Prices of steel have increased and demand is expected to pick up in the first three months of 2012, which is a reflection of economic confidence within the sector.
This is according to the Engineering Employers Federation, which acknowledged output was weak in 2011, but asserted this trend is set to change.
It was also suggested particularly low returns in the final quarter of last year are indicative of the impact of the ongoing eurozone debt crisis.
Indeed, research from the GMB union indicates the economic downturn has brought about the loss of over 700,000 jobs in the UK industrial sectors.
Director of UK Steel Ian Rodgers said demand for the metal did not escape the negative effect of low consumer confidence.
"Stocks in supply chains are now at very low levels and re-stocking in the first quarter is expected to help drive a recovery in steel output," he commented.