The gap between global production and capacity is expected to reach 700 million tonnes in 2020, increasing for the first time since 2016, the OECD steel committee said during its latest session held virtually.

The association noted the latest available data from the OECD show that global steelmaking capacity could increase to 2,455.8mt/year. This new growth would widen the gap between production and installed capacity following a series of declines in the 2016-2019 period, Kallanish notes.

This year, global excess capacity could rise by 41.8mt, mainly supported by new capacities becoming available in the Middle East and Asia. "The Committee noted with concerns that a number of planned capacity increases are premised on expectations of an increase in future demand, including demand in export markets," the OECD commented.

In the Middle East alone, the OECD calculated that capacity is set to increase by over 20% y-o-y in 2020, with further important developments also being planned in the 2021-2023 period (see table).