Concerns are intensifying, amid new record levels of Chinese steel exports, over the displacement of businesses and workers in market-oriented economies, and existing and new lower-emissions projects being increasingly put on hold, concluded the OECD Steel Committee after its 98th session in Paris this week.
Non-market policies and practices by some countries are distorting steel prices, reducing the steel market shares of member countries, creating severe trade disruptions, and leading to national and economic security risks, the committee notes.
International steel market conditions have weakened since the Committee last met in spring, though the downturn is starting to moderate. Following three consecutive years of contraction from 2022 to 2024, global steel demand appears to be bottoming out in 2025, the Committee says, echoing worldsteel’s October short-range outlook.
Projections for 2026 indicate a modest recovery of just over 1%, which would return global demand to its 2022 level. While demand in China is expected to decline sharply, developed economies are poised for a gradual rebound, it adds.
“In China, while steel capacity replacement rules are being tightened, enforcement challenges raise questions regarding the possibility of further net capacity increases. At the same time, Chinese steel companies, including state-owned enterprises, continue to invest in steel projects overseas, especially in ASEAN and Africa,” Committee vice chairs Sheryl Groeneweg and Lieven Top note in a statement seen by Kallanish.
“The structural decline in Chinese steel demand is pushing its domestic steel producers to export record volumes of steel rather than undertake market-oriented reforms and remove such capacity, thereby reshaping international trade flows via different channels,” they add.
Responding to increasing trade measures, Chinese mills have expanded shipments of semi-finished and lower-value products, which are less exposed to such measures. This shift has allowed overall export volumes to remain elevated, while leaving less protected markets – particularly in Asia, Africa and Latin America – more vulnerable to displacement and price competition, the Committee continues.
Government support measures including market-distorting subsidies are increasingly prominent in regions where steelmaking capacity is rapidly expanding, such as in the Middle East and North Africa (MENA), China, and ASEAN, it adds.
“The Committee’s latest monitoring exercise shows that common channels of support in MENA include subsidised energy, tax and customs exemptions, concessional loans, preferential treatment of SOEs, preferential public procurement and local content requirements,” the Committee notes. “Such subsidies have significant adverse effects on members’ steel industries.”
Subsidised firms in non-member economies are increasing their market shares to the detriment of competitors in member countries, it adds.
Several announced projects, corresponding to 19% of the total expected lower-emission project pipeline until 2027, have meanwhile been put on hold amid trade policy shifts and worsening global excess capacity effects. Excess capacity is impairing the ability of companies to conduct the necessary research and development activities, slows their investment in the deployment of lower-carbon technologies at commercial scale, and hinders the development of markets for lower-carbon products, the Committee concludes.
Adam Smith Austria
