The OECD Steel Committee met last week to discuss the state of steel market conditions in the industry and held in-depth discussions regarding the global steel market situation and its outlook. The Committee expressed concerns that the significant and persistent non-market structural overcapacity, with recent indicators showing an estimated global capacity-production gap of 478 million metric tonnes in 2021, may trigger sharp downturns in the future when steel demand growth loses momentum. The Committee discussed policy approaches to ensure a level playing field for a healthy global steel industry as market-distorting government interventions have been feeding much of the additions to capacity in many economies. Global steel demand is expected to recover in 2021 from the slump of 2020, but global growth expectations are currently less buoyant as compared to this spring reflecting weaker prospects in China and several other emerging markets. A number of risks weigh on the outlook. Excess capacity remains high and steel demand growth is expected to remain modest in the long term. Reigning in growing global excess capacity driven by harmful government interventions, such as government subsidies and investment policies remains a key priority. Those structural risks should be addressed urgently, as they could lead to a severe market downturn when steel demand growth begins to moderate from the current post-pandemic recovery phase. In this context, the Steel Committee recognised that the work of Global Forum on Steel Excess Capacity is as relevant as ever, and welcomed the upcoming GFSEC Ministerial Meeting to be held on 1 October.The latest available data from the OECD show that global steelmaking capacity could increase from 2452.7 million tonne in 2020 to 2485.8 million tonne in 2021, following growth in capacity which began in 2019. Delegates expressed their concerns that current OECD data on investments show that as much as 55.6 million tonne of steelmaking capacity are in the planning stages for the next three years (2022-24), while 47.9 million tonne are currently underway for completion. This is the case particularly for the Middle East and some Asian emerging market economies. The Committee was concerned that some of these new capacity projects are funded by overseas investments, many of which are publicly supported and assisted investments driven more by policy considerations than market forces. In this context, the Committee underscored the need to engage with all relevant stakeholders to foster a better understanding of those developments and address their risks, reiterating the need for all jurisdictions to allow market principles and forces to drive steel investment to ensure a balanced and sustainable growth of the steel industry worldwide.The Committee advanced work to build a comprehensive database for subsidies and government support measures provided to steel firms that paves the way for evidence-based analyses and policy recommendations. The Committee also advanced its work on state-owned enterprises and their role in world steel markets, and reviewed new analytical work aimed at developing a framework for identifying suspicious patterns of trade consistent with circumvention and other schemes designed to undermine trade measures on steel products.Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world. The OECD Steel Committee has 25 members Austria, Belgium, Canada, the Czech Republic, Finland, France, Germany, Hungary, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the UK, the US and the EU. In addition, five associates (Brazil, Kazakhstan, Romania, Russia and Ukraine) and seven participants (Argentina, Bulgaria, Egypt, India, Malaysia, South Africa and Chinese Taipei) bring their perspectives to the Committee’s work. A number of other economies also participate in some Steel Committee meetings as invitees.