The Global Forum on Steel Excess Capacity (GFSEC) has warned of a growing crisis in the steel industry caused by surging excess capacity and has urged immediate reforms to prevent declining profitability, job losses and unmanageable output.
The forum highlighted that government subsidies in certain countries, particularly China, are leading to overproduction, resulting in cheaper exports that undermine competitive producers.
China has doubled its exports since 2020, significantly affecting markets worldwide. Excess capacity has not only weakened domestic steel markets but has also led to falling capacity utilisation rates, which have dropped by more than 8 percentage points since 2016 in GFSEC countries.
This oversupply has resulted in lower industry profits and job losses, with 134,000-190,000 jobs lost in GFSEC member economies over the past decade.
Ministers at the forum, referring to Chinese policies and regulations, predicted that overcapacity, which reached 551mn t last year, is set to rise to 630mn t by 2026 if it continues to be fuelled by non-market policies and government subsidies, thereby severely distorting global supply and demand.
This growing imbalance threatens the industry's economic stability, hampering steel producers' ability to invest in green technologies and comply with stricter environmental regulations.
Ministers reiterated their commitment to the Berlin Principles, calling for greater transparency, market-based reforms and collaboration to address the root causes of excess capacity.
European steel association Eurofer, which supports GFSEC policies, insists that the issue be addressed urgently. Projected excess capacity in 2026 is equivalent to five times the EU's crude steel output last year, it said.
"We need a credible strategy focusing on concrete actions that GFSEC countries can take, including unilateral trade actions," Eurofer director general Axel Eggert said. "Persisting in keeping markets open only benefits those countries that withdrew from the Global Forum and those that continue to export excess steel, either in reaction to disruptive import surges or in denial of their own overcapacity."
"For every million tonnes of lost EU production capacity, an equivalent volume of imports floods our market," he added.
