After a period of relative stability during the 1960s, the world steel market experienced considerable turbulence in the 1970s and 1980s. World steel production grew steadily up to the early 1970s, and in anticipation of further demand growth, steel companies in OECD countries continued to expand production capacity. However, the economic recessions of the decade following 1973 seriously reduced demand for steel, with the sharpest drops experienced in 1975 and 1982 (see Chart 5.1). These cyclical downturns, coupled with the emergence of new steel producers in a number of Third World countries, resulted in a major overcapacity problem. Whereas the average effective steel-making capacity utilisation in the OECD countries was around 85 per cent between 1960 and 1975, over the next decade and a half it averaged only about 70 per cent (see Chart 5.2)1
World steel trade has been dominated by the OECD countries, which accounted for two-thirds of world steel exports in the late 1980s, down from roughly 90 per cent in the early 1960s. As Chart 5.3 illustrates, the major exporters of steel were the EC and Japan, which consistently accounted for over two-thirds of total world exports during the 1960s and 1970s, with this joint share declining to roughly 50 per cent by the late 1980s. The respective shares of these two exporters have shifted over the past two decades, however. In the early 1960s, The EC's steel exports were 57 per cent of total world exports while Japan accounted for 11 per cent. By the 1980s, Japan and the EC each accounted for around one-quarter of world exports.