Countries must urgently address policies that are driving the continued expansion of steel excess capacity to prevent further erosion of market stability and fair competition in the steel industry, according to a new OECD report.
The OECD Steel Outlook 2025 shows that excess capacity is projected to rise to 721 million metric tonnes (mmt) by 2027, exceeding by around 290 mmt the combined steel production of OECD countries in 2024. This surge is being driven by continued capacity expansion, despite weak growth in global steel demand. High levels of subsidies and other policy distortions in several non-OECD economies are key drivers of this imbalance, posing risks to market stability, employment, supply chains and decarbonisation efforts.
Notably, China's steel subsidisation rate, as a percentage of firm revenues, is ten times higher than that of OECD countries. Chinese steel exports have more than doubled since 2020, reaching a record level of 118 million tonnes in 2024. This surge has disrupted steel markets in OECD economies, leading to a fivefold increase in anti-dumping measures since 2023.
These developments place considerable pressure on steel companies across OECD countries, with profitability falling to near historic lows. Employment has also been affected, with an estimated 113 000 jobs lost in the member countries of the Global Forum on Steel Excess Capacity (GFSEC) between 2013-21. Moreover, the ongoing imbalance threatens decarbonisation efforts, as 40% of projected new capacity additions between 2025 to 2027 are expected to rely on emission-intensive blast furnace/basic oxygen furnace (BF/BOF) processes, undermining investments in low-carbon technologies.
“The findings of the OECD Steel Outlook 2025 show there is an urgent need to address growing excess capacity, and the distortionary policies driving it, to ensure well-functioning global steel markets,” OECD Secretary-General Mathias Cormann said. “Through evidence-based dialogue and international co-operation, we can work towards restoring fair competition and a more efficient, sustainable steel sector worldwide.”
The OECD Steel Outlook calls for targeted international action in three key areas. First, structural reforms, with governments needing to eliminate market-distorting subsidies and support that fuel excess capacity. Second, enhanced transparency and greater disclosure of government support measures and capacity developments to help ensure effective international co-ordination and a level playing field. Third, international co-operation to accelerate the development and deployment of low-carbon technologies, including by tackling low-efficiency excess capacity and by sharing decarbonisation policy best practices.
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