G20 summit agrees to forum monitoring China’s pledge to cut steel oversupply

Image: ABC

The two-day Group of 20 leaders’ summit has agreed to the creation of a “steel forum”, which would monitor China’s pledge to cutting its steel output, though the issue remains economically sensitive within Australia.

The Australian Financial Review reports that just before the summit, China’s president Xi Jinping said his country would use the “utmost effort” to cut production by 100 – 150 million tonnes by the end of the decade. It exported around 100 million tonnes of its highly-state subsidised steel last year, around 13 per cent of total global output, and has been blamed for a glut that has seen factories shut in Europe and North America.

No binding limits were agreed to at the summit, reports AP.

A joint statement from leaders at the summit – not mentioning China by name – said a forum would be created through the OECD to monitor excess steel capacity.

The issue was a sensitive one for Australia, conceded Australian prime minister Malcolm Turnbull, with China having to deal with mass job losses were it to cut output.

It would also be a negative for Australian exports.

“If China reduces its steel-making capacity, that would be a problem for us as sellers of iron ore,” said Turnbull, according to The Australian Financial Review.

According to lobby group the Minerals Council of Australia – which has previously warned the government against pushing for “artificial interference” in China’s heavily subsidised steel sector – over 60 per cent of Australia’s iron ore and coal exports were sold to China.