[jcranmer]

To understand steel production, you need to look at three numbers, not one: production, capacity, and consumption.

One of the things that has happened since 2000 is that China has expanded its steel production capacity a lot. The capacity utilization--which should optimally be around 80-90%--is at 75% right now and plummeting. China basically built its steelmaking capacity assuming consumption growth rates would increase instead of what they actually did (decrease).

The obvious solution is to close down steel mills. Unfortunately, many governments consider steelmaking to be a point of national prestige (the EU started out as the European Coal and Steel Community!), to the point that democratic governments often idolize steelmakers (with other industrial workers) as the "every-man" [1]. Which means no one wants to cut their capacity.

[1] I find this somewhat ironic given that, now that I think about it, no one in my family that I can trace ever worked in a factory of any kind. Although my grandparents and some of my second and third cousins are farmers, which was historically the other idolized profession.