WSD viewed the announcement of mandated Chinese steel production restraints, whereby steel production in 2021 and beyond was not to exceed the 2020 level, as the “signal” that both production and demand have little to no room for future growth. Indeed, that theory has proven largely correct, as demand “maxed-out” at about 980 million tonnes in 2020 (on a finished product basis) and has since declined every year, reaching an estimated 797 million tonnes in 2025. Looking ahead, WSD anticipates this trend to continue in the decade ahead:
- Chinese apparent steel demand is forecast to continue declining at a ~1.3% per annum rate for the next ten years – arguably an “optimistic” scenario considering the trailing five-year average of -4.0% per annum – from a preliminary figure of about 797 million tonnes in 2025. On that basis, apparent demand would amount to about 696 million tonnes by 2035, or a decline of roughly 99 million tonnes. Demand could fall further to about 646 million tonnes by the end of the decade, assuming the rate of decline is reduced to about -1.1% during that period.
- The outlook for China’s net exports is perhaps the most influential “wildcard” from the perspective of international steel pricing and profitability in the decade ahead. So far, the trend has been a profound negative as China’s net exports have surged to unprecedented levels just as steel demand has entered its decline, rising to a record 125 million tonnes in 2025 from only ~38 million tonnes less than a handful of years prior.
As WSD sees it, there is scant evidence to suggest a substantial reversal in this overall trend, especially considering the macro policy recently outlined in the 2026-2030 Five Year Plan, which essentially doubles-down on the export-oriented economic growth model. The latter implicitly limits steel demand upside – despite manufacturing growth, the bulk of steel-intensive activity still resides in FAI-driven construction and infrastructure segments – as such a model likely restrains any support for the beleaguered construction sector.
- WSD forecasts China’s net exports will remain elevated in the near term, especially relative to declining production and consumption levels, at about 91 million tonnes come 2035. This would represent a modest decline to roughly 13% of apparent consumption versus about 16% on the same basis in 2025.
- To some degree, this modest decline could be viewed as a “positive” for the global steel sector; however, WSD views it more as a reflection of continuing Chinese dominance in international steel markets, especially considering the same ratio stood at only ~4% in 2021.
WSD forecasts the continuation of the decline in Chinese steel demand that has been underway since the Covid pandemic of 2020-2021. This decline has been driven in large part by the collapse of the housing construction sector, with new starts of apartments and other forms of housing down about 20% in 2025 since their peak in 2021. This has reduced steel demand from the overall real-estate sector to only about 145 million tonnes in 2025 from an estimated 261 million tonnes in 2022.
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