West alarmed as global steel capacity set to jump 165 mt by 2027

Anthony de Carvalho, steel division head at Organization for Economic Co-operation and Development (OECD), warns that the emergence of a significant difference between capacity and demand will contribute to financial stress for the industry, including the most efficient steelmakers. The global surplus steel capacity is set to rise from 602 mt in 2024 to 721 mt in 2027, Carvalho says.

Excess capacity of that size will inevitably lower the capacity utilisation rate to 70 per cent from 78–79 per cent now. This will make it a big challenge for steel mills everywhere to stay in the black. Carvalho says capacity growth is happening when China is expected to experience a further “appreciable decline” in steel demand, thanks to the continuing crisis in the house-building and construction sectors.

Steel requirements of the 38 member countries of the OECD will continue to stay “roughly constant”. Factoring in all this, the OECD thinks world steel demand will grow at a slow rate of 0.7 per cent through 2030. Whatever happens to steel demand in China or in developed economies, India, which is the world’s second-largest producer and user of steel, will remain the global industry’s brightest centre. India has not only remained the strongest driver of steel demand growth among all countries, but it is also making important strides in steel capacity building