OECD Steel Market Outlook 2025

SEATTLE (Scrap Monster): The Steel Outlook is the OECD’s annual analysis of the world steel market. It provides the most up to date figures and the medium term outlook showing developments in the world steel market by area, and the main characteristics, apparent consumption, trade and production trends in the steel industry globally.

The global steel industry faces persistent challenges that are likely to intensify through 2025 and beyond. Planned capacity expansions risk deepening global excess capacity amid sluggish demand growth. Capacity utilisation could fall, intensifying downward pressure on prices and profitability. Regional demand trends diverge: while ASEAN and MENA show stronger growth, demand is declining in China and remaining constant in OECD economies.

Competition is distorted by subsidies, particularly in China, ASEAN, and MENA. China’s subsidies (as a share of firm revenues) are 10 times higher than those in OECD countries, encouraging overcapacity and unviable investments. In parallel, Chinese steel exports surged, prompting a sharp rise in trade actions and raising concerns about circumvention practices. These trade distortions underscore the urgency of addressing non market policies driving global imbalances.

Excess capacity is also undermining investment in steel decarbonisation. While many firms are pursuing decarbonisation technologies, progress is uneven due to limited access to renewable energy and high grade ores. This could shift production and trade patterns over time.

Substantial increases in steelmaking capacity of up to 6.7% (165 million metric tonnes [mmt]) are planned worldwide from 2025 to 2027, which, if realised, will exacerbate global excess capacity. Asian economies are expected to account for 58% of the new capacity, led by substantial increases in the People’s Republic of China (hereafter “China”) and India. Cross-border investment is involved in about 16% of the total tonnage to be added from 2025 onward, with China playing a leading role in such investment.

With demand growth expected to be sluggish at best, capacity utilisation could once again decline towards 70%, putting enormous pressure on even highly competitive steelmakers. Already, steel prices have declined from their 2021 peak to historically low levels, although they appear now to be bottoming out. Profitability has experienced a similar trajectory, falling sharply from the relatively strong 2021 level.

Steel demand prospects vary across regions. Solid growth in many emerging markets during 2024 was largely offset by a strong contraction in demand in China and a decline in the OECD area. Through 2030, world demand is expected to grow by 0.7% per year. Demand in the OECD area will remain roughly constant, while Chinese demand will decline appreciably due to the downturn in construction and structural shifts in China’s economy. Prospects are brighter in the Association of Southeast Asian Nations (ASEAN) and Middle East and North Africa (MENA) areas, where demand will grow strongly.

Courtesy: www.oecd.org