Steel industry needs to be cut - ThyssenKrupp

Steelworkers in China and the rest of the world must push for more reductions in excess capacity, according to Guido Kerkhoff, CEO of Germany's ThyssenKrupp AG.

While China has made significant progress in curbing overproduction, there is room for further cuts, Kerhoff told reporters in an interview in Shanghai. Over the past three years, the largest steel country has transformed the industry by closing factories, tightening environmental controls and imposing targeted production restrictions.

“There is still excess potential around the world,” and this reduction “needs to be continued” not only in China, but also in Europe and the rest of the world.

China's steel exports fell to their lowest levels in five years, supporting global prices and strengthening the sector's recovery from the devastating crisis in late 2015. While the industry has enjoyed a relatively mild few years since then, risks are mounting amid global trade tensions in which steel has been the leading target. The World Steel Association predicts a slowdown in demand next year as China's growth slows.

Joint venture
Europe has also taken steps, including through a joint venture between ThyssenKrupp and Tata Steel, which created the region's second largest producer.

Kerkhoff spoke weeks after he was confirmed as CEO to direct the split of the iconic German industrial conglomerate into the two listed units. One of them will operate their elevators, auto parts and building construction businesses, while the other will manage their steel and metal works.

US tariffs on steel imports, imposed by President Donald Trump earlier this year, triggered an influx into Europe, Kerhof said. The European Union is one of seven World Trade Organization members that stepped up their response to tariffs last week in an attempt to rule out their legitimacy from the WTO dispute settlement body.

“As a company, we don't export a lot to the US, and the quality of the steel we sell is often a product not made there, so our customers stick with it,” he said. “What we see is rather an indirect effect. The material that would have entered the United States, one way or another, is included in Europe. We see how the volumes from Turkey and Russia are growing in the European market. "