Talks over global agreement to safeguard domestic steel markets worldwide

Dec-06-2017 Post / talks-over-global-agreement-to-safeguard-domestic-steel-markets-worldwide

Members of the organization of economic cooperation and development are set to meet to deal with problems arising in steel markets due to oversupply issues. Representatives from India, China, South Africa, Argentina, the United States, Japan and other steel power centres are meeting to devise and draft an agreement at the Global Forum on Excess Steel Capacity.

The main agenda for this forum is to combat overproduction leading to oversupply in the global steel industry. There is also the demand for governments to stop supporting domestic steel firms that are underperforming, hoping to weed out a business that depends on subsidies and hand-outs to survive. The agreement is likely to propose that governments report on domestic production capacity and operational levels 3-4 times per year.

The main goal of the forum is to influence China to change its domestic policies that reward production leading to oversupply, while local governments provide copious subsidies to steel mills that face losses. Beijing has responded by signalling clear intent to lower steel capacity in the country by 100 to 150 tons by the year 2020. Mills that produce substandard steel would be shut down.

Global crude steel capacity grew over the past decade to touch 2.68 billion tonnes, while China produced 1.13 billion tonnes, almost half of the global capacity. Countries participating in the agreement are eager to show compliance despite the non-binding nature of the pact, as it seeks to benefit the domestic steel sector of each participant.