Steel prices may fall by another 4% in 2025

The global steel and raw materials market continues to experience a crisis caused by the simultaneous growth of exports from China and declining demand in key markets. In 2024, China’s steel exports increased by 25%, reaching 115-118 million tons. This coincided with a 3-4% drop in the activity of steel-consuming industries in the EU. This is stated in GMK Center’s article “Prospects for the Ukrainian steel industry in 2025”.

The decline in demand led to an 11% year-on-year decline in flat steel prices in Europe, pushing many producers to the brink of solvency. The Ukrainian steel industry is also feeling the effects of this trend, as 80% of Ukrainian steel is exported to the EU.

The situation may worsen in 2025. Steel consumption in China is expected to decline by 1.5%, but exports will remain high at around 100 million tons. This will increase pressure on prices. Analysts predict that average prices for flat products in the EU will decline by another 4%, and the overall reduction in global steel consumption will be 0.7%.

Falling iron ore prices are also complicating the situation. In 2024, the average price of ore in China fell by 10% – to $110/t Fe62%. In 2025, it is expected to fall even further, by 13-14% – to $95/t. This is due to high raw material reserves and a possible oversupply.

For Ukraine, the decline in iron ore prices is particularly critical. Vertically integrated producers, for whom the iron ore segment has always been an important factor in profitability, are facing a decline in margins. This could lead to a reduction in steel exports, which have already suffered from the pan-European drop in demand.

High market volatility and a challenging economic situation in China add to the uncertainty in 2025, creating additional challenges for Ukraine’s steel industry. It is becoming increasingly difficult for the industry to remain competitive in both domestic and foreign markets. In particular, energy and logistical pressures are increasing: electricity prices are rising above European levels, and railroad transportation tariffs are increasing for the second time in three years. These factors increase the production costs of the iron and steel company and threaten to reduce production or shut down facilities completely.

As GMK Center reported earlier, in 2023, Ukrainian steelmakers increased rolled steel production by 0.4% compared to 2022, to 5.37 million tons. Pig iron production during the year amounted to 6 million tons, down 6.1% compared to 2022, and steel production amounted to 6.23 million tons (-0.6% y/y).

The domestic steel industry has increased or approached the levels of 2022, where the bulk of production was in pre-war January-February.

Exports of rolled steel products in 2023 amounted to 1.78 million tons, while in 2022 it was 2.47 million, and in 2021 – 8.34 million tons. Imports of the relevant products reached 1.18 million tons last year, 621.6 thousand tons in 2022, and 1.12 million tons in 2021.