Chinese overcapacity destabilizes global steel industry

By Paul Ploumis 17 Jun 2015 Last updated at 02:01:22 GMT

SEATTLE (Scrap Monster): The recently concluded meeting of the Organization for Economic Cooperation and Development (OECD) demonstrated strong consensus against massive overcapacity in China at a time when demand is witnessing sharp declines. The steel trade associations from across the world also raised serious concerns regarding China’s new steel policy.

Various associations from Asia, the Americas and Europe noted that the Chinese overcapacity has destabilized global steel market. There has been a dramatic increase in unfair steel imports, jeopardizing trade flows. Also, eight steel trade associations representing the US, Canada, Mexico, Latin America and Europe expressed their concerns about the recently released “Steel Adjustment Policy” by China. They noted that the policy will hamper global trade as it follows state-dominated approach to reforming the steel industry.

The OECD Steel Committee called upon each national government to address the challenges posed by low demand growth and rising imports. It asked governments to act upon quickly as delay in action would result in survival of subsidized and state-owned enterprises at the expense of efficient private enterprises that operate with minimal government support. The joint statement issued by AISI, SMA, CSPA, SSINA, CPTI, Canacero, Alacero, Eurofer, Turkish Steel Producer’s Association and the Brazilian Steel Institute emphasized the need for urgent and effective action in order to generate a level playing field in global steel market.

The statement alleges that China has not yet proposed any effective policy to reduce its steel overcapacity. It also called upon individual government to carefully determine the damages caused by dumped imports from China before making any decision regarding recognizing China as a market economy.