Steel overcapacity recognised by G20 amid global crisis

Jessica Morris
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A Look Inside China's Steel Industry
Chinese steel overcapacity has been blamed for the global crisis (Source: Getty)

The world's biggest economies recognised the need for an international response to the problems wrought by industrial overcapacity, particularly in the embattled steel sector.

A statement that coincided with the meeting of G20 finance officials said: "We recognise that excess capacity in steel and other industries is a global issue which requires collective responses."

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It continued: "We also recognise that subsidies and other types of support from governments or government-sponsored institutions can cause market distortions and contribute to global excess capacity and therefore require attention."

"We commit to enhance communication and co-operation, and take effective steps to address the challenges so as to enhance market function and encourage adjustment."

The document used the same language agreed by G20 trade ministers on 10 July.

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The global steel industry has been hamstrung by the fact there is an abundance of mills spewing out too much material. This helped prompt Indian conglomerate Tata Steel to put its loss-making UK business up for sale earlier this year.

The United States and China also agreed to work together to cut global overcapacity in the steel and aluminium sectors.

US treasury secretary, Jew Lew, expressed support for multilateral initiatives to talk about the global steel glut.