OECD Steel Committee: Steel Industry may face long-term low demand growth

Thursday, 14 May 2015 13:59:27 (GMT+3)   |   Istanbul
       

At the 78th Organization for Economic Co-operation and Development (OECD) Steel Committee meeting held in Paris, participants exchanged views on the slow growth prospects of the global steel market and the risks surrounding the outlook for the market. The Steel Committee also discussed new information on public financial support measures for new steelmaking capacities and agreed to continue to examine government interventions, such as public financial support measures that contribute to new steelmaking capacity or to maintaining economically inefficient capacities.
 
The OECD Steel Committee stated that the outlook for the steel sector remains weak with many uncertainties including the pace of world economic growth, geopolitical tensions, the future evolution of oil and raw material markets, the long-term decline in Chinese steel demand and the impacts of excess steelmaking capacity. Delegates discussed whether the steel industry might be entering a long-term period of low demand growth, with implications for trade, overcapacity, and competitiveness. The potential for future steel demand growth could be constrained due to a globally aging population, inter-material competition, and more efficient use of steel. Faced with low global growth and little expectation that China's growth will return to high levels, a focus on creating value instead of volume could help the industry capture opportunities arising from many long-term structural changes.
 
According to the Steel Committee, research shows that crude steelmaking production capacities are being augmented further in certain regions of the world, despite large oversupply in the market. Most of these expansion projects are potentially financed with the support of governments, either of the domestic economy or the economy where the project is being executed. In light of the possible sustained slowdown in global steel consumption in the future, excess capacity will remain a central challenge for the steel industry. Excess capacity in certain markets is leading to significant export increases which in turn have resulted in plant closures and job losses elsewhere.

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