WSD’s Regional Outlook & Development: Part 2: World ex-China
Apparent demand growth in the World ex-China the past five years has not been sufficient to absorb the excesses in the system, especially those emanating from China:
• ASC has risen from about 860 million tonnes in 2019, the last full year preceding the Covid pandemic, to an estimated 910 million tonnes in 2025 for a CAGR growth rate of exactly 1.0% during that period.
• India was a key exception to this trend, posting a CAGR growth of 7.3% during the same period, with demand rising to 153 million tonnes in 2025 from about 101 million tonnes in 2019.
• When excluding India, steel demand in the World ex-China actually declined at a rate of -0.1% during the same period, from 759 million tonnes in 2019 to 757 million tonnes in 2025.
The combination of stagnant demand in the World ex-China/India and rising exports from China has proved to be the Achilles heel for international steel prices in the last handful of years:
• The price of hot-rolled band on the World Export market has declined from an average of $498 per tonne in 2019 ($542 per tonne 2018-2019 average) and a high of $905 per tonne in 2021 (the post-Covid peak) to $466 per tonne in 2025.
• The combined cost of integrated steelmakers’ raw materials – iron ore and coking coal – has risen from an average figure of $311 per tonne in 2019 to $333 per tonne in 2025. (Note: these figures are based on the prevailing prices of 62% Fe iron ore, delivered to northern China ports combined with the price of Australian premium coking coal, FOB port of export, adjusted for usage ratios, respectively.)
• Hence, the “spread” between the price of hot-rolled band, FOB port of export, and the cost of integrated raw materials has compressed from $187 per tonne in 2019 (and a recent peak figure of $504 per tonne in 2022) to only $113 per tonne in 2025.
The “spread” figure – a good proxy for the profitability of export-oriented integrated steelmakers – is the lowest on record going back to 2009 in the aftermath of the Global Financial crisis. Even the period of ultra-depressed prices driven by the Chinese “Export Armada” of 2015-2016 at an average “spread” of $174 per tonne does not compare to the most recent situation.
• Hence, the key question for the World Export price of Hot-rolled Coil and related products in the decade ahead is whether the most recent experience of historically depressed spreads over raw material costs – i.e. the margin – is a medium to long-term phenomenon or a more typical brief “shake-out” period?
Our forecast assumes the answer lies somewhere in the middle: a potential prolonged “shake-out” period that lasts several years on a combined basis in the early part of the cycle – rather than several brief downside “blips” as in prior cycles – followed by a gradual recovery as capacity reductions in China catch-up to waning demand during the second half of the cycle.
As a generality, WSD sees the regional pricing dynamics being driven by a combination of “traditional” market forces – such as regional supply/demand, international steel product trade, raw material prices, etc. – and non-industry-specific dynamics, such as:
• The evolution of the “Age of Protectionism,” not only with respect to direct steel trade but increasingly the “indirect” trade in steel-intensive (such as automobiles, etc.) and other manufactured goods.
• The continuation, or perhaps the stalling-out, of the Decarbonization movement seeking to reduce industry emissions in various ways, depending on regions and government policies.
• The Artificial Intelligence Revolution and its impact on global energy demand, employment, and manufacturing technologies among a slew of other “existential” ramifications.
• Shifting global World Order—Under the second Trump administration, trade deals are rapidly changing, and the role of American diplomacy has shifted significantly.