A glut of subsidised steel is forcing a reckoning, and the producers with the leanest books and the smallest treasuries are the ones to pay.
Veysel Yayan did the sums in January and did not care for the total. On the 13th the general secretary of the Turkish Steel Producers’ Association told S&P Global Platts that the European Union’s next safeguard could cut Turkey’s steel exports to the bloc by as much as 60 per cent. His members had done little to invite the blow. They smelt scrap in electric-arc furnaces and take little state money. For four years they had watched Chinese imports into Turkey climb from 395,000 tonnes in 2020 to 3.7 million by 2024. The cheap metal at their docks came from one place; the wall going up to stop it would pen them in behind it. By June the Organisation for Economic Co-operation and Development (OECD) had put numbers to the worry.
Mathias Cormann set out the scale in Paris. On June 4 the OECD’s secretary-general told trade ministers that global excess steel capacity would reach 745 million tonnes by 2028, some 319 million more than the rich-country club produces between its members. The surplus, Cormann said, “hurts economic security and resilience”. His economists traced most of it to subsidies: in 2024 the median Chinese mill drew 15 times more state support, against its assets, than producers elsewhere, up from 10 times the year before. Utilisation was set to slip from 76 per cent in 2025 to 74 per cent or lower by 2028. Chinese exports, meanwhile, hit a record 131 million tonnes last year, more than the European Union made all year, lifting China’s share of world exports to 41 per cent.
Marie Jaroni shut the lines in December. The head of Thyssenkrupp Steel Europe halted electrical-steel production in Germany and France, blaming cheap Asian imports, while hunting for a buyer in India’s Jindal. Her firm had flagged 11,000 job cuts the previous November. ArcelorMittal had shelved its planned hydrogen-fed plants across Europe the same month, citing energy bills and policy.
Karin Karlsbro is not, by instinct, a protectionist. The Swedish liberal spent the spring drafting Europe’s new steel wall all the same, and on May 19 the Parliament adopted it by a margin that would flatter most elections. Her measure cuts the tariff-free quota almost in half, to 18.3 million tonnes, and puts a 50 per cent duty on every tonne above it from July. The old safeguard, in place since 2018, had let those quotas drift upward even as demand fell.
The unsubsidised
Yayan is an awkward victim for Brussels to make. His mills take little state money, run on scrap and electricity rather than subsidised coal, and had spent years being undercut at home by the very Chinese metal the EU now wants to shut out. They will pay for the wall anyway. To that bill, from January 1, Europe added its carbon border levy. Fuat Tosyalı, who runs Tosyalı Holding, reckons the charge tacks about 60 euros onto every tonne his industry ships north.
Yayan can also see where the diverted steel will end up. The OECD has tracked it on the move: Chinese mills sent 300 per cent more semi-finished steel to South-East Asia in 2025, much of it recast there and waved on to Europe and America as something the tariffs no longer caught. Karlsbro’s answer, buried in the regulation, is a “melt and pour” rule that makes importers name the furnace. Turkey, Yayan fears, is where the overflow lands once Europe’s quota tightens in July.
Mathias Cormann would rather treat the cause than the symptom. The OECD’s Global Forum on Steel Excess Capacity, which he offers as the cure, has spent since 2016 trying to coax dozens of governments into trimming subsidies, with little to show: each treats its own steel as too strategic to surrender. Steel is only the noisiest example. The EU spent 2024 raising tariffs on Chinese electric cars, and the years before that on solar panels, for the same reason it is now walling out steel.
The new measure takes effect on July 1. Yayan reckons it will cost Turkey three of every five tonnes it sells to Europe.
Photo: Dreamstime.