Nineteen steel industry associations from across the globe, including those that represent ArcelorMittal USA and U.S. Steel in Northwest Indiana, have again sounded the alarm on global steel excess capacity.
The American Iron and Steel Institute, the Steel Manufacturers Association, the Canadian Steel Producers Association and steel trade groups from across the Americas, Europe, Africa and Asia urged governments of steelmaking countries worldwide to take urgent action.
Some industry observers estimate steelmaking overcapacity exceeds 500 million tons worldwide, largely as a result of the unprecedented growth of the state-sponsored steel industry in China, which went from making 142 million tons of steel in 2000 to an estimated 1 billion tons last year.
Over that period, global steel production has grown from 936 million tons in 2000 to 1.97 billion tons in 2018, according to the World Steel Association. Once the largest steelmaking country in the world, the United States' share of global steel production shrank from 12% in 2000 to just 5% last year.
Now steel associations in America and across the globe are calling upon government leaders to "step up efforts to effectively tackle persistent global excess capacity in the steel sector, including by quickly implementing strong rules and remedies that reduce excess capacity, its impact and its causes" such as by passing tougher trade laws and negotiating better trade deals.
“We are grateful for the efforts made to date by the G20 and OECD governments to address excess capacity, and to support a playing field at the G20 Global Forum on Steel Excess Capacity and OECD Steel Committee,” the industry groups said in a joint statement. “Unfortunately, effective reductions in capacity and concrete actions to remove government measures that distort markets, including raw materials markets, have not been adequate to date. Efforts by governments to eliminate practices that lead to excess capacity should be redoubled. We are hopeful that the diligent efforts of Japan, the current G20 chair, are successful in extending the G20 Global Forum on Steel Excess Capacity beyond 2019, and we urge all G20 and OECD steelmaking economies to pursue all vigorous means to obtain substantive results on the critical problem of steel excess capacity.”
The steel industry groups are specifically asking for immediate action on eliminating market-distorting subsidies, upholding tariffs to ensure a level playing field driven by market forces and not state decrees, and supporting stronger international rules against subsidies and state-controlled enterprises.
The call to action followed a recent statement by Ulf Zumkley, the chairman of the Organization for Economic Cooperation and Development’s Steel Committee, expressing "grave concerns about the unexpected growth of new steelmaking facilities in 2019, exacerbating global excess capacity and contributing to trade tensions."
An estimated 20 million tons of new capacity is expected to go online in the United States alone over the next few years.