The global steel market is once again at a crossroads as the OECD flags a worrying resurgence of excess capacity.
With global oversupply crossing pre-pandemic levels and China’s exports surging to near-decade highs, pressure is mounting on regional producers. India has responded with a decisive safeguard duty on select flat steel imports, aiming to shield domestic mills from aggressive overseas competition.
Markintel’s analysis suggests the world’s steel supply-demand equation is entering a new imbalance, one where trade defense and cost leadership will define industry survival.
1. OECD Raises Red Flag on Excess Capacity
The OECD’s Steel Committee estimates that global steelmaking capacity has surpassed 2.5 billion tonnes, leaving an excess capacity of around 680 million tonnes.
A significant share of this excess stems from new Chinese and Southeast Asian plants, many of which are running below 75% utilisation.
Persistent overcapacity is eroding pricing discipline and creating a structural imbalance in global trade flows.
OECD members have urged coordinated efforts to monitor subsidies and capacity expansion in non-OECD economies, warning of a “second wave” of global steel dumping.
Markintel Insight: The oversupply cycle has re-emerged faster than expected. Unless disciplined capacity controls are enforced, global prices will remain trapped in a low-margin zone well into 2026.
2. China’s Export Surge Reconfigures Regional Trade
China’s finished steel exports have surged by 10% year-on-year, reaching nearly 110 million tonnes, the highest since 2016.
Weaker domestic demand from property and construction sectors has forced Chinese mills to push surplus output into global markets.
Exports to ASEAN, the Middle East, and South Asia have grown sharply, often at prices USD 30–50 per tonne lower than regional offers.
The influx of low-priced Chinese material has begun to distort local markets in Vietnam, Thailand, and now India.
Markintel Insight: China’s export rebound is not cyclical, it is structural. Weak local demand and competitive cost structures mean China will continue to export aggressively through 2025 and 2026.
3. India Responds with Safeguard Duties
The Indian government, following recommendations from the Directorate General of Trade Remedies (DGTR), has approved final safeguard duties on certain flat steel imports for the next three years.
The duties have been fixed at 12% in Year 1, 11.5% in Year 2, and 11% in Year 3, covering HR coils and select alloy grades.
Industry associations, however, argue the rates are conservative and may need further revision to effectively counter Chinese export pricing.
Domestic producers such as JSW, Tata Steel, and AMNS India are expected to benefit from improved import parity and more stable pricing in the near term.
Markintel Insight: India’s safeguard duties are both a defensive measure and a strategic reset. While they provide short-term stability, they also buy time for Indian mills to invest in higher-value segments and prepare for export competitiveness.
4. Global Trade and Pricing Under Pressure
Global flat steel prices remain volatile, with HRC CFR Vietnam near USD 520–530 per tonne, down nearly 12% year-on-year.
In contrast, Indian domestic HRC prices hover around USD 610–620 per tonne ex-works, supported by duties and steady infrastructure demand.
The OECD’s warning aligns with recent trade flow shifts, where China and ASEAN producers export aggressively into low-tariff markets, while Western and Indian mills rely on domestic protection.
With energy and logistics costs stabilising, global steel prices are unlikely to see major upside in the near term.
Markintel Insight: The global market is splitting into two clear zones — protected markets like India and open markets like ASEAN. Each faces its own risks: import inflation in the former and deflationary dumping in the latter.
5. India’s Steel Demand Remains a Bright Spot
India’s steel consumption continues to grow at 7–8% annually, driven by infrastructure, manufacturing, and renewable energy projects.
Domestic production reached 105 million tonnes in the first nine months of 2025, up 8% year-on-year.
Despite import duties, India’s cost competitiveness is gradually improving due to better raw material linkages and rising domestic scrap availability.
The primary challenge remains export competitiveness, where freight and input cost disadvantages persist.
Markintel Insight: India has emerged as one of the few demand-positive markets globally. The priority now is to leverage this domestic base to upgrade technology, improve efficiency, and strengthen export resilience.
6. Outlook for 2026
Markintel expects continued oversupply and weak global demand to limit any major price recovery in the next two quarters.
China’s export behavior, ASEAN capacity growth, and India’s domestic policy stance will remain key determinants of market stability.
A moderate rebound in prices is possible by mid-2026 if Chinese output cuts coincide with a revival in infrastructure demand.
The Indian government may review safeguard duty structures if imports rise again from alternative origins such as Japan or Korea.
Markintel Insight: The next six months will be a balancing act between protectionism and competitiveness. India’s policy cushion provides breathing space, but not immunity, from the global supply glut.
7. Markintel Strategic View
For steel industry leaders and policymakers, the focus should now shift from reactive trade defense to proactive capacity and product strategy.
Strategic Priorities:
- Build cost leadership through vertical integration and energy-efficient operations
- Accelerate value-added product development in coated, electrical, and high-tensile grades
- Strengthen trade monitoring mechanisms to detect import surges early
- Diversify export markets toward Africa, the Middle East, and Latin America
- Invest in green steel and recycling technologies to align with future trade and ESG mandates
Markintel Insight: The current imbalance is reshaping global steel economics. Firms that adapt through technology, efficiency, and value addition will be best positioned to thrive when the global rebalancing begins.
Global Steel Market Snapshot: 2025
| Region/Country | Crude Steel Output (2025 est.) | Exports (2025 est.) | HRC Price (USD/ton) | YoY Change | Key Observation |
|---|---|---|---|---|---|
| China | 1,020 million tons | ~110 million tons | 520–530 CFR Vietnam | ▼ 12% | Export surge driving global oversupply |
| India | 125 million tons | ~8 million tons | 610–620 Ex-works | ▼ 5% | Demand strong, supported by safeguard duties |
| Japan | 90 million tons | ~25 million tons | 640–650 FOB | ▼ 8% | Stable output, weak global demand |
| South Korea | 65 million tons | ~28 million tons | 630–640 FOB | ▼ 9% | Trade exposure increasing |
| Vietnam | 20 million tons | ~6 million tons | 520 CFR | ▼ 10% | Heavy import dependence, facing Chinese inflow |
| Global Capacity | 2.5 billion tons | — | — | — | OECD flags 680 million tons excess capacity |
Source: OECD, DGTR, Markintel Research, and Industry Data
Disclaimer: Data and insights presented in this article are compiled from publicly available government and industry sources including OECD, NITI Aayog, DGTR, CRU, and S&P Global Commodity Insights. Markintel has independently analysed and interpreted this information for research and educational purposes; it does not represent the official views of any cited organisation.
