Steelmakers worldwide are calling on their governments to take a stand against China, which they say has destabilized the market with 425 million net tons of overcapacity.
Steel associations from the U.S., Mexico, Brazil, Europe, Latin America, and Canada spoke out Tuesday against a rising tide of imports, which they blamed on China's state-owned steel industry.
In a joint statement, they objected to China's new steel adjustment policy, which they said perpetuates a state-controlled approach that has led the country to make more steel than it needs and then dump it in places like the United States.
"Structural challenges must be addressed urgently amid the new era of low steel demand growth and rising exports," Organization for Economic Cooperation and Development Steel Committee Chairman Risaburo Nezu said.
"A failure to address or halt market distortions will result in subsidized and state-supported enterprises surviving at the expense of private and efficient companies operating in environments with minimal government support."
The OECD Steel Committee recently met in Paris, and reached a consensus that a "new normal" of slowed growth has taken place in Asia, Europe and the Americas. All the regions have suffered from a dramatic increase in steel imports that steelmakers blame on China's massive overcapacity, or more mills than are needed to satisfy demand for steel.
The American Iron and Steel Institute, the Steel Manufacturers Association, the Canadian Steel Producers Association, the European Steel Association, the Turkish Steel Producers Association and five other groups released a statement Tuesday saying there's a need for immediate action.
"We reaffirm our call on each national government to address this issue in their own country and make every effort in their own trade diplomacy and regulations to confront and challenge those government policies that are feeding the overcapacity that is at the root of the current steel crisis and provide a level playing field in the steel market," the groups said.
They specifically want governments around the world to reject China's request to be treated as a market economy, which would have a big impact on what recourse steelmakers would have if they're affected by Chinese steel dumping.
Chinese goods are currently subjected to special antidumping rules because of the extent to which the government controls and directs the Chinese economy, such as by subsidizing steel so it can be sold at a lower price. If China were treated as a market economy, the U.S. Commerce Department would not be able to enforce its antidumping laws as well because it could no longer compare Chinese steel prices to those in similar countries with free markets.
"As the steel sector in China so clearly illustrates, China does not yet meet the test of being a market economy," the groups said in the statement. "The existence of the overcapacity itself, estimated at up to 425 million metric tons, and the lack of an effective policy to reduce it are evidence that China is still a top-down state-driven economy.
"This is a critical issue which must be addressed quickly. For that reason, we will continue to collaborate in our individual efforts to make the case to our governments to carefully judge the criteria and the record before making any statements or decisions that might prematurely recognize China as a market economy."