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Committee chairman Risaburo Nezu, said members of the Organisation for Economic Co-operation and Development steel committee – whose two-day Paris meeting wrapped up this afternoon – were especially concerned about government steel policies boosting excess capacity.
He said these included "government subsidies (notably subsidies for the creation of new capacity or the maintenance of inefficient capacities), continued approvals for new steel facilities, the manipulation of border measures, the activities of government financial agencies, and other government interventions".
Nezu said global steel consumption fell 0.8% year-on-year in the first quarter of 2014, having grown 9.3% in the third quarter and 8.7% in the fourth quarter of 2013, according to Commodity Research Unit analysts.
Global steel consumption growth stalled as Chinese steel demand moderated, he said.
Meanwhile, in advanced economies, industrial production – an important indicator of steel demand, said Nezu – increased by 3.1% year-on-year in the first two months of 2014 as Japan saw strong industrial activity.
"In emerging economies, the average yearly growth rate in industrial production [slowed] slightly, from 4.4% in the last quarter of 2013 to 4.1% in the first two months of 2014," said Mr Nezu.
Citing April 2014 forecasts from the World Steel Association (Worldsteel), he added that apparent steel use – deliveries of steel to market from domestic and exporting steel producers – is expected to increase by 3.1% in 2014 and by 3.3% in 2015, down from a growth rate of 3.6% in 2013.
In 2014, apparent steel use in developed economies should increase by 2.5%, marking a modest turnaround following the 0.3% demand contraction expected for 2013.
In emerging markets, apparent steel use growth is expected to slow to 3.2% in 2014, from 5.1% in 2013.
“Chinese steel consumption is expected to rise by 3% in 2014, down from a growth rate of 6.1% in 2013," he added.
Nezu said the global steel trade has "fluctuated significantly over the past few years".
“World export activity has nearly recovered from the financial crisis of several years ago, but the trade performance of individual economies has differed widely,” he said.
Some regions, traditionally large net importers of steel, are investing rapidly in new steelmaking capacity, [thereby] reducing demand for imports, he said, adding that steelmakers in many emerging economies are exporting more sophisticated products than in the past.
Members also discussed how certain measures continue to restrict steel trades "with potentially important implications for steel trade flows", such as increased tariffs, certain quota measures, imposing localisation barriers, and safeguarding measures.
In the case of steelmaking raw materials, members agreed that export controls needed to be reined in as such policies have become more prevalent in recent years.
Liberalisation would reduce distortions in raw materials markets and in broader steel markets, the committee said.
Prices of raw materials, iron ore, coking coal, and ferrous scrap have been falling since mid-2011 as Chinese steel demand has slowed compared with previous years. And Nezu warned that investments in increasing mining capacity for coking coal and iron ore “could potentially lead to excess supply in these markets".
The chairman added that the committee had discussed the "significant role" of state-owned enterprises and their potential to distort the steel market.
Participants discussed proposals for furthering the committee's work, including developing commonly agreed methods to measure capacity, examining information on policies that contribute to excess capacity – including support for individual investment projects – and a potential future event in the next two years.
Members agreed to continue gathering and sharing information about steel reform agendas and plans.
With the 21st session of the Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) taking place in Paris in late 2015, the steel committee also acknowledged that steel production is a "significant industrial contributor of global carbon dioxide emissions”.
However, Nezu added that the steel industry is "sensitive to cost disruptions linked to uneven climate change policies in different economies."
The OECD has 34 member countries – including most European nations, the USA, Japan and Australia – and is dedicated to global development and economic co-operation.
OECD concerns about global excess steelmaking capacity has intensified as its steel committee revealed that demand fell in the first-quarter after increasing throughout the second half of 2013.