Prospects for the pipe industry in the EU

The first data and estimates of the production activity of the pipe industry in Q1 2014 show a slight increase of about 0.5 percent YoY for steel pipe production in the EU. However, the discrepancies at the state level remain significant.

Fundamental pipe demand is expected to improve during the forecast period. Final demand from key user sectors for small welded and seamless steel pipes, such as construction, automotive and metal products industry, should improve in line with expected growth in these sectors.

The outlook for the large diameter welded pipe segment is cautious with the launch of the South Stream project. Orders for the 1st line have been placed, and German manufacturers will carry out a significant portion of the direct deliveries. Unfortunately, EU suppliers were not selected for the 2nd line. Other pipeline projects that were delayed earlier are likely to be revisited again. EU steel pipe production is expected to grow by almost 5 percent in 2014 and about 4 percent in 2015.

Most EU countries have registered an increase in activity. Much of this growth was due to seasonal effects rather than a reflection of a structural improvement in the terms of sale. Meanwhile, Germany in particular has been hit by the continued decline in activity and the strong impact of the large welded pipe markets. The outlook for the remainder of 2014 and 2015 is positive and there is a signal for a sustained upward trend in steel pipe production in the EU.