1. Q1 2014 output improving but country divergences remain;

2. Large welded tube producers started deliveries for South stream project;

3. Improving prospects other tube markets;

4. Tube output rising in 2014 to 2015;

Q1 2014 output of the EU steel tube industry rose by 3.2% compared with the depressed level of activity in the same quarter of last year; this implies a slight upward revision compared with the first estimate in April.

At the national level large divergences in output growth can be observed. Production in Germany fell sharply, reflecting the dominant weight of the large welded tubes sector in total production. Demand in this specific market remained subdued in the Q1.

In the other large EU countries, steel tube producers have a product mix which is more geared towards serving market segments that are consuming small welded and seamless steel tubes, such as the construction sector, the automotive and the metal goods industry. Activity in these market segments registered a recovery and as a consequence somewhat better demand for tubular steel. Limited stock replenishment at the start of this year probably also supported demand.

Q2 2014 output is estimated to have at the year earlier level, with market fundamentals remaining rather similar to those in the Q1. The H1 of 2014 is forecast to see a moderate rebound in output, with sustained activity growth pencilled in for the H1 on 2015; activity in the H2 of next year is seen stabilising around the year earlier level. A key factor in this trend is the supply of tubes for the 1st string of the Southstream pipeline project. First tonnages were produced Q2, but output will gain momentum in the remainder of 2014 and into H1 2015. This will particularly support output growth in Germany.

Meanwhile, brightening prospects for the key user sectors of small welded and seamless steel tubes such as the construction, automotive and metal goods industry will result in a modest rise in output in most other EU countries. Some further restocking in the distribution chain could take place as well. EU production of steel tubes is expected to rise by 2.7% in 2014 and by 3.6% in 2015.