Continuation of Global Forum on Steel Excess Capacity a pre-condition to intensified battle against trade distorting overcapacity
With the Global Forum on Steel Excess Capacity (GFSEC) having been reactivated, the European Steel Association (EUROFER) has called for an intensification of its ongoing work. The GFSEC is a key forum to establish the transparency necessary to map global overcapacity – a pre-condition to facilitate capacity reductions globally.
“The EU steel industry had already reduced its steel capacity by over 22 million tonnes during the past ten years while at the same time other regions continued to install new, export-oriented capacity that the world simply does not need. EUROFER had therefore, been calling for the government-led Global Forum to be extended, as its mandate had come close to expiring. The vast majority of participating countries agreed and had also asked for it to be relaunched. We are glad that the work of the GFSEC is to continue”, said Axel Eggert, Director General of EUROFER.
At the Global Forum’s stakeholder consultation on 7 July, representatives of the worldwide steel industry explained to governments the impact of the COVID-19 on steel sectors and formulated clear recommendations to intensify the ongoing work of the Global Forum. The formal GFSEC meeting between members is taking place on 8-9 July 2020.
Both developed and developing economies are experiencing severe demand depressions ranging between 10 to 11% as a result of the pandemic. The crisis has caused the sharpest drop in steel demand since the global financial crisis. The expected global fall in steel demand is 6% for the year, with sharp drops during the ‘lockdown’ being contrasted with a more tentative recovery.
“The EU market was hit much more severely by the crisis, following already weak market conditions in 2019”, said Mr Eggert. “As a result of the sudden collapse in EU steel demand, EU steel production has been cut drastically, by about 28% from mid-March to date, while at the same time cheap offers at our borders are depressing prices jeopardising any sustainable recovery.”
“The depression in demand has worsened the existing problem of global excess capacity, particularly as some regions continued to increase production, notably China,”, added Mr Eggert. “EUROFER, together with regional steel industries are calling on governments to intensify the ongoing work of the GFSEC, as its work is becoming more important than ever”.
“Transparency in addressing capacity-related subsidisation and support measures should remain the policy focus of the Forum. China should come back to the table. Moreover, we ask for intensive monitoring of the evolving situation of global overcapacity in light of demand per region”, said Mr Eggert. “Only if the global steel industry has reliable statistics on capacity and demand can informed investment and closure decisions be made”.
The Global Forum on Steel Excess Capacity was formally established on 16 December 2016 in Berlin. The Global Forum brings together G20 members and interested OECD members, that represented around 90% of global steel production and capacity until China stepped out of the Forum at the end of 2019. China represents over 50% of the globe’s steel capacity and production. The Global Forum meeting was on 8-9 July 2020, with steel stakeholders meeting earlier this week, on 7 July.
Source: European Steel Association AISBL (EUROFER)