At the 81th Organization for Economic Co-operation and Development (OECD) Steel Committee meeting held in Paris on September 8, the OECD stated that the market situation in the steel industry has improved minimally since the beginning of the year. The overall three-year period from 2015 to 2017 is expected to be characterized by a gradual bottoming out of global steel demand growth.
According to the OECD’s statement, world capacity growth slowed to approximately two percent per year in 2014 and 2015, and should subside further in 2016-18. Most of the growth in steelmaking capacity over the last decade has occurred in non-OECD economies, which accounted for 72 percent of global steelmaking capacity in 2015. With global demand conditions remaining relatively weak in the coming years, it is anticipated that investment activity in the steel sector will slow. Capacity in the OECD area is expected to remain roughly unchanged until 2018, with a small number of new projects being offset by capacity closures.
Recovery in demand in most regions is minimal, with estimated demand in the current year at only 1.5 billion mt, thus indicating unsustainable oversupply, with over 800 million mt of excess capacity. Relatively minor adjustments in supply with some capacity closures and mothballing of steelmaking facilities suggest that steel markets could be bottoming out, the OECD noted.
The OECD Steel Committee also discussed the steelmaking raw material markets and related export policy developments. The use of export restrictions worldwide remains high despite the fact that the market balance for many steelmaking raw materials has eased and prices have fallen significantly in recent years. According to the Steel Committee, more open raw material export policies can have positive effects throughout the steel supply chain, both domestically and internationally.