OECD: Outlook for steel markets faces considerable downside risks

Wednesday, 27 March 2019 16:46:02 (GMT+3)   |   Istanbul
       

The Organization for Economic Cooperation and Development (OECD) Steel Committee has raised concerns over global steel excess capacity at its annual meeting on March 25-26, arguing that it continues to be a major challenge after minor adjustments in 2018. OECD Steel Committee further stated that risks to the steel sector outlook remain high, given the weakening of the global economy, trade frictions, and structural imbalances.

According to the OECD, global steelmaking capacity remained nearly unchanged in 2018, at 2.234 billion metric tons. A slight decrease was observed last year due to closures and postponements related to some investment projects. However, many new investments continue to take place around the world, including regions where excess capacity is most prevalent, the OECD stated. It went on to say that, if these projects are completed, global steelmaking capacity may increase by 4-5 percent between 2019 and 2021, in the absence of closures.

The OECD Steel Committee therefore emphasized the need for eliminating market-distorting practices that are giving way to excess capacity worldwide. In this regard, it expressed support for the work of the Global Forum on Steel Excess Capacity (GFSEC).

Meanwhile, speaking ahead of the GFSEC meeting due to be held on March 28-29, Axel Eggertt, director general of the European Steel Association (EUROFER), stated, “In a world where global overcapacity is still very much present - and with proliferating trade distortions - there is a greater need than ever for the GFSEC”.

According to the OECD, the gap globally between steel capacity and production is expected to be 425.5 million metric tons for 2018.


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