YORK As much as 70 percent of todays global steel
industry is owned by government entities, distorting the basic
fundamentals of a market-driven economy and leading to massive
structural oversupply on a worldwide scale, according to Nucor
Corp. executive chairman Daniel R. DiMicco.
"One of the greatest
banes of our industry for a long, long
timedecadeshas been state-owned steel industries.
Theyre not market driven; theyre politically
driven. ... And politically driven translates to massive
overcapacity," DiMicco said in a keynote address at the Steel
Success Strategies XXVIII conference in New York, sponsored by
AMM and World Steel Dynamics Inc., Englewood Cliffs,
Between 65 and 70
percent of the global steel sector is controlled by state or
national governments, he said, noting that such state-owned
steelmaking companies are neither low-cost nor market driven,
resulting in a glut of subsidized capacity with no home but the
world export market.
"Unfortunately, we in
the United States are the worlds dumping ground,
including for rebar and for other products," DiMicco said.
Organization for Economic Cooperation and Development (OECD)
estimates, there is global demand for about 1.5 billion tonnes
of steel per year, but thats far below the 2.1 billion to
2.3 billion tonnes of capacity fighting to supply that demand,
Much of that
overcapacity is coming from China, but Turkey and other major
steelmaking nations relying on a major export strategy are also
to blame, DiMicco said.
"No nation should
build 300 million tonnes of excess capacity they dont
need, no matter what your growth trajectory is, particularly
when you can build steel mills as fast as (the Chinese) can.
This shouldnt be the case anywhere in the world. A
developing nation? Yes, build a steel industry. But dont
build one that depends on exports to survive," he said.
"Build it to create
jobs in your country (and) drive economic growth internally,
but dont be building it so you export 20 million of 35
million tonnes of your production. Thats ridiculous,"
DiMicco said, citing estimated export figures from Turkey.
"That is basically flaunting and making a laughing stock out of
the concept of market-driven economies and free trade."
The solution, he said,
is going to require pressure from the global steel sector and
key governments around the world.
"To get ourselves out
of this mess ... its going to take enlightened
leadership. Its going to take a global community that
says enough is enough. The distortions are too great; its
time to correct (it)," he said.
to the global steel sector is clear: "Stop exporting your
overcapacity. Theres too much in the world. Take your
medicine at home (and) get rid of your antiquated, excess
capacity of which there are hundreds of millions of
"The challenge in
particular for China is youve done great things.
Youve done things that no other country in the world has
done. A lot of good things, miraculous things in what
youve built. But youve overdone it," he added.
"Please get your act together and become part of the global
community in a non-threatening way."