When I was asked in December 2015 to prepare a presentation on the subject of China’s steel industry for the Platts Steel Markets North America Conference in Chicago, which took place in March 2016, I had little doubt where the topic was headed.

China’s steel industry has grown relentlessly and seemingly exponentially in the first 15 years of the current millennium. Even as its output finally receded in 2015, its potential capacity kept increasing as new mill complexes came online.

An article based on that presentation begins on page 36 of this issue, and the subject has not decreased as a matter of interest to the metals industry.

As this issue goes to press, trade ministers from some 30 nations and representatives from several economic, trade and steelmaking organisations are preparing to meet in Brussels, with China’s steel industry at the top of the agenda.

In each of the past three years, China has produced 800 million tonnes or more of steel. Unfortunately for the rest of the world, it has never consumed more than 700 million tonnes of steel in a calendar year.

A situation where one nation is producing 120 million tonnes (or more) of steel than it can consume within its own borders has never occurred before. The result, however, was probably predictable by most economists: a flood of exports followed by plunging global steel prices.

Given that the absolute number of apartment towers, highways and dams that China can build in one year likely has peaked, its internal consumption of steel also is likely to have peaked—and may be headed closer to the 450 million tonnes range.

That could mean that if China’s current annual mill capacity is 1.4 billion tonnes, it will have to idle more than half of its steel mills so as not to be a mass exporter.

In looking at China’s current dilemma, I became curious about American steelmaking capacity in the late 1940s. My thinking was this represented an era when America’s economy dominated the world, and U.S. steelmakers were helping to rebuild Europe from the ashes of World War II. I was genuinely surprised when I came across a 1949 Chicago Tribune news article that reported a 1948 figure of 66 million short tons of U.S. output—which was higher than at any time during World War II. The article not only makes no mention of overcapacity but actually reports a threat by President Harry Truman to establish “federal steel plants” if the private sector could not boost its output fast enough. Clearly, 120 million tonnes of excess capacity were not in play.

Even in its biggest boom years, America never created the enormous overcapacity now overhanging the Chinese steel sector, meaning those negotiators in Brussels seem to be in uncharted waters.