Steel market pressures mount as global capacity reaches new high and trade circumvention accelerates
Statement by Ms. Sheryl Groeneweg,
Chair of the OECD Steel Committee
99th session, 23-24 March 2026, Paris
Delegates discussed the continued deterioration in market conditions, driven by the unsustainable growth in global steel excess capacity. China's share of global excess capacity rose during 2025, surpassing 50% in the latter part of the year, spurring surges of exports to international markets. This excess capacity is putting enormous pressure on international markets by displacing production in the Committee's member countries, driving prices and industry profitability down as steel producers, particularly in areas outside of the Steel Committee's membership, seek to maintain their position by flooding foreign markets with steel, and contributing to significant employment losses.
Steel Committee members reviewed their trade policy actions, noting that exporters continue to develop new and increasingly sophisticated methods of evading steel tariffs, highlighting the need to strengthen trade enforcement. If current trends continue, costs will mount, more jobs will be lost, and the long-term viability of this sector and, in turn, the national economic security of some members may even be compromised. These headwinds are also impeding the steel industry's ability to invest in innovation and lower-carbon production, as well as in skills and quality jobs to secure the long-term viability of the steel industry in market-oriented economies. Delegates welcomed accelerated efforts by the Global Forum on Steel Excess Capacity (GFSEC) to develop a new framework for joint action to address the structural issues and impacts of the excess capacity crisis.
Key conclusions from the meeting include:
- International steel market conditions are under renewed pressure. Global steel demand has contracted for four years in a row, with the rate of decline accelerating to more than 2% in 2025. Projections for 2026 indicate modest global demand growth, though the extent of the impacts of the current conflict in the Middle East on global steel markets is highly uncertain. While demand in China is expected to continue its structural decline, albeit at a more moderate pace compared to the estimated 6.5% contraction observed in 2025, the OECD area is poised for a partial recovery following its 1.5% demand decline in 2025. India, Southeast Asia, the Middle East and North Africa (MENA) region, and other developing economies continue to show relatively stronger growth prospects. In view of the situation in the Middle East and its impacts on steel markets, delegates focused on the urgent need to work towards energy and raw material security for their steel industries. Potential policies were discussed that would enable affordable, stable and reliable energy supply to their steel industries, thereby ensuring national economic security, and delegations agreed to keep these issues under review.
- Global excess capacity reaches new highs. At the global level, excess capacity increased to 640 million metric tonnes (mmt) in 2025, exceeding total OECD steel production by more than 200 mmt, and is projected to continue rising through 2028. Global steelmaking capacity has increased for four consecutive years, reaching a new high of 2 445 mmt in 2025. A share of this is export-oriented. Regional developments have diverged significantly, however, with the OECD area contracting while non-OECD economies recording growth during this period. India and Southeast Asia have been significant drivers of the Asian capacity expansion, supported by relatively strong demand growth and, in the case of Southeast Asia, inward foreign direct investment. The Middle East, particularly Iran, is also a significant source of new capacity additions. The Committee expressed concern about over-investment, which is adding to already severe oversupply and heightening trade tensions globally.
- China's steel exports reach record highs in 2025. As steel demand contracts in China, steel producers there are diverting surplus production, at an unprecedented scale, to international markets to make up for lost domestic sales. China's annual exports have nearly doubled over the last three years, with its 131 mmt export volume last year surpassing the combined exports from the rest of Asia for the first time in recent history. Market-oriented producers in Europe, North America and Latin America have also suffered steel export declines in recent years, as China's exports surged. These imbalances have triggered significant trade policy responses from countries.
- Members' trade actions are delivering early results, but their effectiveness is being undermined by growing circumvention activity. These include trade remedies, tariff-rate quotas, and national security measures. Measures to address the injury from unfair trade have intensified with China the primary target. In 2025, a total of 75 antidumping (AD) and countervailing duty (CVD) investigations were initiated, and the stock of steel AD/CVD measures climbed higher. Despite these efforts to safeguard steel industries, the effectiveness of OECD members' trade actions is being hampered by a significant steel trade circumvention problem as well as non-market financing and distortions in input costs. Based on a new dataset covering over 260 product-level and country-level cases, new work discussed by the Committee reveals significant transhipment activity between China and some Southeast Asian countries of steel subject to trade measures taken by OECD countries. Exporters are increasingly resorting to a widening range of circumvention techniques in response to OECD countries' trade measures, including by slightly modifying the products, by investing in steel plants abroad to change the origin of the steel, and by exporting steel in the form of steel-intensive downstream products that are not subject to the trade measures.
- New work highlights worsening subsidy trends. Market-distorting subsidies in the steel industry continue to increase, mainly outside of the OECD area. The latest data show that, in 2024, the median Chinese firm received 15 times more subsidies relative to its asset size than a median firm elsewhere, compared to 10 times more in previous years. Moreover, China's steel subsidy rate has nearly doubled since 2019, a trend that will sustain excess capacity in the years ahead absent fundamental structural reforms to address the underlying distortions. The Committee's new monitoring work shows that 59 new provincial and municipal subsidy programmes to support the domestic steel industry were introduced in China in 2025. Many of these programmes were found by the Steel Committee to be highly distortive. Moreover, capacity swap programmes to replace BF-BOF with EAF and other low-emission technologies are not delivering the expected net capacity reductions, as new low-emission capacity is being added without equivalent retirement of existing capacity. Government support measures are also prominent in other regions where steelmaking capacity is expanding rapidly.
- International co-operation on new policy solutions to address the crisis is strengthening. Current trends reveal that existing policy approaches and toolkits are insufficient to fully address global excess capacity and its harmful impacts on steel industries. The Global Forum on Steel Excess Capacity (GFSEC), a process called for by G20 leaders in 2016 and facilitated by the OECD, is strengthening its efforts to deal with the steel crisis. Delegates welcomed GFSEC efforts to develop the key elements of a comprehensive framework for joint action by June 2026 and additional steps to help combat and address the problems associated with global excess capacity, including enhanced monitoring of non-market policies and practices and building capabilities to enhance import monitoring and address circumvention.
