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South Stream Project to boost European steel tube market in 2014


Time:2013-11-05  View:4483  【Font:Big Middle Small】    Back to News

Total European Union steel tube production is expected to decline by almost four percent this year, according to the Economic and Steel Market Outlook 2013-2014/Q4 2013 Report from the Economic Committee of the European Steel Association (EUROFER).

Meanwhile, the outlook for 2014 improved recently owing to the announcement that the South Stream project which will increase the supply of natural gas from Russia to central and southeastern Europe is expected to start in Q1 2014. This should have a positive impact on line pipe output, EUROFER said. In combination with improving demand from major tube using sectors such as construction, automotive and metal goods as well as some inventory replenishment in the distribution chain, according to EUROFER, it is expected to result in a rise of around 3.5 percent in steel tube production in 2014.

Steel tube production in the EU fell almost 3.5 percent year on year in the second quarter of 2013, while the final data for Q1 production activity show a 7.4 percent year-on-year reduction. The slower rate of contraction during the first half of the year hides a marked divergence at the country level which is largely determined by the product mix of the tubular steel producers, EUROFER reported.

Countries with a dominating share of large welded steel tubes in their product mix continued to suffer from very weak demand and fierce competition in the international line pipe markets. Several potential projects which had been identified and had reached the pre-engineering stage in the recent past have been delayed due to uncertainty stemming from increasing shale gas supply. As a consequence, the largest line pipe producers in the EU - namely Germany and France - suffer badly.
 
Meanwhile, the other tubes market segments such as precision tubes and small welded tubes are relatively speaking in a slightly better position, although these segments are also confronted with subdued demand fundamentals and increased imports of commodity tubular steel products.

Estimates for Q3 tube production activity signal the continuation of business conditions as seen in Q2. Some year-on-year improvement is foreseen for the last quarter, but basically due to the very low activity level in Q4 2012 and the expectation of moderating imports into the EU.

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