A zirconium alloy tube for forming the whole or the outer portion of a nuclear fuel pencil housing or a nuclear fuel assembly guide tube. The zirconium alloy contains 0.8-1.8 wt. % of niobium, 0.2-0.6 wt. % of tin and 0.02-0.4 wt. % of iron, and has a carbon content of 30-180 ppm, a silicon content of 10-120 ppm and an oxygen content of 600-1800 ppm. The tube may be used when recrystallized or stress relieved.