STRASBOURG - The European Commission launched an 'action plan' Tuesday to revive a struggling EU steel industry hit by falling demand, rising costs and fierce competition from China and other emerging economies.
The challenges are daunting - the steel market has slumped, jobs are being lost and there is such massive overcapacity it would take up to seven years to bring supply and demand back into balance, the commission said.
But the industry still has a future as a major engine for growth and employment if it can build on its strengths, EU Industry Commissioner Antonio Tajani said.
"The steel industry has a promising future in Europe," Tajani said. "By continuing to lead in innovative products, its traditional strength, it can achieve a globally competitive edge."
To help bring this about, the commission aims to put in place a supportive regulatory framework and to help boost demand from key buyers of steel - the auto and construction sectors.
Brussels will seek to improve access to foreign markets and bring about a "level playing field so as to support EU steel exports, fight unfair practices and ensure access to vital raw materials," a statement said.
Additionally, it will promote efforts to control and reduce energy costs, including helping companies secure long-term electricity contracts if need be, while also supporting innovation and research.
The commission said the EU steel industry currently employs some 360,000 people and has annual sales of 170 billion euros (US $225 billion). Producing 177 million tons or 11% of global output, it is ranked second in the world.
The main problem is global excess capacity of about 542 million tons, with 200 million tons of that in China alone, Tajani said, putting overcapacity in Europe at 80 million tons.
Overall demand in Europe meanwhile has slumped 27% during the debt crisis and some 10% of jobs have been lost.
However, the prospects are positive, the commission said, citing OECD figures to show that global steel demand is expected to rise to 2.3 billion tons by 2025, a gain of about 40%.
"It is vital that the EU steel industry is fit to take full advantage of this competitive market," it added.
The modern day 27 member state EU began life as the European Coal and Steel Community in the 1950s, led by France and Germany to drive post-WWII reconstruction.
Copyright Agence France-Presse, 2013
