Sandvik AB's (SAND.SK) Chief Executive Olof Faxander Tuesday warned that uncertainty surrounding the nuclear industry in China may cause temporary overcapacity for its steam-generating tube business.

China said in March it would freeze approvals for new nuclear reactors, awaiting an examination of safety procedures in the wake of the nuclear crisis at Fukushima in Japan.

The move will impact Sandvik, which makes steam generator tubes, used in the heat exchangers that nuclear plants use to convert water into steam from reactor core heat.

"China is our largest market for steam generator tubes," Faxander told investors and analysts at a press conference that followed the company's second-quarter earnings report.

"There is a risk that some of our projects in China will be delayed, which could create temporary overcapacity in our facilities," he added.

Faxander noted Sandvik's nuclear orders are "firm", and said he doesn't foresee any project cancellations at this point.

"There still is a large need for energy around the world," he said.

At 1248 GMT shares in Sandvik were trading 3.4% higher at SEK105.50.

-By Sven Grundberg, Dow Jones Newswires; +46-8-5451-3098; sven.grundberg@dowjones.com

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