|Steel Supply Strategies|
|Subject||Competition and collusion|
|Key Words||Overcapacity, prices, imports, bankruptcy, capacity, consolidation, negotiations, tariffs, antitrust laws, costs, production, subsidies, World Trade Organization|
Overcapacity in the world steel industry has led to the lowest steel prices in twenty years. American imports of steel are rising as a result. Nearly thirty U.S. steel companies are in bankruptcy. The U.S. believes that domestic capacity needs to be reduced through consolidation, global capacity needs to be decreased through negotiations, and tariffs need to be imposed on U.S. imports temporarily.
U.S. Steel has proposed to lead a consolidation of the domestic industry, but special immunity from antitrust laws may be required. The company also wants government relief from the pension and healthcare costs for retired workers.
Officials from the top steel-producing nations have agreed to cut production by approximately 100 million tonnes over ten years. However, the U.S. would like to see double the cuts and over a shorter time period. There is also skepticism as to whether the cuts promised will materialize. If the U.S. imposes tariffs, the European Union has said it would scupper the talks on capacity reduction.
The U.S. would also like steel subsidies around the world to end. It
will bring the matter up in the new round of World Trade Organization
(Updated May 6, 2002)
|Source||Ted Alden and Peter Marsh, "World's big steel producers ready for hard talking," Financial Times, February 7, 2002.|
Return to the Oligopoly
©1998-2003 South-Western. All Rights Reserved webmaster | DISCLAIMER