Steel Tube Industry Activity in the Third Quarter of 2024: Economic Volatility and Persistent Decline
According to EUROFER’s Economic & Steel Market Outlook 2025 2026, in Q3 2024, the steel tube sector continued its downward trend, registering a 3.3% decline in output after a 3.4% decrease in the previous quarter. This ongoing decrease represents the continued impact of factors that have been plaguing the sector since 2022. The post-pandemic recovery, which boosted the industry in 2021, has now been interrupted by a series of disruptive events, most notably the Russia-Ukraine conflict, geopolitical tensions, and energy price volatility.
Challenges Plaguing the Steel Tube Industry:
1. Geopolitical Instability and the Russia-Ukraine War: The Russia-Ukraine conflict has wreaked havoc on global supply chains, particularly for industries reliant on steel production. As the conflict continues, the EU’s steel tube manufacturers face difficulties in sourcing raw materials, especially from Eastern Europe, further exacerbating the sector's already strained supply chains. Additionally, the war has prompted a global reassessment of energy security, leading to significant shifts in energy consumption patterns that have altered the demand for traditional oil and gas pipelines, an important market for the steel tube industry.
2. Energy Price Volatility and Investment Delays: While gas and energy prices have seen a reduction since their peak in 2022, the lingering effects of the energy shock continue to impact the steel tube sector. The cost of energy remains a major factor in the production process, especially in energy-intensive industries like steel tube manufacturing. High energy costs discourage investment in long-term infrastructure projects like pipeline developments and industrial expansions. As a result, investment in new steel tube projects has been notably sluggish, particularly in areas such as the oil and gas pipeline sector.
3. Supply Chain Disruptions: The pandemic, followed by the Russia-Ukraine war, has exacerbated global supply chain disruptions. In addition to material shortages, manufacturers are facing significant delays in sourcing critical components, further delaying pipeline construction and other steel tube-intensive projects. The EU steel tube sector, which heavily depends on global supply chains, has found it increasingly difficult to meet growing demands. This has resulted in persistent production bottlenecks and project delays across multiple industries that rely on steel tube products, including the construction sector, automotive industry, and engineering sectors.
4. Decline in Oil and Gas Pipeline Demand: The EU’s shift towards LNG shipping for its energy needs has significantly reduced the demand for traditional oil and gas pipelines. This transition is part of the EU's broader efforts to secure energy independence and decrease reliance on pipeline-based energy imports. As a result, the demand for large welded tubes used in oil and gas pipelines has declined, contributing to the overall downturn in the steel tube industry. Furthermore, global oil demand remains subdued, as many countries transition to renewable energy sources and reduce their dependence on fossil fuels.
Key Sectors Impacting the Steel Tube Industry:
1. Construction and Engineering: The construction and engineering sectors provide some relief to the steel tube market. Despite facing slow growth, the demand for small- and medium-sized steel tubes remains relatively stable. These tubes are used in various applications, including building structures, machinery, and automated systems. The EU’s green building initiatives, such as the renovation wave and sustainable construction projects, offer opportunities for the steel tube industry to supply materials for the creation of low-carbon infrastructures.
2. Automotive and Manufacturing: The automotive sector, particularly in the EU, continues to use steel tubes for the manufacture of vehicle components. These components include exhaust systems, chassis, and fuel systems, which are essential for internal combustion engine and hybrid vehicles. Despite the global shift towards electric vehicles, the ongoing need for automotive components ensures that the steel tube sector remains relatively strong in this area.
3. Engineering and Heavy Machinery: Steel tubes are integral to the engineering and heavy machinery sectors, where they are used in manufacturing industrial equipment, machinery parts, and structural supports. As industrialization continues in emerging markets and construction demand recovers in regions outside the EU, the steel tube industry stands to benefit from ongoing investments in infrastructure and industrial growth.
Forecast for 2025-2026: Modest Recovery on the Horizon
The steel tube industry is expected to continue facing downward pressure in 2024, with a further 3% decline in output. However, as global geopolitical tensions stabilize and the industry adjusts to green energy transitions, modest growth is expected to return starting in 2025. The following factors are expected to shape the industry’s future:
1. Shift Towards Renewable Energy Infrastructure:
As the EU and other global regions accelerate the transition to renewable energy, there will be increased demand for steel tubes used in the renewable energy sector, such as for wind turbines, solar power infrastructure, and electric vehicle (EV) charging stations. These industries will require specific steel tube products, offering opportunities for manufacturers to diversify into these markets.
2. Demand from Construction and Engineering Sectors:
While demand from the construction sector is projected to ease in the short term, the EU’s renovation wave and green infrastructure projects will continue to provide opportunities for steel tube manufacturers. The engineering sector, which remains reliant on steel tubes for machinery, will also offer consistent demand as global industrial production rebounds.
3. Energy Sector Transformation:
The shift to LNG shipping and renewable energy sources will continue to dampen demand for traditional pipeline infrastructure, limiting growth in the steel tube sector. However, the oil and gas industry is unlikely to experience significant growth in pipeline projects, making it important for the steel tube industry to pivot towards more sustainable markets.
4. Resilience of Automotive and Manufacturing Sectors:
Despite a slow transition towards electric vehicles, the automotive sector will continue to require steel tubes for components, particularly in hybrid and internal combustion engine vehicles. The demand for steel tubes in manufacturing and heavy machinery will also remain steady as industries continue to invest in industrial production.
Past Trends: Recovery and Setbacks
• In 2021, the steel tube industry saw a significant 12% rebound in output, largely driven by the post-pandemic recovery and strong demand for steel tubes in various sectors.
• 2022 was a year of moderate growth (+0.8%), but the market faced challenges from geopolitical disruptions and energy price volatility.
• 2020 was a difficult year for the steel tube industry, with output plummeting as the pandemic caused widespread industrial shutdowns across the globe.
Looking Ahead: A Bumpy Road to Recovery
The steel tube industry remains vulnerable to various global challenges, including geopolitical uncertainty, energy price fluctuations, and shifting demands for traditional oil and gas pipelines. However, by diversifying into green energy projects, the automotive sector, and sustainable construction initiatives, the industry has an opportunity to adapt and ensure growth in the coming years. 2025 and 2026 are expected to bring a modest recovery, but the long-term future will largely depend on the industry’s ability to pivot to new market demands and overcome the challenges posed by a rapidly changing global economy.
