OECD Steel Committee Warns Potential Overcapacity

Organisation for Economic Cooperation and Development’s steel committee warns steel making capacity could exceed demand level significantly when the steel making capacity would expand mainly in emerging countries through 2010, after the 66th meeting in Paris. Delegations from Europe and USA showed concern on Chinese overcapacity when China expands the capacity more than shutdown of old and inefficient facility. The committee members agreed to study potential monitoring for the overcapacity.

The committee also watches protectionism to avoid potential trade war when many countries impose trade restriction including antidumping duty, higher import tariff and buy national products campaign. The committee continues the monitoring and discussion to improve the trade condition.

The committee couldn’t agree for monitoring for subsidiary on research and development activity. Japanese government opposed to such monitoring when government support is critical to enforce technology development for environmental friendly actions including carbon dioxide reduction.

The committee expects steel demand could take around 3 years to recover 2007 level. The committee expects the demand wouldn’t recover until end of 2009 and the recover could be late 2010 depending on the economy condition.