The global steel sector is expected to face ongoing challenges through 2025 and beyond, according to the OECD. Despite projected capacity growth of 6.7pct between 2025 and 2027, the OECD warns that capacity utilization could fall further, pressured by rising competition, particularly from Asia, which will account for 58pct of new capacity, driven by China and India.
This expansion, equivalent to 165 mln tons, risks worsening already high global overcapacity. With demand growth expected to remain weak, utilization could drop toward 70pct, squeezing margins even for efficient producers. Steel prices and profitability have already fallen from 2021 peaks, though prices appear to be stabilizing.
Demand varies across regions. While emerging markets saw growth in 2024, it was offset by declining demand in China and the OECD. Through 2030, global steel demand is forecast to grow just 0.7pct annually, with stagnant demand in the OECD, a sharp drop in China, and stronger growth in ASEAN and MENA.
Uneven competition remains a key issue. Many governments continue to intervene in their steel sectors with subsidies, protectionist policies, and incentives for domestic expansion. China’s subsidies are especially prominent, ten times those of OECD countries, and include preferential financing, tax breaks, and energy price supports. These measures distort markets by sustaining uncompetitive operations and encouraging excessive investment.
Chinese steel exports surged to a record 118 mln tons in 2024, contributing to a sharp rise in antidumping actions. Nineteen governments launched 81 antidumping cases that year, five times more than in 2023, with nearly 80pct targeting Asian producers. China alone accounted for over one-third. More countries are also introducing broader protective tariffs, reflecting growing concerns about excess capacity’s impact on trade flows.
Producers often respond to trade measures by redirecting exports to less-restrictive markets or by circumventing rules through processing in third countries. Between 2013 and 2020, suspicious rerouted steel trade reached 21.5 mln tons, or 17.6pct of global steel trade, prompting more countries to act against circumvention.
Persistent overcapacity is eroding profitability and undermining the industry’s ability to invest in decarbonization. Over 40pct of the new capacity expected between 2025 and 2027 will rely on emission-intensive blast furnace processes. Transforming steel production to reduce emissions requires long-term investments, supported by stable market conditions and a level playing field.
Decarbonization strategies vary by technology and facility type. Most integrated steelmakers plan to use carbon capture, while many electric furnace producers are exploring hydrogen-based methods. However, hydrogen-based steelmaking depends on access to high-grade ore and renewable energy, both unevenly distributed, which could reshape global production and trade patterns.
With Chinese exports continuing to flood the market and demand growth lagging, trade tensions are likely to persist. Addressing the structural imbalance between global capacity and demand is crucial to avoid further deterioration. OECD stresses the importance of international cooperation among governments and industry players to ease tensions and secure a more sustainable future for steel.