The steel tube industry saw positive results in the quarters for 2017 for which data is available. However, this upswing is flattered by low production levels in the corresponding 2016 period. Steel tube industry output EU steel tube production activity grew by 8.4% year-on-year in the third quarter of 2017. While this growth was flattered by relatively low production levels in the corresponding period of 2016, steel tube producers benefited from solid order books. Output growth was particularly vigorous in Germany and Spain.
Steel tube industry growth in 2017
A key factor contributing to the continued healthy performance of the EU’s steel tube sector is robust project activity in the international pipeline market and the related order backlog at the EU’s main large welded tube producers. Another factor has been the improvement in business conditions in the downstream client sectors of small and medium-sized welded tubes, such as the construction, mechanical engineering, automotive and other transport equipment, and metal goods industry. OCTG demand improved incrementally, boosted by growth in the global rig count.
With favourable business conditions expected to have continued in the fourth quarter of 2017, production activity in the EU steel tube sector is estimated to have increased by another 5.2% year-on-year in this period.
On balance, total EU tube output is expected to have risen by 8.3% in 2017, which resulted in the best annual production volume of total steel tubes in the EU since 2012.
Steel tube industry forecast 2018-2019
In 2018, steel tube production in the EU is forecast to decline moderately as order books for pipeline construction projects at EU large welded tubes mill dry up. So far there is little evidence that significant volumes will be opened for tender in 2018. Moreover, legal uncertainty related to the European Commission’s proposal for new EU anti-monopoly legislation also applies to offshore pipeline segments on EU territory. This could complicate Russia's plans for gas pipelines from Russia to Western Europe. As a consequence, the boost from this market is expected to disappear in 2018 and 2019. Meanwhile, demand for small welded tubes is forecast to continue to increase, supported by the overall positive business situation in the main downstream client industries.
Total EU steel tube output is expected to contract by 0.5% in 2018, followed by a 0.7% increase in production activity in 2019.