Countries are stepping up cooperation through the OECD Steel Committee’s Forum on Excess Capacity in the Steel Industry. In Milwaukee, participants agreed on a framework intended to help governments and companies work together to tackle market-distorting subsidies and financing, as well as improve supply-chain transparency.
Anthony de Carvalho, head of the OECD’s steel unit, announced the new initiative at the annual conference of the Latin American Steel Association (Alacero) in Mexico City on November 10. Measures include preventing the circumvention of trade restrictions. Participants will later present the program to their countries’ ministers.
“The number of like-minded countries is growing… Coordinated action will have a greater impact,” de Carvalho said.
The Global Forum on Steel Excess Capacity (GFSEC) was established in 2016 at the initiative of the G20. It now has 28 members, including Mexico, Brazil and Argentina.
According to de Carvalho, global excess capacity persists and is worsening. In June, the OECD estimated that, under a business-as-usual scenario, it would reach 745 million metric tons by 2028. New capacity totaling 139 million tons is expected to come online in 2026–2028—more than the entire steelmaking capacity of Latin America. Global demand over the same period, however, is expected to grow by only 34 million tons, while total capacity could reach 2.58 billion tons.
De Carvalho identified market-distorting subsidies, particularly in China, as the main cause of excess production and capacity. Without reform of China’s subsidy system, he said, it would be difficult for other countries to protect their markets: subsidy levels in China’s steel industry have nearly doubled since 2019.
“This excess capacity is structural because market mechanisms are not working efficiently: Chinese steel will continue to flow into international markets,” the OECD official said.
In 2025, China’s steel exports reached a record 131 million tons—153% higher than in 2020 and more than the EU’s entire steel output in 2025.
Direct and indirect steel imports into Latin America’s six largest economies have risen 47% since 2019, reaching 55.4 million tons in 2025. That was almost equal to the region’s entire crude steel output that year; China accounted for 39% of imports. De Carvalho noted that imports are displacing local production and reducing trade between countries in the region.
“Consumption in the region is growing, while production is falling. Average capacity utilization in Latin America fell to 60% last year… We are seeing production chains break down, which could lead to steel mills closing,” he said.
Participants at the Alacero conference also called for international cooperation to tackle steel overcapacity and underpriced imports. De Carvalho said the OECD is working with Alacero on a study of how Latin America is absorbing excess global capacity. It is scheduled to be presented at an OECD meeting next week.
At the conference, McKinsey & Company partner Rafael Scott said the consulting firm expects steel demand in China to continue declining over the next decade. As the economy develops, construction will play a smaller role, and growth will become less dependent on steel. According to McKinsey data, demand for finished steel products in mainland China will fall from 1.009 billion tons in 2020 to 769 million tons in 2035. The company expects this to continue squeezing steelmakers’ margins and encourage exports to higher-priced markets.
On November 11, Altagracia Gómez Sierra, coordinator of the Mexican government’s advisory council on regional economic development and relocation, called for the accelerated implementation of the so-called “Plan Mexico.” Developed since 2024, it aims to increase the share of domestic products and domestic value added, while strengthening protection for Mexican industries, including steelmaking, which Gómez Sierra called strategic.
Máximo Vedoya, CEO of Latin American steelmaker Ternium, said similar national plans could also benefit other countries in the region. Gómez Sierra stressed the importance of Latin American countries working together to protect their domestic markets.
“Regionalism is essential,” she said.
Luis Rosendo Gutiérrez Romano, Mexico’s deputy minister of foreign trade at the Ministry of Economy, told congress participants that recent steps to strengthen trade protections now cover about 90% of steel product types in the country. He said this helps protect investment in Mexico’s steel industry.
