U.S. Steel Corp.'s chief executive on Thursday called for China to rein-in its steel industry to calm simmering trade tensions.
And the head of the world largest steelmaker, ArcelorMittal, cautioned that a disconnect between Beijing's central and state governments was hampering attempts by China to curb dumping of cheaper steel.
China needs to carefully, thoughtfully and quickly get about restructuring its steel industry, U.S. Steel's John Surma told Reuters in an interview. And the sooner that happens the less likely tensions will reach boiling point.
Surma's comments came during a joint visit to Reuters' North American headquarters with ArcelorMittal President and Chief Executive Officer Lakshmi Mittal.
Asked about the outlook for the global steel industry, Mittal said it was positive, but we need to a be a little bit watchful and careful about China's exports to various countries.
He said China's government-subsidized steel industry was very fragmented and there are a lot of producers.
There is a move in China to consolidate in different regions of China, said Mittal. (But) Even if there is a policy from China's central government that steel should not be exported in large quantities, that they should not dump it, there is still a disconnect between the state government and the central government.
Surma said that because of its unstructured nature in China, even a small overshoot in an industry that size could cause ... a significant export flow that would be subsidized and therefore not appropriate.
When that's happened in the past it's caused trade tensions and those things are inevitable.
There is some evidence of that in the discussions going on Capitol Hill, he said, referring to U.S. government efforts to press enforcement of world trade regulations.
I think if it's not restructured, that's an issue, said Surma. I do believe ... the central government authorities in China are aware of the issues. But how they can accomplish that at the regional level remains a question.
Asked whether he supported protectionist sentiments, Surma said: We don't view insisting on fair trade and enforcement of fair trade rules as protectionist.