Steel industry needs more cuts — ThyssenKrupp

While China has made good progress, there’s room for even more cuts — CEO

Steelmakers in China and the rest of the world need to do more to reduce overcapacity, according to Guido Kerkhoff, chief executive officer of Germany’s ThyssenKrupp AG.

While China has made good progress in curbing overproduction, there’s room for even more cuts, Kerkhoff told reporters in a group interview in Shanghai yesterday. The biggest steelmaking nation has reshaped the industry in the past three years by closing plants, tightening environmental controls and imposing targeted production curbs. “There is still overcapacity worldwide” and reducing that “needs to continue” not only in China, but in Europe and the rest of the world, he said.

China’s steel exports have dropped to the lowest levels in five years, buoying world prices and cementing the sector’s recovery after a devastating crisis at the end of 2015. While the industry has since enjoyed a relatively benign few years, risks are rising amid global trade tensions in which steel has been a leading target. The World Steel Association predicts a slowing of demand next year as China’s growth declines.

Joint venture

Asked which regions needed to take most action in curbing capacity, Kerkhoff noted that China produces about half the world’s steel and the issue must be addressed according to relative size. Europe has also taken steps, he said, including via ThyssenKrupp’s joint venture with Tata Steel that created the region’s second-biggest producer.

US tariffs on steel imports imposed by President Donald Trump earlier this year have triggered inflows into Europe, Kerkhoff said.