According to the OECD Steel Outlook for 2026, published on June 4, global steel overcapacity will rise to 745 million metric tons by 2028, exacerbating the overcapacity crisis that threatens the viability of market-oriented producers worldwide.
The forecast is made due to the fact that global steelmaking capacity reached a record 2.445 billion tons in 2025, which was the fifth consecutive year of growth, despite the fact that steel demand has been declining for the fourth year in a row. The excess production capacity has grown to 640 million tons in 2025, already exceeding the total OECD steel production by more than 200 million tons.
The widening gap between potential and demand will push recycling prices by 74% or lower by 2028, from 76% in 2025, increasing financial pressure on the industry. The planned increase in capacity to 138.8 million tons in the period up to 2028 is 5.7% compared to the level of 2025, with the main increase occurring outside the OECD countries.
Stagnation of demand )
Capacity expansion is facing persistently weak demand. Global steel consumption decreased by 2.6% in 2025 and is projected to remain virtually unchanged in 2026, with growth averaging just 0.9% per year through 2030, reaching 1.89 billion tons.
In China, the world's largest consumer of steel, demand fell by 6.9% in 2025 as the downturn in the real estate sector intensified. Demand in China is expected to decline by another 0.6% in 2026 and continue to decline through 2030, according to the OECD.
The weakness of China's economy has led to a significant increase in exports: in 2025, Chinese steel producers shipped a record 131.2 million tons of steel to foreign markets, which is 13.8% more than with a 6.2% decrease in global steel exports. During 2019-2025, China's exports more than doubled, and the country's share of global exports increased from 19% in 2019 to 41% in 2025. The exporters of the Association of Southeast Asian Nations (ASEAN) have also more than doubled their exports during 2019-2025, reaching 20.8 million mt ions in 2025.
India and Southeast Asia have shown higher growth prospects: Demand in India grew by 9.8% in 2025 and is projected to grow by 5.1% annually through 2030. However, both regions are also increasing significant capacity, with India planning to increase new capacity to 31.8 million tonnes by 2028 after increasing by 41.4 million tonnes during 2021-2025.
Subsidy distortions
The OECD report highlights the growing distortions associated with government subsidies, especially in China. The average Chinese steel company received 15 times more subsidies in 2024, depending on the size of assets, than manufacturers in other countries, the report says.
According to the OECD, steel mills
