Global overcapacity poses a threat to the U.S. steel industry

The Steel Manufacturers Association (SMA) and the American Iron and Steel Institute (AISI) have expressed serious concern over the growing global steel overcapacity. The organizations warn that the trade policies of China and Brazil undermine fair competition and threaten U.S. national security. This is reported by Kallanish and SteelNet.

SMA Executive Vice President Brandon Ferris emphasized that invoking “Section 301” of the U.S. Trade Act is an appropriate and necessary tool to address the problem of excess capacity. According to him, the American industry has long been a target of structural overcapacity and overproduction, which foreign producers use to destabilize the market.

Key facts:

• global overcapacity, driven by China, exceeded 700 million tons last year;
• this volume is more than eight times the total annual steel production in the U.S.;
• the imbalance requires immediate intervention by the U.S. Trade Representative (USTR) to protect American jobs and the manufacturing base.

AISI President Thomas J. Gibson issued a stark warning regarding recent actions by Beijing and Brasília. The organization is concerned that these measures will redirect excess production volumes to North America during a period of volatile demand.

Key complaints against foreign governments:

1. China: AISI views the decision to eliminate export VAT rebates for a wide range of steel products as an attempt to manipulate the tax system to stimulate exports. This is occurring at a time when the U.S. does not have similar import duties or VAT refund systems under its Uruguay Round commitments.

2. Brazil: The reinstatement of tariffs on imports of certain types of steel in Brazil could lead to a redirection of global export flows toward NAFTA markets, which would cause additional harm to American mills.

Gibson emphasized that the actions taken by China and Brazil were carried out “by decree,” without proper transparency. Such direct government intervention undermines confidence in international trade and rules based on an open approach.

AISI has officially appealed to U.S. officials to review current trade policies regarding these countries, given the critical importance of the stability of the domestic steel market.

It is worth noting that global steel overcapacity is growing at the fastest rate in the last 15 years and could exceed 680 million tons by the end of 2025. As a result, the global steel industry is experiencing its deepest crisis since the 2009 financial crisis.

As reported by GMK Center, there is no quick solution to the problem of China’s excess capacity, as the industry is closely tied to the country’s overall economy. At the same time, the surplus is being pushed onto global markets at low prices, putting pressure on producers in other countries and exacerbating trade tensions.