Steel trade groups applaud G20 initiative to address global steel overcapacity

SPOKANE (Scrap Monster): Representatives belonging to nine steel industry trade groups have expressed cautious optimism on the measures proposed to curb excess steel capacity during the recently concluded G-20 Summit at Hangzhou, China. They termed the decision to form a Global Forum on steel excess capacity as an important first step. While appreciating the commitment of leaders who participated in the Summit, the trade groups noted that a lot needs to be done to find a permanent solution to the steel industry crisis.

The steel groups expressed gratitude to leaders on recognizing the severe impacts to steel industry caused by global steel overcapacity. The excess capacity has hit the margins of domestic producers and has also impacted their liquidity. The steel groups urged the governments of various countries across the globe to implement concrete policy actions to curtail excess capacities and end quota, subsidies that are likely to ruin a level playing field. While appreciating the commitment of global leaders to address the issue, the representatives noted that the excess capacity on account of liberalized government policies is the root cause of the rising imports in many countries in the American and European region.

The statement noted that the formation of a Global Forum would result in increased sharing of information as well as more cooperation among the major steel producing countries of the world. It called upon the governments and the industry to work in partnership to create the Global Forum, in order to define its agenda and working modalities. The representatives of the steel trade groups expressed the hope that the Forum could start functioning at the earliest. Incidentally, the G-20 Leaders’ Communique states that a progress report has to be ready before the G-20 ministerial level meet in 2017.

The G-20 meet had earlier announced the formation of a Global Forum which will be facilitated by the OECD with the active participation of G20 members and interested OECD members. However, the fact that major steel producing nation China and other important steel producers such as India are not part of the OECD has raised concerns over the Forum’s impartiality.

The leaders from the US and Europe had blamed China for flooding international markets with cheap products. They urged the Chinese administration to act strictly on curbing excess capacity. Meantime, the Chinese President Xi Jinping announced that the country is committed to reduce steel production capacity by 100-150 million tonnes by 2020. The country had promised to cut steel capacity by 45 million tonnes in 2016, but sources indicate that it is behind on that target.

The nine groups represents the steel industry in North America, South America, Latin America and Europe and comprises of the American Iron and Steel Institute (AISI), EUROFER (European Steel Association), the Steel Manufacturers Association (SMA), the Canadian Steel Producers Association (CSPA), CANACERO (the Mexican steel association), Alacero (the Latin American Steel Association), Brazilian Steel Institute, the Committee on Pipe and Tube Imports (CPTI) and the Specialty Steel Industry of North America (SSINA).