Forecast lower global economic growth in 2019-2020, trade policy tensions and falling investment have dimmed the steel market outlook, the OECD’s steel committee said last week.
Declining steel prices and higher raw material costs have squeezed margins, as crude steel production continued to rise in the first half of 2019.
Steel capacity is poised to rise again this year, exacerbating oversupply, with the gap between capacity and production widening to 440mn t/yr in January-June. The OECD expects global capacity to increase by 2-3pc in 2020-22.
Meanwhile, global steel trade is falling, contracting by 2.6mn t on the year in the first quarter, following a 5.2pc drop for the whole of 2018.
The OECD highlighted its concern over cross-border investment by state-run enterprises, citing implications for capacity expansions. And the committee called for the removal of subsidies, noting that these prevent inefficient mills from exiting the market.