Steel tube prices to rebound

MILAN: Prices of steel tubes and their raw material, hot-rolled coils, are likely to rebound in the third quarter of 2011 after a fall in the second quarter as demand picks up, the head of a leading Italian steel group said.

"I expect prices to have bottomed and slightly rebound starting in the third quarter I think prices should go up by 20-30 euros (a tonne for hot-rolled coils)," Antonio Marcegaglia, chief executive of Italian steel processor Marcegaglia, said on Wednesday.

"This is because fundamentals are coming back, Japan is coming back and China is developing its housing plan," Marcegaglia told Reuters on the sidelines of Metal Bulletin's steel conference.

Prices of tubes and other final steel products would hopefully outpace an expected increase in raw material prices, he added without giving more precise forecasts.

Overall Steel demand in Europe is expected to rise 5.2 percent this year after a 4.0-4.5 percent increase in 2010, Marcegaglia said citing forecasts from Europe's industry body Eurofer.

Apparent steel demand, which includes inventory build-up, is expected to rise 6.0 percent after a nearly 19 percent jump in 2010 powered by stock rebuilding after a slump in 2009 when the industry was hit hard by the global economic crisis, he said.

"I think it could be even a bit better," he added referring to 2011 steel demand compared to Eurofer forecasts.

"This year, real consumption and apparent should be more aligned," he said.

Steel demand in Italy is expected to rise about 9 percent this year as major players, including Marcegaglia, plan to boost output and consume more steel, he said.

Marcegaglia group wants to raise its output of welded tubes to 2.4 million tonnes by the end of 2012 from 1.5 million tonnes in 2010 thanks to increasing production in Italy, China and Brazil, he said.

Overall steel demand in Italy and the rest of Europe has been driven mainly by mechanical engineering, machinery and equipment as well as automotive industries. Construction remained weak, especially in southern Europe, Marcegaglia said.

Car production in Europe was expected to rise 5 percent this year and 2.5 percent in 2012, helping to drive steel demand, Arthur Mahler,J D Automotive's head of European forecasting, told the conference.

Europe's car market has started recovering after the Japanese component crisis in the aftermath of the earthquake there in March, Mahler said.

Copyright Reuters, 2011