The global steel market has begun to recover but could face excess capacity between now and 2012, the OECD said.

“The sharp contraction in global demand that began in the second half of 2008 is now tapering off,” the Organisation for Economic Cooperation and Development (OECD) said following a meeting in Paris of government officials and industry representatives from steel-producing countries.

It cited demand growth in emerging markets such as China and India.

But it cautioned that the rebound could be ‘slow and long’ in some countries, where it could take three to four years for steel consumption to return to pre-crisis levels.
In addition, steelmaking capacity-despite the fall in demand – has not adjusted and has even increased in some areas.

“Projections to 2012 suggest that global capacity may exceed demand by a wide margin, raising concerns about the unwinding of excess capacity,” the OECD warned.
In the longer term, according to the report, production increases are likely to come primarily in fast growing emerging market countries.

It warned that while further improvements in the efficiency of the steelmaking process can be made, breakthrough technologies to radically reduce carbon emissions are far away and will be expensive and slow to introduce.