Output in the steel tube industry in the EU continued to grow strongly in the 2nd quarter of this year. Nevertheless, compared with the extremely robust increase in production in Q1 2011 of more than 22% YoY the deceleration to a growth of around 8% YoY was quite significant.

This trend could be observed in almost all EU countries. Since the second quarter real consumption in the steel tube using sectors has become the main driver of demand growth, whereas in the first quarter also inventory replenishment had played a significant role in the rise in tube demand. Basically all client sectors of the tube industry have registered a robust rise in activity in Q2 2011.

First estimations for output in the 3rd quarter show a further moderation in output growth to around 2.5%, closely in line in the growth in activity expected for the key client sectors. The outlook for the coming months is for output growth cooling further to 2% y-o-y in Q4. This looks also set to become the average growth rate in the first half of next year.

Demand for small and medium sized steel tubes should strengthen mildly further over the forecast period, in sync with the expected trend in activity in the main tube using sectors such as automotive, engineering and metal goods.

OCTG demand will be supported by higher activity in the Middle East and a sustained high level of activity in North America, assuming that oil prices remain close to their current levels. Solid pipeline project activity is foreseen to keep global demand for large welded tubes at a satisfactory level in Eastern Europe, the Middle East and Asia.
On balance, total steel tube production in the EU is forecast to increase by almost 9% in 2011. Output growth in 2012 is projected to cool down to around 2.5%.