OECD’s Latest Report on Global Steel Overcapacity: A Clear Warning for the EU
On April 2, 2025, the Organisation for Economic Co-operation and Development released its latest data regarding global steel overcapacity at a meeting held in Paris. The report highlighted a growing and unsustainable issue in the global steel market, projecting that the global overcapacity in steel production, which stood at 602 million metric tons in 2024, would increase to an alarming 721 million metric tons by 2027. This represents an increase of over 19% in just three years, creating a dire outlook for steel producers worldwide.
The scale of this problem is especially worrying for the European Union, where the steel industry already faces significant challenges. The EU's total steel production capacity is just over 140 million metric tons annually, meaning that global overcapacity will exceed more than five times the EU’s entire steel output by 2027. This overproduction, which is largely concentrated in countries with extensive state subsidies and lax environmental regulations, threatens to flood the European market with cheap steel, pushing local producers into an even more precarious position.
EUROFER’s Urgent Call for Action: Post-Safeguard Measures Are Vital
In response to the OECD's findings, Axel Eggert, the Director General of EUROFER, emphasized the critical need for stronger post-safeguard measures within the European Union. He pointed out that the global overcapacity issue is not a new one, but the latest data confirmed that it is only worsening. He remarked, “The trends illustrated by the OECD prove that the global steel overcapacity problem not only remains unsolved but it’s constantly and significantly worsening.”
EUROFER has long been a vocal advocate for stronger trade protection measures to ensure that the EU steel sector is not undermined by unfair competition. According to Eggert, the current safeguards imposed by the EU, such as import quotas and tariffs, are increasingly ineffective in addressing the growing imbalance between steel imports and actual demand in the European market. While the EU’s safeguards initially helped limit the influx of cheap steel, they have proven to be insufficient as global overcapacity continues to rise.
The Impact of Global Steel Overcapacity on the European Market
The global overcapacity in steel production is primarily driven by countries like China, Japan, South Korea, Vietnam, and Indonesia, where government subsidies and other trade-distorting practices encourage excessive steel production. These countries often produce steel in volumes that far exceed their domestic demand, leading to massive surpluses that are dumped onto the global market at artificially low prices.
In Europe, these practices have put immense pressure on domestic steel producers who are unable to compete with the low-cost steel flooding into their markets. This situation is further exacerbated by the U.S. steel tariffs, which have diverted more steel into European markets as producers attempt to find new places to sell their excess production. As a result, European steel producers have faced rising imports that undermine their profitability and market share.
This excess steel entering the EU has caused a significant downturn in prices, making it difficult for European producers to maintain competitiveness. Additionally, the influx of cheap steel has resulted in job losses and plant closures, particularly in regions that are heavily dependent on the steel industry.
The EU's Safeguard Measures: Inadequate and Outdated
The European Union’s safeguards were introduced in 2018 in response to a surge in steel imports following the U.S. Section 232 tariffs, which placed heavy duties on steel imports from a wide range of countries. These safeguards aimed to limit the volume of steel entering the EU by imposing import quotas and tariffs on steel products from non-EU countries.
While these measures initially helped reduce the impact of overcapacity, they have become increasingly ineffective as global steel production continues to surge. The OECD’s projection of a 19% increase in global overcapacity from 2024 to 2027 demonstrates that the problem is not just persisting but worsening. The EU’s current import quotas do not adequately account for this growing overcapacity, and as a result, they allow for excessive amounts of steel to enter the EU market, further undermining European steel producers.
EUROFER has expressed deep concern that the current safeguards fail to address the broader issue of global overcapacity, which is driving up steel imports and reducing the competitiveness of European steel manufacturers. The gap between steel imports and demand in the EU has grown wider, and this disconnection cannot be solved by the existing safeguard measures alone.
The Need for Stronger Post-Safeguard Measures: A Call for Action from the European Commission
In light of these developments, Axel Eggert called for the European Commission to take decisive action and implement stronger post-safeguard trade measures. EUROFER has proposed a range of solutions, including:
• Stricter Import Controls: Ensuring that only steel products that genuinely meet demand are allowed to enter the EU market, and that imports from countries with excessive overcapacity are more tightly restricted.
• Tariff Adjustments: Imposing higher tariffs on steel products from countries with significant overcapacity to prevent dumping practices that undercut the European market.
• Environmental Standards: Strengthening the environmental standards for imported steel to ensure that it is produced sustainably and does not undermine European efforts to meet carbon neutrality goals.
• Permanent Trade Defense Measures: Moving beyond temporary safeguards to create permanent trade defense measures that are more flexible and responsive to changes in global market conditions.
Eggert stressed that these measures must be implemented urgently to protect the European steel industry, which is facing an existential threat from global overcapacity and unfair trade practices. He said, “The European Commission must now walk the talk and deliver as soon as possible on a post-safeguard trade measure with a highly effective level of protection as envisaged in the European Steel and Metals Action Plan.”
The Future of the EU Steel Industry: A Critical Crossroads
The EU steel industry stands at a critical crossroads, with global overcapacity posing an existential threat to its survival. As countries with massive steel overproduction continue to flood international markets, European steel producers must compete not only with unfairly priced imports but also with the environmental and regulatory advantages that some of their competitors enjoy.
The future of the EU steel industry depends on the swift implementation of stronger trade measures that will level the playing field. If the European Commission fails to act decisively, it could lead to further plant closures, job losses, and a dramatic reduction in the EU’s steel production capacity. On the other hand, by implementing stronger post-safeguard measures, the EU can protect its steel sector, safeguard thousands of jobs, and ensure that it remains a global leader in sustainable steel production.
The EU’s steel industry is facing one of its greatest challenges, and the outcome of this battle will determine whether Europe can maintain a competitive and sustainable steel sector in the years to come.
Key Takeaways:
• Global steel overcapacity is projected to rise from 602 million metric tons in 2024 to 721 million metric tons by 2027, posing a significant threat to the EU steel industry.
• EUROFER calls for stronger post-safeguard measures to protect the European steel market from unfair competition caused by global overcapacity.
• Current EU safeguards are increasingly ineffective in addressing the growing imbalance between steel imports and actual demand in the European market.
• The EU steel industry is already suffering from the effects of overcapacity, U.S. import tariffs, and unfair trade practices from countries like China, Japan, and South Korea.
• Stronger trade defense measures are urgently needed to protect the European steel sector, including stricter import controls and higher tariffs on steel from overcapacity countries.
• The European Commission must act quickly to implement post-safeguard measures in line with the European Steel and Metals Action Plan to safeguard the future of the EU steel industry.
• The outcome of these trade measures will be crucial for the long-term survival and competitiveness of the European steel industry, which faces an existential threat from global overcapacity.
