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Global steel industry groups call for urgent action on excess steel capacity

London — Nineteen steel industry associations in the Americas, Europe, Africa and Asia Tuesday called on the governments of steelmaking economies to step up efforts to tackle persistent global excess capacity in the steel sector, European steel federation Eurofer said.

The associations are asking for strong rules and remedies to be implemented quickly, which reduce excess capacity, its impact and its causes.

The industry groups emphasized that governments should use all available mechanisms and negotiation forums, including the G20 Global Forum on Steel Excess Capacity to ensure the reduction of excess capacity, eliminate market-distorting subsidies and other support measures that contribute to excess capacity, uphold effective trade remedies to ensure a level playing field, support rules against subsidies as well as create robust mechanisms to facilitate the exit of inefficient companies.

The industry groups commended the September 30, statement by Chairman of the Organization for Economic Cooperation and Development's Steel Committee Ulf Zumkley, which expressed grave concern about the unexpected growth in new steelmaking facilities in 2019, exacerbating global excess capacity and contributing to trade tensions.

Participants in the OECD Steel Committee reiterated the need for further capacity reductions in relevant steel-producing economies and urged members to extend the G20 Global Forum on Steel Excess Capacity past its current expiration in 2019.

According to the OECD's September report the latest available data shows an increase in global steelmaking capacity in the first half of 2019, to 2.29 billion mt a year. In the absence of additional capacity closures during the remainder of 2019, global capacity would increase this year for the first time since 2015. The gap between global capacity and production widened to about 440.0 million mt/year in the first half of 2019. At the same time, many new investments contributing to excess capacity continue to take place in specific jurisdictions, and many others are in the planning stage. Should all these projects be realized, global steelmaking capacity could increase by 2%-3% between 2020 and 2022, in the absence of closures.

-- Annalisa Villa, annalisa.villa@spglobal.com

-- Edited by Jonathan Dart, jonathan.dart@spglobal.com