Steel-Producing Nations Discuss Lowering Output

Steel-producing nations are meeting today and Tuesday in Paris to discuss slashing production in a bid to boost prices from their lowest level in more than a decade. Analysts doubt their plan will work.

Steel companies worldwide are suffering from a glut left from last year, when output surpassed demand by 10%.

Any agreements by national representatives to cut production at the meetings may fail because most steelmakers are investor- owned companies--who won’t be present at the conference--and may ignore targets set for them by government, analysts said.

Twenty-five U.S. steelmakers have entered bankruptcy since 1997.

European steelmakers such as Usinor and U.S. rivals including USX-U.S. Steel Group Inc. are attempting to cut costs by merging, at the same time as possible U.S. import controls threaten to release a flood of steel onto other markets.

By Friday, nine of the top 10 steel-producing nations had refused to say how much their steelmakers are willing to reduce, suggesting they are waiting to hear the U.S. position, said Wolfgang Huebner, head of the OECD’s steel unit.

Any agreement to cut production at the Paris meeting may influence the U.S. in its decision on whether to restrict steel imports. The International Trade Commission, a government agency, recommended last week that President Bush impose tariffs of as much as 40% on imported steel and place quotas on some products.

Bloomberg News