Tighter supply lends support to global steel market

Global steel prices are expected to rise modestly in 2026, supported by tighter supply conditions as export volumes from Mainland China begin to ease.

BMI (a FitchSolutions Company) forecasts global average steel prices will climb to around $US625 per tonne in 2026, up from approximately $US600 per tonne in 2025, marking a reversal after several consecutive years of price declines.

The price uplift is being driven largely by production curbs in China rather than a recovery in demand. China’s crude steel output is forecast to fall by four per cent in 2026 to 936 million tonnes, following an estimated three per cent decline in 2025 to 974 million tonnes.

This contraction reflects renewed efforts by authorities to rein in excess capacity, particularly in northern regions where steelmakers must now decommission at least 1.5 tonnes of capacity for every tonne added under rules released by the Ministry of Industry and Information Technology in October 2025.

Lower Chinese output is expected to translate into fewer steel exports after a surge in 2025, when shipments rose 6.7 per cent year-on-year between January and November. As export volumes ease and anti-dumping duties in Asia, Europe and the Americas remain in place, global steel markets are set to tighten, supporting higher prices.

Iron ore dynamics are reinforcing this trend. Despite steel production cuts, iron ore prices remain subdued, with 62 per cent iron (Fe) fines at Qingdao trading below $US100 per tonne. Robust supply, particularly from Guinea’s Simandou project, which came online in November 2025, is pushing the seaborne iron ore market into deeper surplus.

Lower iron ore and coking coal prices are supporting steelmaker margins but are not translating into cheaper steel due to reduced output.

BMI said that the rise in steel prices in 2026 will be supply led and margin supported, rather than demand driven, with the longer term outlook still pointing to softer prices as global capacity expands and green steel production accelerates.