Excess steel production capacity continues to weigh on global markets – OECD

By 2026, global excess steel production capacity will reach 745 million tons. This is according to a new report by the Organization for Economic Cooperation and Development (OECD) – OECD Steel Outlook 2026.

This figure exceeds current steel production in the OECD by 319 million tons.

The planned capacity increase of 139 million tons by 2028 represents a 5.7% rise compared to 2025 levels, while demand growth is expected to be moderate—at around 0.9% per year.

Most of the new capacity, the report notes, is being built outside OECD countries, often with government support. In 2024, the average Chinese steel company received 15 times more subsidies relative to its total assets than producers in other countries.

Capacity in OECD member countries decreased by 2.8 million tons (-0.4%) between 2021 and 2025, with particularly sharp declines observed in the United Kingdom (-39.7%) and Japan (-7.2%).

“Excess steel production capacity creates problems for everyone. It distorts global markets, undermines economic security and resilience, and hinders innovation and sustainable development,” said OECD Secretary-General Matthias Cormann.

He added that the root causes must be addressed, particularly subsidies and other non-market practices, which requires strengthened international cooperation.

The report also highlights mounting pressure on raw material supplies. In particular, 42 countries currently restrict scrap exports. Rising energy prices linked to the conflict in the Middle East are creating an additional burden, as energy costs can account for up to 40% of the cost of steel production. This pressure is weighing on investment decisions in the industry; several low-carbon steel production projects have been postponed.

As a reminder, the American Iron and Steel Institute (AISI) previously noted that global excess capacity undermines market discipline and creates significant obstacles for American steelmakers, who, among other things, are seeking to invest in new and modernized facilities.