In the first quarter of 2010 the year-on-year drop in steel tube production in the EU slowed to just one percent, coming from two-digit declines in the five preceding quarters and a massive 31 percent reduction in output in the whole of 2009, according to the third quarter report of the ‘Economic and Steel Market Outlook 2010-2011', released by the European Confederation of Iron and Steel Industries (EUROFER). This marked relative improvement reflects the upward trend in manufacturing activity in the EU and the coming to an end of the process of inventory reductions in the steel tube distribution chain and at end-users.
First estimates and preliminary data for the second quarter point to the first quarterly year-on-year rise in steel tube output since two years. With the exception of the construction sectors and the shipbuilding industry, activity in the main end-user segments of steel tubes is picking up again. While this supports steel tube demand picking up from the very low level reached in 2009, replenishment of the sharply reduced inventories of tubular steel products is the main driver for growth in demand and output. On balance, output growth is estimated to have amounted to eight percent year on year in Q2 2010.
This positive trend is foreseen to continue in the remainder of the year owing to the ongoing rebound in activity expected for all end-user sectors of seamless and small and medium-size welded steel tubes. Improving downstream activity levels will also require inventory levels of steel tubes to be raised further.
Demand for large welded tubes is rather firm owing to several large pipeline projects being under construction in Europe, for example the 1,220 km Nord Stream pipeline that will link Russia and the European Union via the Baltic Sea. Also in the Balkan a number of projects are currently under construction. More projects are under study; their realization will depend on energy market and financing conditions.
All in all, total steel tube output in the EU may expand by 5.5-6 percent in 2010, said EUROFER, revising its previous forecast of four percent growth. For 2011 growth between 4.5 and five percent is currently expected.