Global steel excess capacity is projected to reach 745 mln tons by 2028, up from an estimated 640 mln tons in 2025, as capacity expansion continues to outpace demand growth, according to the OECD Steel Outlook 2026 report.
The OECD said global steelmaking capacity is expected to increase by up to 139 mln tons between 2026 and 2028, while steel demand is forecast to grow by only 34 mln tons over the same period. As a result, global capacity utilization rates could decline from 76pct in 2025 to around 74pct by 2028.
The report highlighted that China remains the main contributor to global excess capacity. Chinese steel exports reached a record 131 mln tons in 2025, up 153pct compared with 2020, amid weak domestic demand. China is also expected to add up to 38.6 mln tons of new steelmaking capacity by 2028, the largest planned expansion among individual countries.
India added 41.4 mln tons of steelmaking capacity during 2021-2025 and is expected to add a further 31.8 mln tons by 2028, while Southeast Asia continues to expand capacity rapidly. In contrast, steelmaking capacity in OECD countries declined by 2.8 mln tons between 2021 and 2025.
The OECD also noted that steel subsidies remain a major market distortion. According to the report, the median Chinese steel producer received subsidies equivalent to 15 times those of producers in other economies relative to asset size in 2024. The organization warned that rising excess capacity, subsidized exports, trade diversion and circumvention of trade measures continue to threaten the viability of market-oriented steel industries worldwide and called for stronger international cooperation to address the root causes of the crisis.