CEO of Germany’s ThyssenKrupp AG – Guido Kerkhoff – has urged steelmakers in China and the rest of the world to do more and implement curbs to reduce overcapacity.
China is at the forefront of steel production and it has taken steps in the recent years to curb over-production; however, according to Kerkhoff there is room for further reduction in overcapacity.
Speaking to reporters in a group interview in Shanghai on Saturday, Kerkhoff said that while 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 a lot that can be done and not only by China, but other nations as well.
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.
Kerkhoff was speaking weeks after he was confirmed as CEO to steer a split of the iconic German industrial conglomerate into two listed units. One will manage its elevator, auto parts and plant construction businesses, the other its steel and metals operations.
US tariffs on steel imports imposed by President Donald Trump earlier this year have triggered inflows into Europe, Kerkhoff said. The European Union was among seven members of the World Trade Organization that escalated its response to the tariffs last week by seeking a ruling on their legality from the WTO’s disputes settlement body.
“As a company we do not export much into the US, and the qualities we do sell are often products that are not produced there, so our customers stick to them,” he said. “What we see is more an indirect effect. Material that would have gone to the US is entering one way or another into Europe. We see volumes from Turkey, volumes from Russia increasing in the European market.”