Global steel demand growth slows due to China’s contraction

World steel demand is projected to hold steady at 1.722 billion metric tons in 2026, then increase 1.7% in 2027, according to the World Steel Association, or worldsteel, in its latest short-range outlook.

Slower Recovery Due to China’s Contraction

Worldsteel states that the recovery trajectory outlined in April still holds but is progressing more slowly than initially anticipated. The projected 1.7% growth in 2027 is down from an earlier forecast of 2.2%, almost entirely due to China’s expected contraction. The association emphasizes that the recovery is not weaker, just its momentum is being overshadowed by China’s structural decline.

Energy-market disruptions from ongoing Middle East instability further complicate the outlook.

Alfonso Hidalgo de Calcerrada, chair of the worldsteel economics committee, highlighted that a significant turnaround in developed world industrial activity and steel demand is still expected in 2027. He attributes this to growth in AI-related investments, defense spending, energy transition initiatives, rising incomes, and supportive policies.

Hidalgo de Calcerrada noted that demand outside China reaching 4.0% growth in 2027 is rare in recent years and signals optimism for the steel industry and broader economy.

China’s Economic Pressures and Regional Shifts

Worldsteel now expects Chinese steel demand to decline by 2.0% in 2026, revising down from April’s forecast, with the contraction narrowing to 1% in 2027. The property investment downturn has not eased as anticipated, and infrastructure investment, previously seen as a support, has remained in negative territory. Manufacturing growth, driven by strong exports, has not offset weaker real estate and infrastructure sectors.

Steel demand in developing economies excluding China is forecast to rise by 1.9% in 2026 and 5.1% in 2027. India remains the fastest-growing major steel market, with demand projected to reach 172.4 million tons in 2026 and 186.2 million tons in 2027.

The Gulf region illustrates the impact of regional conflict on steel demand. After a 17.7% surge in 2025 due to economic programs and infrastructure projects, demand is now expected to drop by 11% in 2026. Worldsteel forecasts an 11.3% rebound in 2027 as uncertainty diminishes and supply chains normalize.

Developed World and U.S. Projections

Steel demand in developed economies is projected to grow by 1.0% in 2026 and 2.2% in 2027, following a stabilization in 2025. The EU’s apparent steel use is expected to decline by 0.3% in 2026 before growing by 3.1% in 2027, a downward revision of 1.5 percentage points for this year. In the U.S., demand is forecast to rise by 2.0% in 2026 and approximately 1.5% in 2027.