THE Organisation for Economic Cooperation and Development (OECD) on Tuesday expressed deep concern over the deterioration in steel market conditions related to the COVID-19 crisis, and agreed to accelerate work to build a comprehensive database of government support provided to steel producers in major steel-producing economies.

During their virtual four-day meeting, the OECD Steel Committee said the pandemic had had accelerated the decline in global trade of steel, with a sharp downturn in exports in the second and third quarters of 2020.

Committee Chair Mr Ulf Zumkley said the slump in demand for steel has taken place amid increases in steelmaking capacity, which may not reflect market fundamentals.

The members also reiterated the need for capacity reductions, including by facilitating the exit of inefficient producers in relevant countries while supporting workers affected by plant closures. It was noted that government subsidies and other support measures and interventions had also led to distortions in steel trade flows and contributed to trade tensions.

The latest OECD data show that global steelmaking capacity increased to 2,453.2 million tonne in 2020, and the gap between global capacity and production widened to 625.4 million tonne.

Moreover, global demand is likely to only partially recover in the near term, with the level of demand for finished steel in 2021 expected to remain below pre-pandemic levels in most countries.

The Steel Committee discussed the state of its work on building a database of subsidies in the steel sector. Members agreed to resume collecting subsidy data on the world’s largest steel producing jurisdictions, including those where recent data on increasing production has raised concerns about potential government support.

This marks a further step towards improving transparency on support measures and will feed into future work examining the impact of these measures on global steel markets, said the OECD.