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| Steel |
Supply Outpaces Demand Growth, Stoking Trade Tensions and Undermining Green Transition
Global steelmaking capacity is on track to grow by 6.7%—or 165 million tons—by 2027, with nearly 60% of the expansion concentrated in Asia, particularly in China and India, according to the OECD. In contrast, global steel demand is forecast to grow at just 0.7% annually through 2030, mainly driven by ASEAN and MENA markets, while China’s consumption is expected to decline.
This growing imbalance is projected to drive global capacity utilization down to around 70%, intensifying margin pressures—even for the most efficient producers—and further depressing steel prices, which have fallen sharply from their 2021 peaks.
Protectionism on the Rise as China’s Exports Swell
China’s ongoing subsidies and rising exports have fueled trade protection responses worldwide. Over the past year alone, 81 anti-dumping investigations into steel products have been launched globally. These measures reflect mounting concerns over distorted market competition and steel dumping, particularly by state-supported producers in Asia.
Green Steel Struggles Amid Overcapacity
The looming glut is also undermining investment in decarbonized steel production. Over 40% of new capacity still relies on the carbon-intensive blast furnace/basic oxygen furnace (BF/BOF) method, indicating a sluggish transition toward greener alternatives like electric arc furnaces (EAFs) and hydrogen-based processes.
ScrapInsight Editorial Commentary
Surging global steel capacity amid stagnating demand will likely put downward pressure on scrap prices, especially in export-driven economies. Overcapacity may also slow the shift toward EAFs—crucial for boosting demand for ferrous scrap—as producers cling to subsidized BF/BOF setups. For scrap exporters, this imbalance may intensify competition and increase reliance on protectionist policies to sustain fair trade flows. A sustained pivot to green steel will need policy certainty, not just market incentives.
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