The debate on steel subsidies and government support (henceforth, “subsidies”) often focuses on their potential negative impact on well-functioning markets. Subsidies can lead to global excess capacity and distort trade by encouraging some steel firms to maintain higher levels of capacity and production, resulting in lower prices and unfair competition for non-subsidised firms. They may also incentivise investment and capacity expansions that are not in line with steel market conditions, as highlighted in the OECD Steel Outlook (OECD, 2025[2]).
Concerns about subsidies provided to steelmakers relate essentially to two issues. First, many concerns relate to the level playing field among steel producers worldwide, both from an international perspective and from a domestic perspective. Internationally, those issues give rise to trade frictions and trade disputes and can trigger “tit-for-tat” behaviour that can have ripple effects on other sectors of the economy. Subsidies can distort market signals both domestically and internationally, allowing inefficient producers to continue operating and depressing global steel prices. This concern links to the question of access to subsidies and which criteria and processes are used by subsidy providers to select subsidy recipients.
A second set of concerns is where subsidies help maintain legacy capacity or build additional new capacity, which would exacerbate the global excess capacity issue, distort trade, depress prices in the long term and endanger the financial viability of non-beneficiary firms (OECD, 2025[2]). Furthermore, even subsidies that do not contribute to the installation or maintenance of crude steelmaking capacity may still distort the level playing field, for example by allowing beneficiary firms to increase their market share.
This report complements (Mercier, 2024[1]) and (Mercier and Giua, 2023[3]) to shed further light on both concerns mentioned above by using a new confidential OECD database on government support and subsidies, the OECD MAnufacturing Groups and Industrial Corporations (MAGIC) database. In doing so, the report seeks to help answer the following two questions:
What are the main drivers of subsidies to steel firms, and which firms’ characteristics correlate with their receiving larger subsidies?
What are the impacts of each type of subsidy – in particular, cash grants and BMB, which are systematically quantified in the OECD MAGIC database – on a steel firm’s crude steelmaking capacity?
Section 3 shows that subsidies are pervasive across all economies, but very unequally distributed across time, jurisdictions, and firms. Section 3 explores the factors that seem to drive the provision of subsidies to steel firms, including their ownership status. Section 5 assesses the impact of cash grants and BMB on steel firms’ crude steelmaking capacity in a multivariate regression setting, and Section 5 discusses the policy implications of the report’s overall findings.