OECD: Global steelmaking capacity could increase between 2019 and 2021

Tuesday, 02 July 2019 17:40:07 (GMT+3)   |   Istanbul

According to the OECD’s Steel Market Developments report, steel market fundamentals weakened significantly over the second half of 2018. The report pointed out that, although steel production growth is still positive in most regions, steel prices have already started to adjust, reversing their previous upward trend and eliminating most of their earlier gains. “Important headwinds include the weakening global outlook, the increase in trade frictions, the pickup in new capacity investments, and the persistence of excess capacity,” the OECD noted.

Commenting on steel demand, the OECD said that steel consumption growth stalled in most economies in 2018 and downside risks to demand outlook include increased trade frictions and a weakening global economy, which suggests that, without further action, large structural imbalances are likely to persist.

The OECD also released recent developments in steelmaking capacity, with the latest available data suggesting that global steelmaking capacity declined marginally in 2018. While investment and closure data from the first half of 2018 suggested the possibility of a slight increase in global steelmaking capacity for the year as a whole, incoming information on closures as well as recent reports indicating that some investment projects were postponed have led to a slight downward adjustment in the estimate for global steelmaking capacity in the full year of 2018.

However, many investment projects continue to take place around the world and others are in the planning stages. The OECD believes that, if these projects are realized, global steelmaking capacity could increase by approximately 4-5 percent between 2019 and 2021 in the absence of closures. In the context of global excess capacity, it will be important for policymakers to continue closely monitoring investments and the closures that take place in the steel industry, the OECD warned.

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