World Steel Market Distorted Due to Subsidies Granted to Chinese Producers (OECD) - Global Market Disruption: OECD Accuses Chinese Steel Subsidies of Artificial Price Manipulation
Record High Steel Exports from China Disrupt Global Market
In a report released by the Organisation for Economic Co-operation and Development (OECD), China's escalating steel exports have been cited as a significant challenge for nations grappling with decreasing exports and surging imports. As the world's largest steel producer, China's domestic market has been impacted by a slump in real estate demand, pushing companies to aggressively penetrate overseas markets.
Export volumes of steel skyrocketed to a record-breaking 118 million tons in 2024, marking a staggering 100% increase since 2020. Simultaneously, imports plummeted by almost 80%, with statistics revealing a decrease to just 8.7 million tons. These findings have spawned concerns among nations struggling with their own exports, an issue raised in the OECD Steel Outlook 2025 report. For instance, steel imports in the European Union have risen by nearly 13% since 2020, while North American imports have swelled by a substantial 40%.
Amidst this global market disruption lies an escalating wave of trade restrictions aimed at curtailing unfair competition instigated by China's subsidized steel industry. In 2024, a total of 81 anti-dumping investigations were initiated by 19 governments, which represents a fivefold increase compared to 2023 data. Approximately one-third of these cases were linked to China. With tensions escalating, US President Donald Trump imposed a 25% tariff on all steel and aluminum imports in March 2024.
Confronted with weakening profitability and undermined fair competition, the OECD is advocating cooperation between countries to address excess capacity and the resulting market distortions. Without effective global intervention, steel producers will remain entrenched in unsustainable profitability, according to the OECD.
China’s steel industry benefits from subsidies at rates several times higher than their counterparts in OECD countries. This, in turn, contributes to the excess capacity and oversupply that drive downwards pressure on prices and reduce profitability for producers on a global scale. As a result, the steel sector has been characterized by falling profits and ensuing job losses across member countries. An estimated 113,000 jobs have been lost since 2013 in OECD countries due to the excess supply and its resulting price pressure.
Besides the economic implications, China's steel export surge complicates global efforts to decarbonize the steel industry. With approximately 40% of new capacity expected to rely on high-emission techniques, the OECD stresses that addressing excess capacity is essential to unlock investments in green steel production.
The OECD’s Global Forum on Steel Excess Capacity (GFSEC) continues to closely monitor the steel market, advocating for transparency and cooperation among nations in efforts to achieve a sustainable market. While the challenges remain daunting, concerted global action is critical for the creation of fair, stable, and sustainable steel markets worldwide.
- The escalating steel exports from China, as highlighted in the OECD Steel Outlook 2025 report, pose a significant challenge to employment policies in various industries, including the steel industry itself, due to the oversupply and downward pressure on prices.
- In light of the global market disruption caused by China's steel exports, the need for community policies to address excess capacity, decarbonization, and fair competition in the finance sector becomes increasingly crucial to ensure sustainable economic growth and employment opportunities.
