Unfair competition has a significant impact on steel markets – OECD

Surges in imports affect the economies of the organization's member states

The Steel Committee of the Organization for Economic Cooperation and Development (OECD) at its last meeting expressed concern about the distortion of the steel market due to unfair competition and growing trends in circumventing trade protection measures. This is stated in a statement.

As noted, there are factors that have already signaled metallurgical crises in the past. These include the rapid growth of overcapacity, increased unfair competition in steel exports, falling prices for steel products, and increased trade tensions.

The committee’s discussion showed that global steel demand has been declining for the third year in a row, and many companies continue to struggle to maintain or restore profitability.

As for global steel demand in 2025, it may generally show a modest improvement, but there are a number of risks, such as macroeconomic and geopolitical uncertainty, the extent of the downturn in China and the worsening global overcapacity situation.

Currently, global overcapacity has reached crisis levels, leading to trade disruptions that have affected most steel-producing countries.

According to the statement, China’s net steel exports have increased to almost 100 million tons this year, which has caused significant market distortions. In particular, China’s subsidies to the steel industry are five times higher than in other non-OECD economies, and more than 10 times higher than in OECD countries.

At the same time, subsidies to the steel industry in non-OECD countries are 42% higher in the form of cash grants and 11 times higher in terms of borrowing than in OECD countries.

Many delegations noted that surges in steel imports affect their economies. The impact of unfair competition is significant and tangible: efficient steel mills in OECD countries have been forced to cut production, reduce capacity, and some have even shut down as a result of ongoing market distortions.

These consequences, the statement said, go far beyond the steel industry itself, affecting upstream and downstream production, threatening jobs and even climate mitigation efforts.

As a result of the meeting, members of the OECD Steel Committee, in particular, called for greater cooperation to counter trade remedy circumvention. The Committee will, among other things, develop new empirical tools to identify suspicious trade patterns and work to identify market-distorting subsidies.

As GMK Center reported earlier, the World Steel Association WorldSteel has downgraded its short-term forecast for global steel demand in 2024. The volumes are expected to decline by 0.9% compared to 2023 to 1.75 billion tons, while the previous forecast envisaged a 1.7% y/y increase – to 1.79 billion. At the same time, in 2025, global steel demand will grow by 1.2% y/y after three consecutive years of decline to 1.77 billion tons.