At the 77th Organization for Economic Co-operation and Development (OECD) Steel Committee meeting held in Cape Town, South Africa on December 12-13, the participants exchanged views on excess capacity in the global steel sector, noting that numerous new steel plants continue to be built around the world, many supported by government interventions, underlining the extent of the excess capacity challenge which should be addressed with a sense of urgency. The Steel Committee participants also expressed concerns about trade frictions in steel and raw materials trade.
The OECD pointed out that excess capacity is one of the main challenges facing the global steel sector today. The growing gap between global
steelmaking capacity and demand has led to a deterioration in the financial situation of steelmakers, and has raised concerns about the longer-term economic viability and efficiency of the industry. With investment projects continuing to increase in a number of economies while steel consumption growth is anticipated to remain moderate, the global imbalance will continue to pose risks for the industry for the foreseeable future.
According to the OECD, the November 2014 forecasts of the World Steel Association (worldsteel) indicate that world steel demand is expected to reach 1.56 billion mt by the end of 2014 and 1.6 billion mt by the end of 2015. Growth in Chinese steel consumption is expected to decelerate to one percent in 2014 and 0.8 percent in 2015, compared to growth of 6.1 percent in 2013.
Regarding trade frictions in the steel industry, the OECD Steel Committee observed that the risk of trade conflicts in steel appears to have increased lately. Government interventions in the steel sector, excess capacity and oversupply, associated trade disruptions, and the industry's low profitability are creating significant challenges for steel companies and spurring calls for more trade restrictive measures around the world. Petitions for trade remedies to address unfair and injurious imports are increasing.