(Bloomberg) -- Global steelmakers will finally start to see some reprieve from the flood of Chinese exports that have been inundating the market and pressuring other suppliers.
That’s according to Aditya Mittal, chief executive officer of ArcelorMittal SA, the world’s second-largest steelmaker. He sees Chinese government mandates for output cuts as helping to reduce exports from the nation for the next five to 10 years. He also cited requirements for local government approvals before building new steel facilities in the country as well as trade actions from the Europe and the US against the Asian nation.
When it comes to Chinese steel exports, “I don’t expect that the pressure will dramatically increase because of the limitations that have been put on Chinese capacity,” he said during a virtual lecture at Brazil’s annual steel conference. “Nevertheless, as an industry, we have to work to identify if there are surges and certain product ranges and what we can do to counter that.”
China’s move to constrain it’s steel output marks the end of an era for the industry after years of breakneck growth, during which the country’s exports put pressure on Western producers. ArcelorMittal lost its crown as the world’s top mill to state owned China Baowu Steel Group Corp. in 2020, after being forced to close down some of its higher-cost capacity.
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Mittal’s comments come at a time when the industry has been particularly concerned that Chinese mills could inundate the global market this year because domestic demand has remained subdued. Asia’s largest economy has struggled to rebound after a year of lockdowns to curb coronavirus, and Beijing had been reluctant to respond with large scale stimulus.
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Mittal said he’s “very bullish” about the outlook for the industry, even as the supply from China remains a concern for competitors.
The US has levied duties against some Chinese steel products. American officials have also been in talks with European counterparts about how to measure and tackle oversupply from nations including China. In Brazil, local producers association Aco Brasil recently requested the government to increase import tax rates to 25% in a move to protect the industry from an abundance of shipments.
Other industry challenges include ensuring the safety of steel operations, improving diversity and attracting new talents and the need to curb the sector’s carbon footprint, Mittal said. The steel industry accounts for about 7% of global carbon emissions.
“We know how to do it — it’s a matter of cost,” Mittal said, referring to lowering emissions. “It’s not about doubling the price — it’s about increasing the cost of steel by 20 to 30%.”
--With assistance from Eddie Spence.
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