* Q1 pretax profit 504 million crowns vs 209 million forecast * Sees demand remaining strong in most markets
* Sees slightly higher shipments in Q2
* Price hikes not seen fully offsetting input cost rise
* Shares up 6.6 percent, outperform market
(Adds analyst comment, share price reaction)
By Simon Johnson
STOCKHOLM, April 29 (Reuters) - Swedish high-strength steel maker SSAB swung back to profit in the first quarter and said a pick-up in demand in most markets was set to continue.
SSAB, which bought North American steel maker IPSCO in 2007, has struggled in recent quarters to offset rising raw materials costs and was hit by slowing demand and production disruption in the fourth quarter, when it slipped to a 176 million Swedish crown ($29.2 million) pretax loss.
The company said production was now normal and demand had recovered during the first quarter.
"Shipments of SSAB's products are expected to increase slightly in the second quarter," the company said.
It said demand should continue at a good level, particularly in Asia, Latin America and in North America. Recovery in Southern Europe is still slow, while northern Europe has seen a somewhat more positive trend, the company said.
SSAB shares were up 6.6 percent at 104.90 crowns at 0827 GMT, easily outperforming a flat STOXX Europe 600 Basic Resources Index.
"All the divisions are doing very well relative to what was expected," said one analyst who declined to be identified. "It is especially good to see the European operations are firmly back in the black after two straight quarters of losses."
SSAB's results chimed with peer Rautaruukki. Earlier this month the Finnish steel-maker reported stronger-than-expected first-quarter results thanks to strong sales and higher prices, and hiked its 2011 sales forecast.
Rautaruukki expects profitability this year to improve clearly compared with 2010.
The global outlook remains cloudy, however.
Earlier this month POSCO, the world's No. 3 steelmaker, reported a hefty fall in quarterly operating profit hit by high raw materials costs and low demand.
Baoshan Iron & Steel Co Ltd, China's biggest listed steelmaker, is cutting prices because of weak demand.
SSAB on Friday warned that price increases for its products would not fully compensate for higher raw materials prices in the shorter term.
It also said that excess capacity may put a pressure on prices unless underlying demand continues to strengthen.
Pretax profit was 504 million Swedish crowns ($83.74 million) against a forecast of 209 million in a Reuters poll and 83 million a year earlier.
(Editing by Mike Nesbit)
($1=6.018 Swedish Crown)