Co-operation needed to end the steel crisis
Statement by Mr. Ulf Zumkley, Chair of the OECD Steel Committee
97th session, 31 March-1 April 2025, Paris
The OECD Steel Committee brought together 293 government and industry delegates from 41 major steel-producing economies to discuss the current steel crisis, its root causes, and the need to deepen international co-operation to improve prospects for their steel industries.
Key conclusions from the meeting are as follows:
- The global steel industry crisis has deepened due to growing global steel excess capacity and resulting surge in exports of low-priced steel, threatening Steel Committee members’ production. Chinese steel exports have more than doubled since 2020, surging to 118 mmt in 2024 (more than total North American steel production and not far from that of the European Union last year), while the country’s steel imports have plunged by almost 80%, to 8.7 mmt. Steel prices and industry profitability continued to decline during 2024, hitting historically low and unsustainable levels in some regions. These negative developments have disrupted international markets resulting in trade actions across a growing number of countries that are likely to persist in the light of increasing excess capacity and sluggish market growth.
- Non-market policies and practices – the root cause of the current crisis – continue unabated in some economies where steelmaking capacity is growing rapidly. The Committee reviewed its latest subsidy monitoring work, concluding that significant Chinese subsidisation in 2024, including grants, tax incentives, differentiated electricity pricing and below-market borrowing to steel companies in China and other countries, will worsen steel excess capacity problems and trigger further trade disruptions for Steel Committee members going forward. Without policy adjustments in countries that are fueling the excess capacity, or disincentives for them to export their surplus steel, global steel industry problems will intensify. The Committee called for accelerating work on the root causes of the global steel crisis and to feed the results into international efforts to develop solutions to the situation, including the Global Forum on Steel Excess Capacity.
- The market outlook faces significant risks. Global steel demand is projected to grow only modestly in the medium term, impacted by the steep downturn in the Chinese construction sector. Global steel excess capacity is expected to continue rising, with 165 mmt of new capacity additions projected for 2025-27, fuelled by cross-border investments by Chinese steel companies. Global excess capacity is expected to increase to 721 mmt by 2027, from an estimated 602 mmt in 2024, putting enormous pressures on the viability of even highly competitive steelmakers. The Committee looks forward to releasing its findings in the forthcoming OECD Steel Outlook in late May.
- Decarbonisation efforts are facing headwinds. The ongoing excess capacity problem is reducing the steel industry’s profitability and the capital available for investing in new technologies, hampering the industry’s efforts to decarbonise. The Committee discussed recent initiatives and exchanged their national experiences on ways to reduce those headwinds, including ways to foster and expand markets for lower-carbon steel and seizing opportunities from rapid developments taking place in green iron markets.
- Co-operation needed to end the steel crisis. Despite the increased market difficulties and heightened trade policy reactions thereto, participants welcomed the OECD Steel Committee as an essential multilateral platform for discussion and promoting mutual understanding. As key action points moving forward, the Steel Committee will, as soon as practicable, host a workshop during which members, experts, and other participants will discuss best practices and evidence related to tools and policies of relevance on how countries can urgently address challenges for the steel industry. This would include assessing why certain trade measures are being taken, and explore where solutions to common problems can be found amongst the Committee’s members. The outcome of discussions could feed into the work of the Global Forum on Steel Excess Capacity and other relevant fora.
