A global platform for dialogue and information-sharing should be established to tackle the steel crisis, a meeting of ministers from across the world has recommended.
To cope with plummeting prices and overcapacity, more investment in research and innovation is required, along with a reduction in production capacity. Governments also need to promote restructuring by developing long-term industrial strategies in collaboration with the steel industry.
The meeting in Brussels, organised by the OECD, included ministers, senior officials and private sector representatives from around 30 countries including China, Japan, Germany, India, the UK and the US.
Ensuring all countries adhere to the same trade rules and regulations and the need to establish an objective monitoring system were also discussed.
With the global steel industry in turmoil due to China’s dumping and a general oversupply, the price of iron ore has dropped tremendously from $135.4 a tonne in 2013 to $41.3 per tonne in January 2016.
The fallout of China’s economic restructuring, the move away from a manufacturing and credit-fueled growth model to one based more on the service sector and consumer spending, can be seen in the recent sale of the Tata Steel Plant at Port Talbot. US Steel has also announced that it will cut 750 jobs in America with more lay-offs expected at the company’s plants in Kosice, Slovakia.
At the meeting, the OECD reported that the industry’s capacity utilisation rate declined to 67.5% in 2015, from 70.9% in 2014, causing a significant drop in prices (nearly 20% in the past year) and hampering steel-based economies by a large margin. In addition, by the end of 2015 there was a 700m tonne global excess of steel, while new plants will increase production capacity by nearly 750m tonnes by 2018.