Issue 37, 2023 - This week's editorial: OECD sees global steel market weakness increasing amid Chinese slowdown

The OECD Steel Committee expressed grave concern this week about the deterioration in global steel market conditions currently being driven by growing overcapacity, softening demand for steel, and government interventions in some economies.

The gradual recovery in global steel market conditions that began earlier this year was shortlived, with China’s post Covid-19 economic rebound not living up to expectations. The latest data points to renewed weakness in steel market conditions. Demand is starting to falter amid growing concerns over China’s real estate crisis and the impact this will have in international steel markets, the committee chair summarised after the 94th session.

Five consecutive years of global steelmaking capacity growth have led to burgeoning overinvestment in the industry, with most of this concentrated in BF/BOF steel production routes. World steelmaking capacity is swelling to a record-high level of 2.5 billion tonnes in 2023, far in excess of steel demand prospects, according to the OECD. The organisation projects global capacity to surge by 56mt in 2023 alone, taking the gap between global capacity and steel production to 612mt.

“In China, land-use rights, cash grants, cash awards, tax breaks and reduced tax rates are commonly provided by local governments to steel firms to incentivise them to relocate to other regions, modernise their equipment and increase the concentration of the domestic steel industry. This is strengthening ‘national champions’ with considerable global reach that are investing abroad and securing raw material sources and technologies, including through joint ventures,” the OECD chair observes.

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