The OECD said that the global steel market, battered during the economic downturn, has begun to recover but could face excess capacity between now and 2012. It added that "The sharp contraction in global demand that began in the second half of 2008 is now tapering off."

It cited demand growth in emerging market powerhouses China and India in particular. But it cautioned that the rebound could be slow and long in some countries, where it could take three to four years for steel consumption to return to pre crisis levels. In addition, steelmaking capacity despite the fall in demand has not adjusted and has even increased in some areas.

The OECD warned that "Projections to 2012 suggest that global capacity may exceed demand by a wide margin, raising concerns about the unwinding of excess capacity."
According to the report, production increases are likely to come primarily in fast growing emerging market countries in the longer term.