Global overcapacity challenge still exists

A recent report by the Organization for Economic Cooperation and Development (OECD) warns that excess capacity outside China is affecting the global steel industry's recovery. International observers believe that overcapacity in steel and other industries is a global problem. China has cut capacity in the past two years to help the global steel and other industries recover from the downturn caused by overcapacity. In the future, countries should continue to strengthen communication and cooperation to collectively address the challenge of overcapacity. .

 

The challenge of global overcapacity still exists

 

According to a report released by the OECD's Iron and Steel Committee, global steelmaking capacity in the first half of 2017 was 2.36 billion tons, a slight decrease of 0.6% from 2.37 billion tons in the same period of 2016. Among them, the Middle East, South America, and other European countries except the European Union and other regions have noticeable increases in steel production capacity. "The excess capacity is at a worryingly high level," said Liven Top, chairman of the steel commission.

 

This report predicts that from 2017 to 2019, the global steel production capacity will increase by nearly 40 million tons, of which the Middle East will add about 23 million tons.

 

Alistair Ramsay, director of American Metals Market Research, said that increasing steel production capacity in any region may pose significant risks to future steel pricing and profits.

 

According to the OECD report, global steel demand will pick up in the future, but it will not be enough to digest the current excess capacity. Analyst Chris Holden of the British Commodity Research Institute also expects that global demand growth will not be sufficient to provide a reasonable basis for new capacity.

 

Li Bo, a visiting researcher at the Center for International Chinese Studies at Aichi University in Japan, said in an interview with Xinhua News Agency that the global overcapacity problem is still very serious. It is mainly concentrated in traditional industries such as steel, non-ferrous metals, and rubber, which are mainly based on raw material processing. The market and developing countries have concentrated excess capacity.

 

China's outstanding contribution to capacity reduction

 

Overcapacity is a cyclical phenomenon under market economic conditions and a structural problem. Since the outbreak of the international financial crisis, the decline in the world economy has caused demand to shrink, which is the root cause of the current global overcapacity in industries such as steel.

 

Overseas experts also pointed out that after the international financial crisis, many countries have adopted large-scale economic stimulus measures, giving priority to the development of steel, petrochemical and other industries, but limited technological investment, resulting in excessive low-end capacity, insufficient high-end capacity, and structural excess capacity.

 

Some Western politicians and companies are keen to blame China for overcapacity, which is neither objective nor fair. In fact, in recent years, China has taken the initiative to take the supply-side structural reform as the main line to digest and eliminate excess capacity such as steel and coal, which has contributed to the international community.

 

China's efforts to reduce production capacity are unique in the world. Official data show that China withdrew more than 65 million tons of steel capacity last year, and this year it has reduced its output by about 50 million tons. China Iron and Steel Industry Association stated that China has basically achieved the target of reducing overcapacity of 100 million to 150 million tons within five years set last year.

 

Edwin Bassoon, director general of the World Steel Association, said that China has played a prominent role in reducing excess production capacity globally. In the past two years, China has reduced its production capacity to the same level as the United States.

 

In an interview with Xinhua News Agency reporter, Ramsay said that the global excess steel production capacity has continued to decline since the end of 2015, and China has contributed.

 

China's outstanding performance in capacity reduction is due to the government's accurate grasp of trends and its strong execution capacity. Xiong Yu, a tenured professor at the Newcastle School of Business at Northumbria University in the United Kingdom, said that compared with most countries, China has implemented relevant measures more accurately and effectively, and has implemented "digesting a batch, transferring a batch, integrating a batch, eliminating a batch "The correct path.

 

Sergei Lukkonen, director of the Chinese Ministry of Economics and Political Affairs of the Institute of World Economics and International Relations of the Russian Academy of Sciences, said that China is compressing and eliminating backward production capacity and improving the level of production technology. China has completed this process and cooperated with other countries to achieve transnational Environmental production will create a high value-added international industrial chain with better production efficiency.

 

Strengthen cooperation is the solution

 

Overcapacity in steel and other industries is a global problem. On the road to global capacity reduction, all parties need to respond collectively, share responsibility, and act together, rather than blame each other or even build a high wall of protectionism.

 

In the face of global overcapacity, overseas experts have called on countries to strengthen communication and cooperation and take effective measures to enhance market mediation functions. Guo Shengxiang, director of the Australian Institute of Innovation and Finance, said that there is an Organization of Petroleum Exporting Countries in the oil sector, and there should be a corresponding coordination mechanism in the area of ​​excess capacity.

 

In response to the current structural overcapacity, Li Bo suggested that it is possible to seek to establish an international linkage mechanism on a global scale, find out the advantages of each country to divide production, and reduce duplicate production. Lu Koning also said that the current international market demand for advanced production capacity products is still large, and strengthening international cooperation on advanced production capacity is an effective way to solve the current excess production capacity.

 

In recent years, while reducing production capacity and optimizing the industrial structure, China has actively carried out international capacity cooperation. At present, China has established production capacity and investment cooperation mechanisms with 36 countries, established third-party market cooperation mechanisms with Australia and other countries, and launched multilateral capacity cooperation with regional organizations such as ASEAN.

 

10In the 10 years since the international financial crisis, the international community has worked together to gradually bring the world economy back to the track of recovery. At present, the world economy is gradually improving, global trade and investment are picking up, and the confidence of all parties has significantly increased. There is reason to believe that with the continuous advancement of international capacity cooperation, all parties will pay more attention to policy coordination, the capacity of countries and regions will be more balanced, and the global industry supply and demand relationship will be more reasonable.