ISTANBUL

The Organization for Economic Cooperation and Development (OECD) stated Tuesday that the difficulties in the global steel industry are likely to continue in 2025 and thereafter.

Although the steel industry's capacity growth is expected to be around 6.7% from 2025 to 2027, the capacity utilization might fall due to intensifying competition from Asia, OECD said in its Steel Outlook 2025 report.

"With demand growth expected to be sluggish at best, capacity utilization could once again decline towards 70%, putting enormous pressure on even highly competitive steelmakers," it noted.

The organization said the competition in the steel industry is not level across countries as some governments intervene heavily with policies aimed at promoting industrialization, strengthening and/or expanding the domestic steel industry, reducing steel import dependency and/or indirectly supporting downstream manufacturing in higher value-added activities.

"China’s subsidization rate is ten times that of OECD countries. In addition to below-market borrowings, measures include subsidized energy prices, direct grants and preferential tax treatment," the report said.

Governments across the globe felt pressures due to ASEAN nation's low-priced exports and took measures to protect their export shares, as China's steel exports surged to a record high of 118 million tons in 2024.

Nineteen nations launched 81 antidumping investigations involving steel goods in 2024, which is close to the 2016 steel crisis level and five times more than the 2023 level. Nearly 80% of the charges were brought against Asian producers, with China alone accounting for over one-third of the cases.

Apart from examples of product-specific dumping, an increasing number of nations have implemented more comprehensive steps to safeguard their steel sectors by raising steel tariffs across the board.

"Steel producers subject to trade measures often seek to ease the impact by shifting their exports to other markets with no or less restrictive trade measures or exploring ways to circumvent them," it said.

The report emphasized that the surge in exports of low-priced steel from China has disrupted international markets, resulting in growing trade tensions that seem likely to persist in the near term in light of slow market growth and increased capacity.

"Efforts to address the root causes and consequences of the structural imbalance between global capacity and demand need to intensify to avoid further deterioration of the situation over the longer term. In the meantime, affected countries will benefit from working together to share data, knowledge and experiences to help mitigate the devastating impacts of global steel excess capacity on their economies," the report added.