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North American Governments Call for Effective and Immediate Commitments to Address Global Steel Excess Capacity

April 11, 2016

Mexico City, Mexico – Citing the dramatically worsening steel market situation in all three countries, the governments of Canada, Mexico and the United States agree on the need for governments of all major steel-producing countries to make strong and immediate commitments to address the problem of global excess steelmaking capacity. 

Officials of Canada, Mexico and the United States, along with North American steel company representatives, met in Mexico City on March 31 – April 1, for the North American Steel Trade Committee, where they reviewed the current market situation and discussed options for addressing the excess steel capacity situation.

Globally, excess steel capacity has more than doubled from 2000 to 2014, led by unsustainable expansion in capacity by China.  At a time when steel demand is weakening worldwide, global steelmaking capacity is expected to grow through 2017 to 2,420 million metric tons. North America, which experienced modest growth in steel demand over the past two years, saw steel production decline while the volume of non-NAFTA finished imports increased dramatically over 40 percent in 2014 and 2015 compared to 2012 and 2013 levels.  Imports represented 22 percent of regional finished steel demand in 2015, up from 21 percent in 2014 and 16 percent in 2013.  Exports from the three countries declined 19 percent in 2015 from 2014 levels.  The region’s steel industries are experiencing decreased profitability and thousands of job losses. 

The three North American governments support efforts by the Organization for Economic Cooperation and Development (OECD)’s Steel Committee to arrange a high—level meeting on steel, hosted by the Government of Belgium, on April 18, which will assess the situation and adopt policy approaches to address the excess capacity situation.  In recent years, this Committee has undertaken useful analytical work and facilitated inter-governmental policy dialogue in this area, helping to clarify the magnitude of the excess capacity problems and its leading causes.  Canada, Mexico and the United States agreed on the value of the high-level meeting to lay the groundwork to restore a healthy global steel market and reduce government-led distortions in the steel sector.  This includes working towards robust commitments by governments to curtail government subsidies and other supports that artificially maintain or increase steelmaking capacity and to reduce uneconomic excess capacity.