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[ISE-SHIMA] World leaders warned Friday that the global oversupply of steel must be "urgently addressed", while taking aim at governments that contribute to excess capacity, hinting at China.
Beijing has been in the firing line over claims Chinese steel exports were forcing plant closures and job losses in some countries, as the sector grapples with soft prices and limp demand.
China produces more than half of the world's steel and is accused of flooding the market with products sold below cost in violation of global trade rules.
Following two-days of summit talks in Japan, the Group of Seven flagged the issue without naming specific countries.
"We recognise that global excess capacity in industrial sectors, especially steel, is a pressing structural challenge with global implications," it said in a final communique as the talks concluded.
"This issue needs to be urgently addressed through elimination of market distorting measures and, thereby, enhancement of market function".
It added: "In particular, we are concerned about subsidies and other support by governments and government-supported institutions that distort the market and contribute to global excess capacity." This month, the European Union said granting market economy status for China at the World Trade Organization was "untenable" due to the loss of jobs it would cost Europe in key industries such as steel.
The designation would make it much harder for major economies to fight Beijing over alleged unfair trading practices.
While China did not appear in the G7's final statement on oversupply, a Japanese government official said the massive steel producer came up in private discussions on the matter.
Japanese Prime Minister Shinzo Abe "said (G7 leaders) must keep up close communication to make sure China abides by international (trade) rules so that we can both co-exist and prosper with China," the Japanese official said.
"(Abe) concluded that the G7 would further communicate on the issues of excess production capacity and China's market economy status." Angry steel manufacturers have urged the EU, the second-biggest steel producer, to follow the United States in punishing China with harsh tariffs.
The US in March slapped tariffs of nearly 300 per cent on cold rolled steel used to make auto parts, but the EU settled on a more cautious 20 per cent duty for the same product.
Adding to problems in the industry, slowing global growth has taken a bite out of demand, while China's economy has weakened from the break-neck rates that helped commodity suppliers grow fat off demand for big ticket infrastructure projects there.