OECD Warns Global Steel Crisis to Persist Through Coming Years

(MENAFN) The Organization for Economic Cooperation and Development (OECD) announced on Tuesday that challenges facing the global steel sector are expected to linger through 2025 and beyond.

Despite projections indicating steel production capacity will expand by approximately 6.7% between 2025 and 2027, the OECD’s Steel Outlook 2025 report warns that capacity utilization rates may decline due to escalating competition from Asian producers.

"With demand growth expected to be sluggish at best, capacity utilization could once again decline towards 70%, putting enormous pressure on even highly competitive steelmakers," the report highlights.

The OECD pointed out significant disparities in competitive environments worldwide, with some governments actively intervening to promote industrial growth. These interventions include policies designed to bolster domestic steel production, lessen reliance on imports, and support downstream industries with higher value-added manufacturing.

The report reveals, "China’s subsidization rate is ten times that of OECD countries. In addition to below-market borrowings, measures include subsidized energy prices, direct grants and preferential tax treatment."

Rising concerns over inexpensive exports from ASEAN countries have led governments globally to take defensive actions, especially as China’s steel exports hit a record 118 million tons in 2024.

In response, nineteen countries launched a total of 81 antidumping probes targeting steel products last year—nearly matching the peak levels seen during the 2016 steel crisis and multiplying fivefold compared to 2023. Asian producers were the focus of almost 80% of these investigations, with China alone responsible for over one-third.

Beyond tackling specific dumping cases, more nations are now imposing broader measures, such as increasing steel tariffs across the board, to protect their domestic industries.

"Steel producers subject to trade measures often seek to ease the impact by shifting their exports to other markets with no or less restrictive trade measures or exploring ways to circumvent them," the OECD noted.

The report underscores that the flood of low-cost steel exports from China has unsettled global markets, fueling escalating trade disputes likely to endure amid weak market expansion and rising capacity.

"Efforts to address the root causes and consequences of the structural imbalance between global capacity and demand need to intensify to avoid further deterioration of the situation over the longer term. In the meantime, affected countries will benefit from working together to share data, knowledge and experiences to help mitigate the devastating impacts of global steel excess capacity on their economies," it concluded.

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