China's overcapacity threatens global steelmaking

The recently concluded meeting of the Organization for Economic Cooperation and Development (OECD) showed a negative attitude towards bloated steelmaking capacity in China, while demand is showing a sharp decline. In addition, steel trade associations around the world have serious concerns about China's new policies to reform the steel industry.

Various associations from Asia, America and Europe noted that China's overcapacity has destabilized the global steel market. Confirmation of this was the sharp rise in unfair imports of steel products, which jeopardized trade flows. In addition, eight steel trade associations representing the United States, Canada, Mexico, Latin America and Europe expressed their concerns about China's recently introduced “steel sector policy adjustment”. They noted that politics would hinder global trade practice in a way that is dominated by a government approach to reforming the steel industry.

The OECD Steel Committee called on the governments of all states to address the problems associated with low growth in demand and increased imports in their markets. The OECD is urging governments to act quickly in a way that delay will keep subsidized and state-owned enterprises to survive, at the expense of efficient private enterprises that operate with minimal government support. A joint statement by AISI, SMA, CSPA, SSINA, CPTI, Canacero, Alacero, Eurofer, the Turkish Steel Manufacturers Association and the Brazilian Steel Institute underlines the need for urgent and effective action to ensure a level playing field in the global steel market.

The statement claims that China has yet to come up with an effective policy to reduce overcapacity in its steel industry. The OECD also urged governments to individually carefully investigate and determine the damage caused by dumped steel imports from China before making any decision regarding China's recognition as a market economy.