Global crude steel production dips by 2% y-o-y in CY’25

• • China’s output falls 4% on weak demand, govt curbs

• • Strong infra growth, policy support boost Indian output

• • US overtakes Japan to become 3rd-largest producer

Morning Brief: Global crude steel production totalled 1,849.4 million tonnes (mnt) in CY’25, down 2% y-o-y from 1,886.8 mnt in CY’24, as per data from the World Steel Association (WSA).

The decline was expected, with output from China, the largest producer accounting for over 50% of the world total, falling by 4.4% to a seven-year low of 960.8 mnt. Moreover, a number of leading producers, including Japan, Russia, and South Korea, also recorded modest declines, struggling with weak demand and sluggish economic growth.

Earlier, in October, WSA had also projected global steel demand in CY’25 at 1,749 mnt, flat y-o-y. Subdued manufacturing activity, geopolitical tensions, and cautious trade sentiment weighed on steel demand and, consequently, production.

How did top steel-producing countries fare in CY’25?

China’s crude steel production fell by 4.4% in CY’25, with consumption estimated to have dropped by a slightly steeper 5.4% to 808 mnt. The fall could be attributed to relatively subdued activity in the manufacturing and infrastructure sectors besides real estate, which failed to recover from its prolonged downturn since 2021.

The government anti-involution programme, aimed at limiting harmful competition within the industry, also sent a strong signal to steelmakers to curb output, which was reinforced by shrinking profitability and pollution control measures in the final quarter of the year.

Among the top ten, India was the only country to record double-digit growth in production, at 10.4%, while consumption grew at a slower 8%. Rapid infrastructure growth, urbanisation, and active policy support encouraged strong production momentum, while steady capacity expansions added to the total. A mild decline in imports also boosted production enthusiasm.

The US surpassed Japan to become the third-largest producer, logging an increase of 3.1%. The 50% import tariffs succeeding in reducing the US’s imports by around 11% to 23.7 mnt in January-November, which spurred mills to raise their capacity utilisation rates. Additionally, easing pollution-related regulations, other tax reforms, and an increase in demand from the automotive sector were other key contributors to the US’s higher crude steel production.

Japan’s crude steel output fell by 4% in CY’25 to 80.7 mnt, the country’s lowest total since 1969, 56 years ago. Mounting exports from China and flagging global demand adversely affected Japan’s steel industry, given its heavy export dependency. Moreover, delays in construction projects due to a labour crunch, the punitive impact of US tariffs on Japanese automobiles, and rising adoption of protectionist measures globally pressured steel demand, keeping manufacturers wary of increasing output.

Russia’s production is estimated to have fallen by 4.5% y-o-y to 67.8 mnt. According to the Russian Steel Association, domestic consumption is projected to have declined by 14% to 38 mnt in CY’25, the lowest since CY’11, driven by reduced demand from the automotive, mechanical engineering, energy, and construction sectors. Lower steel production could also be attributed to thinning profits, high interest rates, and sanctions pressures. However, exports are estimated to have increased 19% to 24 mnt, compensating for the sharp drop in domestic demand.

South Korea’s output was down by 2.8% y-o-y. The major reasons were a domestic demand slump, especially from the construction segment; weak profitability; elevated energy costs; and rising Chinese steel imports. US tariffs, EU safeguards, and other protectionist measures by major importers also curtailed South Korea’s steel demand.

Turkish crude steel production rose 3.3% y-o-y, driven by robust infrastructure and construction activity as part of government-led reconstruction efforts following the devastating 2023 earthquake. Other factors included strong export growth, energy infrastructure development, strong momentum in the automotive sector, and financial incentives to boost household consumption.

Crude steel production in Germany fell by 8.6% to 34.1 mnt, with capacity utilisation rates slipping below the critical 70% mark. Notably, crude steel production remained below the 40 mnt for the fourth consecutive year, as surging energy costs, the increasing market share of imports, and lacklustre manufacturing sentiment discouraged steel mills. In the German steel industry, the 40-mnt mark is generally considered the minimum for economic viability.

Brazil’s crude steel production dipped by 1.6% in CY’25, even as apparent steel demand increased 3%. This was because of rising low-priced imports, primarily from China, which pressured domestically steelmakers’ margins and capacity utilisation rates.

Iran’s crude steel production inched up by 1.4%, even though restrictions on gas and electricity consumption hampered production intermittently throughout the year. Ultimately, procurement of energy from alternative sources allowed manufacturers to normalise operations. Moreover, growing export demand and declining imports facilitated an increase in crude steel output.

Outlook:

Global crude steel production is likely to remain flat y-o-y in CY’26, as the market downturn bottoms out. The WSA has projected a 1.3% rebound in steel demand in CY’26, given the global industry’s continued resilience in the face of geopolitical and trade headwinds. Sustained economic growth, though at a subdued level, as well as monetary easing, will also likely offer steady support to steel consumption. However, trade frictions and geopolitical volatility may keep producers cautious about lifting output.

In terms of regions, China will continue to be key driver. Tighter production controls are set to continue, while it is unlikely that property sector will finally be able to find its footing. Steel demand is projected to fall further in CY26, by a much-lower 1% to 800 mnt. As such, Chinas steel production is set to decline further though at a slower pace.

The continued fall in Chinese steel production is likely to be balanced by growth in India, the ASEAN and MENA regions, and, most possibly, the EU. India will continue to be a bright spot, with massive public infrastructure spending, supported by robust construction demand. Meanwhile, steel production in the EU may finally rebound in CY26, with EUROFER projecting a 3% increase in consumption following four consecutive years of decline. This production growth is likely to stem from an expected decline in imports due to the Carbon Border Adjustment Mechanism (CBAM).

Additionally, in Russia, while domestic demand is set to rise with key infrastructure projects scheduled, the Ukraine war and resulting sanctions, tight liquidity, and firm raw material costs amid falling steel prices may lead to a fall in steel output again.