G7 plans on addressing global steel glut

G7 nations are ready to address the slump in steel prices – which many have blamed on overcapacity by Chinese producers.

Leaders of the G7 nations (the United States, Canada France, Germany, Italy, Japan, and the United Kingdom) are set to meet later this month in Japan, and it appears the global glut in steel will be one of the main talking points, according to a draft text obtained by the news agency Reuters.

“We recognise the negative impact of global excess capacity across industrial sectors, especially steel, on our economies, trade and workers,” the draft said.

Tata Steel is pulling out of its UK operations, the main reason being “imports of Chinese steel, high energy costs and weak demand ”

“We are committed to moving quickly in taking steps to address this issue by enhancing market function, including through coordinated actions that identify and seek to eliminate such subsidies and support, and by encouraging adjustment.”

EU members were urged on Friday by France and Germany to implement tighter trade defences to protect European steel companies from cheap Chinese steel imports.

In fact, one of the main reasons Tata Steel decided to shut down its UK steel operations was the rise of cheap Chinese steel.

“In particular, we are concerned about subsidies and other support by governments and government-supported institutions that distort the market and contribute to global excess capacity, including such supports granted to overseas expansion of the capacity,” the G7 text added.