PARIS A key economic figure is pessimistic about the global steel sectors ability to reduce overcapacity.
"The prospects for excess capacity are quite bleak. Its difficult for markets to grow (their) way out of excess capacity, especially under demand and growth currently expected for the future," Anthony de Carvalho, senior economist for the Organization for Economic Cooperation and Developments (OECDs) steel committee, told AMM sister publication Steel First after a meeting in Paris, which wrapped up July 2.
"It might be a medium-term problem that affects the viability of the steel industry," he warned, noting that while China accounts for a very large share of the excess capacity other OECD economies also have problems. "This is why the committee is an important forum for multilateral discussions: to help countries realize this is a global problem. It really is a global perspective."
Participating countries are eager for the committee to continue examining this issue, which is almost certain to be discussed at future meetings, de Carvalho said, adding that excess capacity could also affect the availability of raw materials for steelmaking in the future. "Markets could move into significant excess supply given the large extent of investment and given relatively weak demand coming from the steel industry."
The OECD committee gave countries an opportunity to share past experiences regarding excess capacity, including how the United States restructured its steel industry to deal with new market conditions.
"We have a lot of non-OECD membersemerging economies that participate in the steel committeeinterested in how countries have dealt with this in the past," de Carvalho said, stressing that cooperation between OECD and non-OECD members in these discussions is an important step forward. "This is a positive developmentmost countries recognize that there is a problem."
A version of this article was first published in AMM sister publication Steel First.