Steel is an essential material used in virtually all manufacturing sectors and construction applications, and the steel sector plays an important role in connecting economies through its central position in global value chains. With more than 90 countries producing on aggregate more than 1.9 billion metric tonnes of crude steel in 2021, few challenges have more global impact than those facing the steel sector.
Excess steelmaking capacity creates significant difficulties for steel producers in advanced, emerging and developing economies alike. It depresses prices, undermines profitability, generates damaging trade distortions, jeopardizes the very existence of companies and branches across the world, creates regional imbalances, undermines the fight against environmental challenges and dangerously destabilizes world trading relations. It especially undermines income opportunities of employees.
Recognising the serious problem of excess capacity in the global steel industry, at their September 2016 summit in Hangzhou, G20 Leaders called for the formation of a Global Forum on Steel Excess Capacity (GFSEC) to increase information sharing and cooperation. As many countries have set objectives to lower carbon emissions, the GFSEC is also engaging in discussions on decarbonisation of the steel industry, given that this issue is closely intertwined with excess capacity. As noted in the 2021 GFSEC Ministerial report, reducing steel excess capacity is essential for improving the environmental performance of the steel industry.