The Organization for Economic Co-operation and Development (OECD) has stated in its "Steel Outlook 2026" report that global steel demand is expected to recover only slightly in 2026 following four consecutive years of contraction, as the continued slowdown in China’s property sector offsets stronger growth in India, Southeast Asia, Africa and some Middle Eastern markets, while the widening gap between steelmaking capacity and demand continues to deepen the structural crisis facing the global steel industry.
According to the OECD, global steel demand declined by an estimated 2.6 percent in 2025 to 1.80 billion mt and is forecast to rise by only 0.4 percent in 2026 to 1.81 billion mt, while demand is expected to reach 1.88 billion mt by 2030, corresponding to a compound annual growth rate of just 0.9 percent over the 2025-30 period.
The OECD noted that China’s steel demand fell by 6.9 percent in 2025 to 830.94 million mt and is expected to decline by a further 0.6 percent in 2026 to 826.22 million mt, as the country’s construction activity remains subdued despite the government’s decision in January 2026 to abandon the “three red lines” borrowing policy that had previously restricted property developers’ access to financing.
The organization stated that the policy change is unlikely to generate a rapid recovery in steel consumption, since buyer confidence remains weak and new home prices are still falling, while China’s steel demand is expected to continue its long-term decline and fall to 817.84 million mt by 2030.
Global excess capacity projected to reach 745 million mt by 2028
The OECD stated that the weakness in demand is occurring while global steelmaking capacity continues to expand, creating a widening imbalance that is expected to keep capacity utilization rates at unsustainable levels and intensify financial pressure on producers.
According to the report, global steel excess capacity is estimated to have reached 640 million mt in 2025 and is projected to rise to 745 million mt by 2028, as demand is expected to increase by only 34 million mt during the 2026-28 period, while capacity could expand by up to 139 million mt over the same period.
The OECD underlined that, if realized, global excess capacity in 2028 would exceed current OECD steel production by almost 320 million mt, while capacity utilization rates could fall from 76 percent in 2025 to 74 percent or less by 2028, putting further pressure on steel prices, profitability and the long-term viability of market-oriented steel industries.
The report also stated that most capacity expansion over the past two decades has taken place outside the OECD area and has often been supported by subsidies and other non-market policies, while excess output that cannot be absorbed domestically is typically exported at low prices or embedded in steel-intensive downstream products, creating additional pressure on producers in importing markets.
Regional demand prospects remain uneven
The OECD stated that steel demand outside China is expected to remain stronger than the global average, but growth will remain uneven across regions, with India’s consumption rising by 9.8 percent in 2025 and expected to increase by another 6.7 percent in 2026, while demand in ASEAN countries is forecast to grow by 3.5 percent in 2026, supported by infrastructure, manufacturing, transport, energy and industrial zone investments.
In the United States and Canada, steel demand is expected to be supported by infrastructure spending, manufacturing policies, data center construction, energy-related projects, automotive strategies and clean-technology investments, while Mexico’s recovery is expected to remain gradual due to weak downstream activity and pressure from low-priced Asian imports.
In Europe, steel demand in the EU and the UK is expected to recover by only 1.4 percent in 2026 after contracting in 2025, as weak industrial and construction activity, high energy costs, import pressure and competitiveness challenges continue to limit improvement, particularly in major markets such as France and Germany.
The OECD also noted that Africa and the Middle East recorded stronger steel demand growth in 2025, led by project-driven activity, government-led construction, industrial localization and energy infrastructure investments, but growth in both regions is expected to moderate in 2026 as investment cycles mature and macroeconomic constraints re-emerge.
OECD calls for stronger international cooperation
The OECD stated that the current excess capacity crisis cannot be resolved through demand recovery alone, as trade remedies and other national measures may provide temporary relief but cannot fully address the root causes of the problem, which are linked to subsidies, non-market policies and capacity expansions that are not aligned with market conditions.
The organization said members of the Global Forum on Steel Excess Capacity are developing a new comprehensive framework for joint action in 2026 to address both the root causes and the negative effects of global steel excess capacity, while the OECD Steel Committee is strengthening its monitoring and analytical work in order to improve import monitoring and detect suspicious trade patterns that may indicate circumvention of trade measures.
The OECD concluded that progress on these fronts will be essential for restoring market-driven investment, production and trade in the steel sector, while also supporting a durable turnaround in the global steel industry at a time when weak demand, rising capacity and intensifying trade tensions continue to undermine market stability.