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EUROFER Steel Tube Industry Forecast 2020-21

Steel News - Published on Thu, 13 Aug 2020

Image Source: EU Steel Tube Industry COVID19
Production activity in the EU steel tube industry has become more closely aligned with downstream sectors such as construction, automotive, the metal goods and mechanical engineering sectors. It has thus moderately declined over the second half of 2019, further to modest growth rates or even negative growth rates recorded between the second half of 2018 and the first half of 2019. This trend has been exacerbated dramatically by the outbreak of the Covid-19 pandemic in March 2020, resulted in an even steeper fall in steel tube output in the first quarter of this year. In the first quarter of 2020, output in the EU steel tube industry fell by -13.3%, a much more pronounced fall than the -1.4% recorded in the fourth quarter of 2019 (that had resulted, over the whole year, in a marginal decrease of 0.3%).At the individual country level, the divergence in output trends remained as significant as in preceding quarters. In Central Europe production activity registered an increase, whereas in many Western EU countries steel tube output continued to fall rather sharply. The relative resilience of the tube industry, which recorded more moderate decreases in output compared to other steel-using sectors, can be partly explained by the links with the construction sector in the EU, which had a positive impact on demand for steel tubes in construction applications up to the first quarter of 2020. This somewhat mitigated the negative impact of deteriorating demand conditions in other sectors, such the automotive industry, mechanical engineering and the metal goods sector.

Steel tube industry forecast 2020-2021 - Output in the EU steel tube industry is expected to be heavily impacted by the industrial lockdown that has hit the EU further to the COVID-19 outbreak, with visible effects at least until the end of the second quarter of 2020. Once the lock|down measures are removed and the pandemic ends- at a time and pace which is essentially unknowable at the moment - the outlook for demand for large welded tubes from the oil and gas sector is expected to remain very weak. Most important regional projects from which EU-based large welded tube producers could benefit have been put on hold and little progress has been made over the past few months in solving the political and commercial issues hampering the completion of some specific pipeline projects. The recent collapse of global oil demand (and oil prices) reinforces this difficulty. The demand outlook from the other downstream steel tube market segments is expected to remain fairly sluggish even after the return to normal business conditions. This will produce some positive effects on output from QI 2021. Demand from the construction sector looks set to recover, albeit most likely at a somewhat reduced growth rate. Tube demand from the automotive and engineering sectors is forecast to remain rather weak, even if these sectors restore their production activity to normal levels and supply chain disruptions are sorted out. Import pressure on steel tube markets in the EU will remain high, particularly for the commodity segment. Steel tube output will fall for the second consecutive year in 2020, at a much faster rate than in 2019 (-19.4% vs -0.3%). A rebound of 9.8% is foreseen for 2021.

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Posted By : Yogender Pancholi on Thu, 13 Aug 2020
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