On October 8, 2024, the Global Forum on Steel Excess Capacity released alarming new data indicating a significant rise in global steel overcapacity. This situation, described as a "destructive dynamic" by the European Steel Association, poses a serious threat to the steel market and jobs across Europe. Axel Eggert, Director General of EUROFER, emphasized the need for immediate and comprehensive trade actions among GFSEC member countries to tackle this pressing issue.
The report revealed that global steel excess capacity is projected to reach 630 million metric tons by 2026, which is five times greater than the total crude steel production in the EU in 2023. This surplus of steel threatens not only the European market but also the overall economic stability of regions with open markets. The situation is exacerbated by countries that have withdrawn from the GFSEC and continue to export excess steel, contributing to market distortion and further jeopardizing European jobs.
Eggert criticized the idea of waiting for market forces to correct this imbalance, stating that the time for passive observation has ended. He called for a credible strategy that includes unilateral trade actions targeting the countries and products contributing to the overcapacity crisis. The existing open markets disproportionately benefit those nations that have not adhered to the principles of fair trade, allowing them to maintain their competitive edge despite global overcapacity.
The urgency of the situation is highlighted by the fact that while European steelmakers are investing billions of euros in decarbonization efforts, these investments are at risk of being undermined by the influx of excess steel. The carbon-intensive nature of this surplus not only distorts market prices but also threatens the EU's decarbonization goals. For every million metric tons of EU production capacity that is lost, an equivalent volume of steel imports floods the market, further complicating efforts to promote sustainability and innovation within the industry.
The GFSEC Ministerial Meeting served as a platform for discussing these challenges, with participants acknowledging the need for emergency actions to mitigate the spillover effects of global excess capacity. The focus is not only on immediate trade responses but also on finding structural solutions that address the underlying causes of overcapacity. As Eggert noted, the situation demands a concerted effort from all GFSEC countries to protect their domestic steel industries and safeguard employment.
In conclusion, the data from GFSEC underscores a critical moment for the global steel industry. With overcapacity threatening to destabilize markets and undermine years of investment in sustainable practices, the call for comprehensive trade actions has never been more urgent. The future of the steel industry in Europe and beyond hinges on the ability of GFSEC countries to unite and confront this challenge head-on.
