UK Steel warns that without trade policy action, the steel sector will sink under global excess capacity. 

Members of the OECD (Organisation for Economic Co-operation and Development) Steel Committee and Global Forum on Steel Excess Capacity (GFSEC) gathered in Paris last week to discuss the developments and to identify solutions.

China’s steel subsidies are more than ten times higher than OECD countries

The structural decline in Chinese demand is a key driver. Chinese net exports are expected to surge to 100 million tonnes (Mt) this year. But the issue is much wider than China: subsidies and preferential access to finance are also driving capacity expansions in South East Asia and the Middle East:

•    China’s steel subsidies are more than ten times higher than OECD countries and more than five times higher than other non-OECD economies
•    Steel subsidies in non-OECD countries are 42% higher in terms of cash grants and 11 times higher with respect to below-market borrowings than in OECD countries.

UK Steel said that it is clear that there is no level playing field and this manifests itself as a flood of cheap imports that domestic industries cannot compete with on a fair basis.

The potential return of US tariffs for the EU and the UK is also a key factor to assess. 

The government’s plan for a trade strategy has “shot up the priority list” 

At the sidelines of the OECD event, participants speculated that the EU’s quotas for export to the US could be gone by March, as that was technically the deadline by which a Global Arrangement on Sustainable Steel and Aluminium was meant to be negotiated. Such an agreement is now highly unlikely, and the US-EU quotas may well not be extended. The fate of the UK’s quotas for tariff-free export to the US is also unknown.

On Thursday, Politico’s London Playbook included a segment on the government’s plan for a trade strategy, adding it has “shot up the priority list” in Whitehall following the re-election of Donald Trump. The plan is designed to “renew the UK’s commitment to free and open trade” and involves strengthening co-operation with the EU. Officials are hoping it will be published in Spring.

Tata Steel UK continues to work closely with UK Steel, Eurofer and the UK Government in order to develop a solution which will address the trade impact of excess capacity on the UK market.  

UK Steel have published a report available here: Steel trade beyond 2026