VIENNA--Demand for steel in Europe will increase next year, the head of Austrian steel company Voestalpine AG (VOE.VI) said in an interview with the German daily Sueddeutsche Zeitung on Monday.

"We expect demand for steel in Europe to increase--by at least 2%--next year after three years of decline," said Wolfgang Eder, who is also president of the European Steel Association, Eurofer.

Customers have been restocking inventories since the summer and there are positive signals from southern Europe. "If this trend continues, prices could recover at the beginning of 2014," Mr. Eder said.

Even with the increased demand, steel markets, both in Europe and around the world, remain over-supplied, he said. He estimated excess steel production amounts to 30 million to 50 million metric tons in Europe, and 300 million to 500 million tons globally.

None of Europe's steel customer markets are showing structural growth in demand, he said.

"Overall in Europe we will lose half of our production capacity over the next 15 to 20 years if the prevailing circumstances don't change," said Mr. Eder.

Producers of commodity steel, such as Germany's Thyssen-Krupp AG (TKA.XE) have been hit hard by the decreased demand for steel.

Newspaper Web site: www.sueddeutschezeitung.de

Write to the Vienna Bureau at nicole.lundeen@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires