Subsidies and market share in the global steel industry

This paper examines how subsidies affect competitive outcomes in the global steel industry. Using firm-level data from the OECD MAGIC database covering 2006–2022, the analysis assesses the relationship between government support and market-share developments across steel producers worldwide. Econometric results indicate that subsidies increase recipients’ global market share at the expense of less-subsidised competitors. Firms receiving larger support through cash grants and below-market borrowings tend to gain market share even when they exhibit weaker productivity, cost efficiency and financial performance: subsidies weaken the normal link between firm performance and market-share gains. The analysis also identifies negative spill-overs on competing firms, implying that support granted to some producers can reduce rivals’ market shares and discourage investment by unsubsidised firms. The results are consistent across OECD Members and partner economies, although subsidisation levels are significantly higher in the latter and hence the dampening of market signals is even more pronounced there. Overall, the evidence suggests that subsidies contribute to resource misallocation, persistent steel excess capacity and shifts in global competitive positions. These findings highlight the importance of greater transparency in industrial support and stronger international cooperation to reduce distortions and support a more level playing field in the global steel sector.