Today our International Trade Group published a report—the second edition of its kind—on the unprecedented level of overcapacity in the global steel industry, which is severely distorting the world market and threatening the viability of many steel producers worldwide. Since the first edition of Government Intervention and Overcapacity was released in July 2013, excess capacity has continued to grow. Today’s update is necessary, almost three years later, because the overcapacity crisis has reached alarming new heights.  Much of this capacity growth has resulted from government plans and policies in China, which holds nearly two-thirds of global overcapacity.  While purportedly intended to reduce capacity, Chinese government plans and policies actually have the opposite effect, encouraging the continued upgrading and expanding of unnecessary steel capacity.

In the United States, the effects of the overcapacity crisis are being felt most acutely in the form of record import levels, which are having severely injurious effects on the health of the U.S. steel industry. By the end of 2015, U.S. steel producers were utilizing less than 65 percent of their capacity, and they have been forced to lay off 12,000 workers over the past year. The U.S. steel industry cannot withstand these market conditions much longer.

Immediate action is required to reduce capacity, particularly in China, and to stem the significant adverse effects on steel producers around the world. Our report describes a number of actions that should be taken, including the immediate removal of 300-400 million tons of steelmaking capacity in China, as well as the elimination of subsidies and other forms of government interference in the steel industry. Unless immediate action is taken to reduce global overcapacity, the very viability of many steel industries around the world will be threatened.

To read our full updated report, please click here.