G7 leaders urged to combat Chinese steel ‘over-production’

Steel Rolls - UK Steel
Chinese rebar dumped onto the UK market accounted for more than half the UK market of 720,000 tonnes in 2015.

Steel companies across the world are urging G7 leaders meeting in Japan to act together to prevent Chinese steel being dumped unfairly, distorting markets across the globe.

In a statement signed by steel trade groups from UK Steel in Britain; Europe; the US; Canada, and Japan, world leaders are warned that the current crisis will continue to put pressure on steelmakers with the potential for more plant closures without action to deal with the problem at source.

Gareth Stace, new director, UK Steel.
Gareth Stace, director, UK Steel.

Director of UK Steel, Gareth Stace commented: “Chinese government policies have contributed to significant global excess capacity in steel, unfair trade and distortions in steel trade flows around the world.

“If the G7 leaders fail to address or halt market distortions it will mean subsidised and state-supported enterprises surviving at the expense of efficient companies operating in environments with minimal government support.’

“That’s why we are urging leaders at the summit in Japan to discuss the need to maintain effective remedial measures, consistent with their World Trade Organisation rights and obligations, against exports from countries in which market economy conditions do not prevail.”

The statement in full:

Government support measures and other policies have contributed to significant global excess capacity in steel, unfair trade and distortions in steel trade flows around the world.

Among other things, these market-distorting government policies have prevented adequate industry adjustment in some markets in response to changes in global demand. This is an issue of concern in countries where government policies encourage steel capacity growth without regard to market signals, or where government actions sustain uneconomic or consistently loss-making steel plants that otherwise would exit the market.

Steel producers in the G7 nations, and elsewhere around the world, highly appreciate intergovernmental attempts so far to cope with the global overcapacity issue, and urge their governments to take urgent action to address this global problem, building upon the work program outlined by high-level government representatives in Brussels in mid-April to address the overcapacity and adjustment challenges facing the steel industry.

It is critical that all major steel-producing nations participate in efforts to eliminate trade-distorting policies that are contributing to the current steel crisis.  Otherwise, as was noted at the OECD Steel Committee meeting in May 2015, ‘a failure to address or halt market distortions will result in subsidised and state-supported enterprises surviving at the expense of efficient companies operating in environments with minimal government support.’

In this regard, we urge the G7 summit in Japan to discuss the need to maintain effective remedial measures, consistent with their WTO rights and obligations, against exports from countries in which market economy conditions do not prevail.