Steel-Glut Challenge Shown as China Shuns Global Statement

  • Chinese government declines to sign capacity-cuts declaration
  • EU, U.S., Japan, Canada among signatories after Brussels talks

China declined to add its name to an international statement on actions needed to tackle the steel glut in a sign of the obstacles to balancing a market dominated by Chinese mills.

Representatives of the European Union, the U.S., Japan, Canada, Mexico, South Korea, Switzerland and Turkey issued a statement on steel-market overcapacity after meeting this week in Brussels. China, which is the world’s No. 1 steel-producing country and took part in the April 18 gathering, isn’t among the signatories, according to the European Commission, the 28-nation EU’s executive arm.

“The restructuring that needs to take place in the steel industry should be market-driven, with production and trade flows reflecting the market-based competitive positions of steel producers,” the group of signatories said in a statement released by the commission on Wednesday in Brussels.

Steel-trade tensions are rising worldwide as a result of a flood of exports by China, which accounts for about half of global production and last year posted its slowest economic growth in more than two decades. This has raised the threat of more tariffs on Chinese steel shipments.

State Aid

The signatories to the Brussels statement signaled a need to curtail state aid to steel manufacturers, saying steps that could be taken to help balance the global market include ensuring “governments and government-supported institutions do not provide subsidies or other support that sustain uneconomic or consistently loss-making steel plants, encourage investment in additional steelmaking capacity which would otherwise not be built, or otherwise distort competition.”

A press official at the Brussels-based Chinese mission to the EU couldn’t immediately be reached by phone and e-mail for comment.

While China pledged in January to cut steel output by as much as 150 million metric tons, or about 18 percent of its annual production, the EU said two days ago that the Chinese authorities must do more to tackle the oversupply.

“China has announced reforms to the sector, which we consider a promising step if implemented in a reasonable period of time,” EU Trade Commissioner Cecilia Malmstroem said on April 18. “But the reforms announced are probably not enough alone.”

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