According to the Economic and Steel Market Outlook 2017-2018/Q4 2017 Report from the Economic Committee of the European Steel Association (EUROFER), EU steel tube production expanded by seven percent year on year in the second quarter of the current year, having rising by more than 11 percent year on year in the first quarter. The resulting year-on-year output growth of over nine percent in the first half was to a large extent driven by sharp production rises in Germany.
The EUROFER report indicated that during the first half of this year strong project activity in the international pipeline market was a key driver of production activity growth in the EU steel tube sector. EU mills have been able to benefit from numerous projects, both large and small, in the wider European area, including the Nord Stream 2 project. This has contributed to healthy workloads for large welded tube manufacturers in the EU. Global project activity in gas distribution has, in particular, been gaining momentum, thereby relieving international competitive pressures. Meanwhile, OCTG demand remained at a more or less satisfactory level in the first half. Demand for small welded tubes improved over the given period, owing to increasing production activity in major client sectors such as construction, automotive and metal goods manufacturing.
Fairly similar business conditions are expected to have led to a continuation of activity growth in the third quarter of this year. Prospects for the final quarter of 2017 are for continued but somewhat slower year-on-year output growth as order backlogs for large welded tubes start to shrink. All in all, total EU tube output is expected to increase by 7.2 percent in 2017.
According to EUROFER, in 2018, steel tube production in the EU is projected to decline slightly as the boost from strong order books at EU mills for large welded tubes for pipeline construction projects comes to an end. This market will therefore no longer support total output growth as strongly as before, although project activity will continue to contribute to the workload of line pipe mills. Demand for small welded tubes is expected to increase further, supported by relatively healthy business conditions in the main downstream client industries. Total EU steel tube output is expected to shrink by 0.6 percent year on year in 2018.