Nineteen steel industry associations in the Americas, Europe, Africa and Asia on Tuesday urged industrialized country governments to step up efforts to tackle persistent global overcapacity in the steel sector, European Steel Federation Eurofer said.
Associations are asked to put in place strict rules and remedies that reduce overcapacity, its impact and causes.
Industry groups stressed that governments should use all available negotiating mechanisms and forums, including the G20 Global Forum on Overcapacity, to ensure reductions in overcapacity, eliminate market distorting subsidies and other support measures that drive overcapacity growth , support effective trade, measures to ensure a level playing field, and the creation of reliable mechanisms to facilitate the liquidation of ineffective companies.
Industry groups praised the September 30 statement by Ulf Tsumkli, Chair of the Metals Committee of the Organization for Economic Cooperation and Development, expressing grave concern over unexpected new steel expansion in 2019, exacerbating global overcapacity and heightening trade tensions .
Members of the OECD Steel Committee reaffirmed the need for further capacity cuts in their respective steel-producing countries and urged members to extend the G20 Global Overcapacity Forum after its current expiration in 2019.
According to the September OECD report, the latest available data show an increase in global steel production capacity in the first half of 2019 to 2.29 billion tonnes per year. In the absence of additional capacity closings during the remainder of 2019, global capacity will increase this year for the first time since 2015.
The gap between global steel production and steel production capacity widened to about 440 million tonnes per year in the first half of 2019. At the same time, many new investments contributing to the creation of excess capacity continue to take place in specific jurisdictions, and many more are in the planning stages. If all of these projects are implemented, global steel production could increase by 2-3% between 2020 and 2022.
