At the 75th Organization for Economic Co-operation and Development (OECD) Steel Committee meeting held in Paris on December 5-6, the participants discussed the slow growth prospects in the global steel market, exchanged views on the effect of excess capacity on the economic health of the steel industry and expressed concerns about trade frictions in the steel and raw materials trade.
According to the OECD, with global economic growth forecasts having been revised downwards for 2013 and 2014, in large part due to weaker prospects in many emerging market economies, steel consumption is expected to increase at a moderate pace going forward but not fast enough to keep up with capacity growth.
The OECD Steel Committee pointed out that, as global steel demand is expected to grow slowly in the coming years and with many new investment projects coming on stream, excess capacity will probably remain high in the medium term. In consequence, excess capacity will continue to weigh on the operating profitability of the global steel industry.
Global excess capacity, low prices and profitability have led to a variety of trade restrictive measures including frequent recourse to safeguard measures, thereby adversely affecting the openness and dynamism of the global steel markets, the OECD Steel Committee warned. Some committee members noted that subsidized trade and dumping practices appear to be increasing. As a result, countries are responding with trade remedy actions which are legitimate measures to counteract unfair trade provided they are compatible with World Trade Organization (WTO) rules. However, some members stated that abuse of these measures should be avoided.
The OECD Steel Committee also discussed raw material export restrictions on
steelmaking materials becoming increasingly sophisticated, such as combinations of export restrictions with certain localization requirements.