The governments of the United States, Canada and Mexico are increasingly alarmed by the deteriorating conditions of their domestic steel industries due the overcapacity of steelmaking in the global market.
The governments of the United States, Canada and Mexico are increasingly alarmed by the deteriorating conditions of their domestic steel industries due the overcapacity of steelmaking in the global market.
The North American Steel Trade Committee pointed out that despite weakening worldwide steel demand, production is expected to increase through 2017 to 2,420 million metric tons, which it noted was being driven by China’s unbridled steel manufacturing industry.
“North America, which experienced modest growth in steel demand over the past two years, saw steel production decline while the volume of non-NAFTA finished imports increased dramatically over 40 percent in 2014 and 2015 compared to 2012 and 2013 levels,” said the U.S. Commerce Department’s International Trade Administration, in a statement.
Imports represented 22 percent of regional finished steel demand in 2015, up from 21 percent in 2014 and 16 percent in 2013. Exports from the three North American countries fell 19 percent in 2015 from 2014 levels. “The region’s steel industries are experiencing decreased profitability and thousands of job losses,” the Commerce agency warned.
The U.S., Canadian and Mexican governments said they support efforts by the Organization for Economic Cooperation and Development Steel Committee’s efforts to possibly adopt policies to address the excess capacity situation.
The American Institute for International Steel noted the problem is that most of China’s steelmaking industry is composed of state-owned enterprises (SOEs), which it said is “fueling the current global glut” in steel production.
“The April 10, 2016 confirmation by the vice head of China’s Industry Ministry that despite recent production cutbacks China will still have at least 400 million tons of excess steel capacity by 2020—a number that exceeds the combined 2014 steel production of the United States, the European Union, Canada, and Mexico,” AIIS said.
“SOEs are among the most pernicious of all trade barriers because they make real market competition all but impossible,” the trade group added. “Accordingly, we strongly urge the United States government to not assent to market economy status for China until we see substantial progress toward securing binding disciplines on trade-distorting SOEs in steel.”
North American steel trade in trouble
