HANGZHOU, China (Reuters) - G20 leaders have pledged to work together to address excess steel capacity that has punished the global industry with low metal prices for years while raising tensions between China and other major producers.
A statement from the White House said that leaders at the G20 summit in Hangzhou, eastern China, on Monday accepted that overcapacity in steel and other industries is a global issue that requires a collective response.
Proposals for the formation of a global forum that would seek a global solution and report back to the G20 next year underscore the growing resolve to support a sector that has long been grappling with chronic oversupply and sluggish demand.
Global steel production fell last year for the first time since 2009, dipping 2.8 percent to 1.6 billion tonnes, with China accounting for half of the total.
But there is a long way to go if the industry is to make a serious dent in the 700 million tonnes of excess capacity.
Such a forum would be the first concrete action by world leaders to try to stem output, revive producers and end a trade brawl between China and other major steel producers, including the United States.
Speaking at the summit, British Prime Minister Theresa May said the G20 had decided to do more to tackle excess output, while Japanese Prime Minister Shinzo Abe urged leaders to address the issue.
European and U.S. leaders have pressed China to accelerate capacity cuts, blaming its big exports on slumping prices and accusing it of dumping cheap metal in foreign markets.
They have threatened sanctions or anti-dumping taxes on Chinese steel imports and criticized Beijing for providing subsidies, such as interest-free loans, to prop up state-owned companies.
China has promised to cut steel capacity by 45 million tonnes this year, though it said last month that it was behind on that target.
The steel industry welcomed the G20’s pledge of support but remained cautious, with executives in Europe and India agreeing that any taskforce requires China’s buy-in.
“Its success will depend on (China‘s) attitude,” said Jindal Steel & Power’s Chief Executive Ravi Uppal, adding that global production needs to be about 800 million tonnes.
“Anything more than that is going to create crisis.”
Indian steelmakers have lobbied for protectionist measures to prevent cheap overseas steel from undercutting local mills and squeezing margins.
European steel body Eurofer said it was “prudently positive” about the plan.
Additional reporting by Yawen Chen and Nicholas Heath in Beijing, Manolo Serapio in Manila and Eric Onstad in London; Writing by Josephine Mason in Beijing; Editing by David Goodman