EU steel tube output fell by just 0.6% YoY in Q4 2013. As a consequence total steel production decreased 4.7% over the whole of last year. Particularly output in Germany and France decreased sharply, basically because of weak demand for large diameter tubes for pipeline construction.

First data and estimates for production activity in Q1 2014 indicate basically a marginal increase of around 0.5% YoY of steel tube output in the EU. However, divergence at the country level remained significant.

Most EU countries registered an increase in activity; to a significant extent this increase was rather the effect of a seasonal uptick than a reflection of a more structural improvement in downstream sales conditions. Meanwhile particularly Germany suffered from a continued drop in activity due to its strong exposure to the large welded tube markets.

Prospects for the remainder of 2014 and for 2015 are more positive and signal a steady upward trend in EU steel tube production activity. The improvement is driven by a general improvement in tube demand fundamentals over the forecasting period.

Final demand from key user sectors of small welded and seamless steel tubes such as the construction, automotive and metal goods industry should improve on a par with the expected rise in activity in these sectors. Rising downstream activity implies that also there will be some restocking in the distribution chain.

Prospects for the large welded tube segment are cautiously brightening owing to the start up of the South stream project. Bookings for the 1st line have been made; particularly German producers will supply a substantial part of direct deliveries. Unfortunately EU suppliers have not been selected for the 2nd line. Other pipeline projects which had been shelved are apparently being reconsidered again. EU production of steel tubes is expected to rise by almost 5% in 2014 and close to 4% in 2015.