Excessive steel production in China is strangling the global market but the country has expressed reluctance to temper its output at a meeting in Belgium between over 30 OECD countries.
China is the world's top steel producer and has been ramping up exports in recent years, as it battles to steer its economy into services-led growth and away from traditional manufacturing, while keeping employment levels high.
But with a 30 per cent jump in exports from a year ago to 9.98 million tonnes in March, steel producers around the world are struggling to cope with deflated prices which have made it uneconomic to produce the metal.
Asked what steps the Chinese government would take following the unsuccessful talks, China Commerce Ministry spokesman Shen Danyang said: "China has already done more than enough. What more do you want us to do?"
"Steel is the food of industry, the food of economic development. At present, the major problem is that countries that need food have a poor appetite so it looks like there's too much food."
In a statement, US Secretary of Commerce Penny Pritzker threatened high tariffs or embargoes in order to protect its domestic industry.
"Unless China starts to take timely and concrete actions to reduce its excess production and capacity in industries including steel, the fundamental structural problems in the industry will remain and affected governments - including the United States - will have no alternatives other than trade action to avoid harm to their domestic industries and workers," she said.
The OECD said global steelmaking capacity was 2.37 billion tonnes in 2015, but declining production meant that only 67.5 per cent of that was being used, down from 70.9 per cent in 2014.
But the Brussels talks were looked upon more favourably by UK Business Secretary Sajid Javid, who described them as ‘constructive’.
He said it was the first time all major steel-producing nations had come together with the industry, representing 90 per cent of world production, to discuss the excess capacity which is crippling companies.
"They have absolutely recognised that it is a problem of overcapacity in their country,” he said in relation to China’s appearance at the meeting. “They're committing to do something about it and I think that's a very positive step forward."
"I don't think anyone expects an overnight solution. The discussion today with all these countries coming together is something that we pushed for, and ... China's participation will help make the difference.”
Britain has been particularly badly affected by the global steel markets, with Tata recently announcing it was selling its UK business due to losses of around £1m a day.
While the investment firm Greybull Capital has agreed to buy the company’s Scunthorpe plant, assuring the jobs of 4,400 employees, a buyer for Tata’s other factories still needs to be found.
Tata revealed it had contacted 190 potential financial and industrial investors worldwide since launching its sale process a week ago.
"With regards to Tata, the sales process - the formal process - has now begun, we're starting to be approached by interested parties. It's too early to say much about them at this stage but the important thing is, as we said all along, we will do everything we can to help with that sales process. The steel workers of Britain deserve nothing less,” Javid said.
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