Background information
Overcapacity is a widespread, cyclical, and structural issue that arises in the course of global economic development. It is not an economic phenomenon unique to the steel industry but rather a common challenge faced by countries around the world. The causes of this problem are multifaceted. At the root of the current global overcapacity in the steel sector lies the global economic downturn triggered by the 2008 U.S. financial crisis, which led to a decline in steel demand. This consensus was also reached by leaders at the G20 Hangzhou Summit.
Development History
In December 2016, the Global Forum on Overcapacity in the Steel Industry was established, based on the consensus reached at the G20 Leaders’ Hangzhou Summit. As stipulated in the Hamburg Summit Communiqué of the G20, the Forum was expected to produce a substantive report—including specific policy recommendations—by November 2017, serving as a foundation for taking concrete and swift policy actions.
On November 30, 2017, local time, the Ministerial Meeting of the Global Forum on Steel Overcapacity was held in Berlin, Germany. At the meeting, participants reached a consensus on reducing excess capacity and will submit a policy recommendation report to the Group of Twenty.
On September 20, 2018, the second ministerial meeting of the Global Forum on Steel Overcapacity was held in Paris, France. At the meeting, the Chinese side pointed out that the root cause of this round of steel overcapacity is the global economic recession and the decline in steel demand triggered by the international financial crisis of 2008.
Existing members
The Global Forum on Steel Overcapacity includes the G20 members (China, Argentina, Australia, Brazil, Canada, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union) as well as 33 other OECD member countries that have expressed interest.
Forum Activities
At the press conference held after the conclusion of the 2017 Global Forum on Steel Overcapacity, German Economy Minister Brigitte Zypries stated that global challenges require global responses. The 33 members of the forum have reached a consensus on this report and will continue to work together in the future to explore appropriate countermeasures. Zypries specifically pointed out that China has clearly set a target to reduce excess steel capacity by 100 million to 150 million tons by 2020, and she expressed hope that all members of the forum will, in the future, independently adopt reduction targets for steel capacity that are as objective and sincere as China’s.
Li Chenggang, Assistant Minister of China’s Ministry of Commerce, attended the conference at the invitation of the German government, which holds the presidency of the forum. Li Chenggang stated that from 2014 to 2016, China reduced its steel production capacity by more than 120% of the global total reduction. To achieve this, China paid a tremendous price and overcame numerous difficulties. In 2016 alone, the steel industry re-employed 201,000 workers—more than the total number of steel-sector employees in the United States and Japan combined, and equivalent to 60% of the total steel-sector employment in Europe. China’s pioneering efforts to resolve excess steel production capacity reflect a conscious, proactive, firm, and sustained commitment—a necessity for its own development—and have also made an important contribution to the development of the global steel industry.
Meaning of the forum
All member countries of the forum are actively participating in a constructive manner, further strengthening information sharing and cooperation, proactively advancing the forum’s progress, and guiding the steel industry toward a healthy development trend, thereby contributing to the sound development of the global steel industry.