According to recently revised forecasts, the conflict in the Middle East is a major stress test for the projected recovery in global steel demand in 2026.
European Parliament respondents in Europe, Asia and North America this month noted the impact of the conflict on their spending. In particular, those living in the United States and Canada noted the impact of rising transportation costs. Energy costs are a bigger problem for steel producers in Europe and Asia.
In addition, increased tariffs and extended delivery times between the two regions create an additional barrier to exports from Asian producers ahead of the introduction of reduced tariff quotas and tariffs exceeding quotas of 50% by the EU and the UK from July 1, compared with 25%.
Despite these challenges, worldsteel's new short-term forecast predicts that global steel demand will return to growth in 2026 after declining 1.6% in 2024 and 1.9% in 2025. However, the company lowered its growth expectations to 0.3% from 1.3% in the October report, estimating the total market volume at 1.72 billion tons. In addition, growth of 2.2% is projected in 2027.
The Worldsteel forecast reflects the data available as of mid-March. His assumptions are based on the June settlement of the Middle East conflict.
Conflict is holding back economic growth in developing countries
Even if the war in the Middle East is resolved by June, steel demand growth in developing countries, excluding China, is projected to slow to 2.5% in 2026, down from about 5% in recent years. This is primarily due to a sharp decline in demand from steel buyers in the Middle East.
Slowing the pace of decline in China's domestic steel demand may help alleviate concerns about excess steelmaking capacity. In 2025, the country's steel production decreased by 4.4% year-on-year to 960.8 million tons. However, exports increased by 7.5% year-on-year to 119.02 million tons, as domestic demand for steel decreased by 7.1% to 796 million tons. The decline in domestic steel demand in China is expected to slow to 1.5% this year and remain unchanged in 2027.
- This article was first published in the April issue of the European Parliament's International Steel Review. The monthly report provides subscribers with information on steel prices, indexes, market commentary, and forecasts from key global steel markets in North America, Europe, and Asia. Contact the MEPs for detailed information on how to subscribe.
According to worldsteel, India will remain the world's largest steel producer. the most significant global
