Steel Groups Release China Subsidies Report

Five U.S. steel associations on July 27 released a report (here) that documents a high rate of China's subsidies flowing to steel manufacturers in recent years, creating runaway global overcapacity, according to a statement by the organizations (here). The American Iron and Steel Institute, the Steel Manufacturers Association, the Committee on Pipe and Tube Imports, the Specialty Steel Industry of North America and the American Institute of Steel Construction released the report, which reviewed the 25 largest steel companies in China and displays the amounts and types of government subsidies received in recent years. The Chinese government remains a majority shareholder in top-output steel companies, fueling the industry through subsidies such as cash grants, equity infusions, mandated mergers and acquisitions, preferential loans and directed credit, land use subsidies, utility subsidies, raw material price controls, tax policies and benefits, currency policies and weak enforcement of environmental regulations, the groups said in the report. China’s 822 million tons of steel produced in 2014 composed about half of world production, and production facilities under construction are expected to accelerate operations in the near future, with global capacity expected to grow in the short term, they said.