After its meeting on Friday 29 September, the OECD steel committee warned that a modest recovery is under way in the global steel market but that structural imbalances remain acute amid sluggish demand growth expected in the long-term.
As well as the organisation's member countries, the OECD steel committee associates Taiwan in its work, and the emerging economies (Brazil, China, Russia, India, South Africa, Argentina, Egypt and Malaysia) also bring their perspectives to the committee’s work – in other words, the committee is a panel representing 45% of global production and 75% of global steel exports. After its meeting on Friday, the committee hailed the "ambitious commitments" taken by the leaders at the G20 summit in Hamburg in July to fight against overcapacity.
It also called for concrete policy solutions to be developed by November to enhance market function and reduce excess capacity in the context of the Global Forum on Steel Excess Capacity.
In addition, the committee reiterated its concerns about "the high level of trade tension" in the steel sector, and stressed the need to fight protectionism, including all unfair trade practices – but it recognised the role of legitimate trade defence instruments in that regard.
After growing at an average annual rate of 6.3% between 2009 and 2015, world steel exports contracted by 1.1% from 317 million metric tonnes in 2015 to 313 million metric tonnes in 2016. Data for the first quarter of 2017 show that steel exports continue to decline, the OECD steel committee states, but it nevertheless says that in certain major markets such as North America, Japan and the EU, steel imports increased significantly in the first half of 2017.
The committee called for the removal of market distortions created by direct and indirect forms of government market-distorting subsidies and other support to the steel sector, including through state enterprises. These state enterprises have a large presence in the emerging economies and accounted for at least 32% of global wholesale steel production in 2016.
"State enterprises in the steel sector are associated with poorer economic performances and higher levels of indebtedness compared to private enterprises. State enterprises (...) have also contributed significantly to the increase in global steelmaking capacity, while achieving lower financial results than their comparable private counterparts", the head of the OECD steel committee, Belgian national Lieven Top, said in his statement.
Working towards greater transparency, the steel committee advanced in the creation of an inventory of the different forms of market-distorting subsidies and other types of support by governments and state enterprises which affect global and domestic steel markets.
The OECD steel committee also discussed the guidelines and best practices on government support for the steel sector, which could contribute meaningfully to alleviating excess capacity, ensuring a level playing field and reducing trade friction. (Original version in French by Emmanuel Hagry)