- The World Steel Association (worldsteel) lowered its forecast for global steel demand growth in 2026 from 1.3% to just 0.3%, citing the Iran war’s impact on construction and industrial activity in the Middle East.
- While demand in China is projected to decline as the property sector stagnates, India remains a bright spot, with strong infrastructure spending expected to offset slower growth elsewhere.
- Potential rebound in 2027: Worldsteel expects modest growth in 2026 to be followed by a stronger rebound in 2027 as reconstruction and investment pick up once geopolitical tensions ease.
The World Steel Association said on Tuesday that it now expects worldwide steel demand to grow by only 0.3% in 2026, sharply down from its previous 1.3% forecast.
The revision reflects a collapse in orders from Middle Eastern markets, where the closure of the Strait of Hormuz and missile attacks on port infrastructure have halted construction projects and delayed deliveries of raw materials.
China, which accounts for more than half of global steel consumption, is also showing signs of weakness. The country’s property sector remains in crisis, and Beijing’s efforts to curb real‑estate leverage mean that steel demand is likely to fall further next year.
By contrast, India remains a rare bright spot: strong public infrastructure programmes and booming auto sales are expected to lift consumption even as exports face headwinds. Europe and North America are forecast to register only marginal growth amid high borrowing costs and supply bottlenecks.
Industry executives note that the downgrade comes just as steelmakers grapple with soaring energy prices. The Iran war has driven up the cost of natural gas and electricity, both crucial inputs for steel mills. Lower demand may offer short‑term relief by reducing capacity utilisation and moderating energy consumption.
However, persistent weakness could weigh on capital expenditure and slow the pace at which mills invest in low‑carbon technologies such as hydrogen‑based direct‑reduction. Many European producers have delayed planned green‑steel projects until energy markets stabilise.
Worldsteel sees a potential rebound in 2027, expecting pent‑up infrastructure investment and reconstruction in the Middle East once hostilities subside. Yet much depends on the duration of the conflict, the reopening of shipping lanes and the availability of affordable energy.
Analysts warn that if oil prices remain above $100 for an extended period, construction may remain subdued and steelmakers could be forced to idle more blast furnaces, further tightening supply.
British steel demand depends heavily on construction, automotive manufacturing and the wind‑power sector; a slowdown abroad can trickle down through reduced exports and supply‑chain disruptions. Conversely, lower global consumption could soften iron‑ore and coking‑coal prices, offering some relief to energy‑intensive heavy industry.
The forecast also underscores how geopolitical crises can ripple through basic materials markets, affecting everything from the cost of new homes to the viability of decarbonisation investments. Policymakers and investors will need to factor these uncertainties into infrastructure planning and climate‑policy designs.
