Non-Chinese Steel Demand Shows Positive Outlook Ahead

Non-Chinese Steel Demand Shows Positive Outlook through 2026

The outlook for non-Chinese steel demand may be turning moderately positive through 2026 in WSD’s opinion. Here’s our expectation looking ahead to 2026 on a crude steel equivalent basis:

Global steel production ex-China/India is so depressed at present, that even a modest uplift of about 20-25 million tonnes would immediately shift some pricing power to the mills, albeit not sufficiently to create a “good” or “boom” times environment. Consider:
Crude steel output in the world ex-China/India peaked most recently at 790 million tonnes in 2021 with the 2025 figure estimated at about 714 million tonnes – or about 76 million tonnes lower.
A still anemic growth rate in steel demand (by historical standards) of about 1.0% for 2026 would yield roughly 852 million tonnes of apparent consumption (ex-India), an increase of 8 million tonnes versus 2025
A decline in Chinese steel exports of about 15 million tonnes appears reasonable given the recently-implemented trade actions in S. Korea, Vietnam, India, and other markets
Hence, crude steel output would have to rise by about 23 million tonnes to 736 million, the highest figure since the 2021 recent peak.

Given the above, notwithstanding the decline in Chinese steel output, global steel production in 2026 at 1.87 billion tonnes is about unchanged versus 1.86 billion tonnes this year.

Steel buyers may decide it’s time to start adding to inventory because their inventories have been pared and/or they fear price increases. The HRB export price will look more attractive to them on a Risk/Reward As perceived by the buyer, the Risk, if the price is $450 per tonne FOB the port of export by late-2025, might be a price rise in the next year of, let’s say, $75 per tonne; while the Reward might be only a further $25 per tonne decline; hence, the R/R is +$75/-$25 = 3.0 X.

Other factors that could be promoting economic growth outside of China include:

Interest rates will be on the decline while inflation rates will likely remain subdued (on the aggregate), which is a positive for global economic activity since borrowing costs will be coming down. There remains an excess supply of money circulating the globe, with hordes of it seeking a safe haven in government bonds.
No global financial crises.
No massive weakening of the Chinese RMB versus the U.S. dollar.
Rising FAI/GDP outside of China. On a global basis, FAI/GDP rises from 25% to 27% during these years (using IMF data):
More outlays for machines using AI to replace workers. Capital is replacing labor.
High fixed asset investment (construction and capital spending) in many countries because policymakers are fearful of diminished employment based on the use of artificial intelligence. They promote FAI to create more jobs. The Capital Fundamentalism economic theory is in full bloom.
High returns on manufacturing investment based on opportunities created by the technological revolution and the low cost of money.
No runaway in the prices for industrial commodities – including steelmakers’ raw materials and, possibly, oil.
No runaway wage increases. Workers are losing their pricing power as capital continues to replace labor. Workers are increasingly fungible.

Some economic growth restraints – the countervailing forces – include:

Aging populations.
Political turmoil.
Massive municipal and governmental debt in a number of countries, leaving less funds for infrastructure spending.
Trade wars.
Individual country economic flare-ups.
The Chinese economy may perform more poorly than expected.
Destabilizing swings in exchange rates.
Stock market declines.

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