G20 nations for global forum to address excess steel capacity

Major steel producers China, India and Japan along with other G20 nations have called for increased sharing of information as well as more cooperation by forming a global forum to address the issue of excess steel capacity.
The development assumes significance in the backdrop of the problem caused in international markets due to excess steel capacity amidst softening of prices, which eroded sales and profits of firms across countries, especially at a time when the global economy recovery is weak.
G20 leaders in a communique today recognised the "structural problems, including excess capacity" in some industries, exacerbated by a weak global economic recovery and depressed market demand that have caused a negative impact on trade and workers.

"We recognise that excess capacity in steel and other industries is a global issue which requires collective responses," it added.
The joint statement said the leaders' also recognised that "subsidies and other types of support from government or government-sponsored institutions" can cause market distortions and contribute to global excess capacity and therefore require attention.
The leaders' committed to "enhance communication and cooperation" and take effective steps to address challenges so as to enhance market function and encourage adjustment.

"To this end, we call for increased information sharing and cooperation through the formation of a Global Forum on steel excess capacity, to be facilitated by the OECD with the active participation of G20 members and interested OECD members.

"We look forward to a progress report on the efforts of the Global Forum to the relevant G20 ministers in 2017," the Communique said.
The joint statement also comes in the backdrop of nations such as the US imposing heavy duties on imports of cheap steel from countries such as China.
India, the world's third largest steel producer, too is facing a spate of cheap imports from China, Japan and Korea.
This has hit the sales and profits of domestic steel producers and also impacted their liquidity, which in turn has affected their capacity to repay loans and meet interest payment deadlines having a cascading effect on the number of non performing assets (NPAs) with the banks.

Steel sector in India accounts for the highest number of NPAs with the banks.
Last week, Finance Minister Arun Jaitley said in Parliament: "Highest NPAs are in steel sector... Second is national highways... Imported steel is cheaper than domestically manufactured steel. Wherever, steel dumping is happening, we have imposed anti-dumping (duty).