The World Steel Association has revised its global steel consumption forecasts downwards, predicting a slight contraction in demand during 2026 as weakness in China’s property sector and disruptions associated with the US-Israeli conflict with Iran weigh on the industry.
The association now expects worldwide steel demand to fall by 0.1% this year, compared with its April forecast for an increase of 0.3%.
Its outlook for 2027 has also been reduced, with consumption projected to grow by 1.7%, below the previously anticipated expansion of 2.2%.
The revisions indicate that the recovery in global steel demand is taking longer than expected, with regional construction activity, investment decisions and geopolitical developments continuing to influence consumption.
Alfonso Hidalgo de Calcerrada, chair of the association’s economics committee, said the anticipated improvement in the market was proving slower and more gradual than earlier projections suggested.
The latest assessment highlights substantial differences between major steel-consuming regions, with China and Europe facing weaker conditions while India continues to expand.
Chinese Property Downturn Extends Pressure on Steel Consumption
China remains a major contributor to the weaker global outlook, with steel demand forecast to decline by 2% in 2026.
The association said the country’s prolonged property market downturn has continued beyond its previous expectations, limiting the recovery in steel consumption.
China’s construction industry is a significant source of demand for steel products, making developments in residential and commercial property activity particularly important for the sector.
Continued weakness in property development therefore remains a challenge for steel producers exposed to the Chinese market.
European demand is also expected to deteriorate this year.
The association now forecasts a 0.3% decline in steel consumption across the European Union and Britain, replacing its earlier projection of 1.3% growth.
The downward revision reflects a slower and more uneven recovery in construction activity than previously anticipated.
The weaker outlook suggests that demand from European building and infrastructure projects may remain subdued, limiting the pace of recovery for regional steel suppliers.
Middle East Conflict Delays Gulf Construction Projects
The Gulf is expected to experience one of the sharpest declines in steel consumption during 2026 as the conflict involving Iran disrupts economic activity and investment planning.
World Steel Association forecasts an 11% contraction in regional steel demand this year, followed by growth of 11.3% in 2027.
The organisation indicated that the expected decline largely reflects delays to planned construction and infrastructure activity rather than the permanent cancellation of demand.
“What we observe (in the Gulf) is not the destruction of demand but its deferral, as project awards, construction starts and financing decisions are pushed back while the security situation remains unresolved,” Hidalgo de Calcerrada said.
He explained that the region could experience a strong recovery once security concerns ease, the Strait of Hormuz reopens and disrupted supply chains return to normal operations.
The waterway is an important international shipping route, and interruptions to maritime trade can affect the movement of commodities and materials required for industrial and construction projects.
The projected rebound in Gulf demand during 2027 consequently remains dependent on improvements in regional security and the resumption of postponed investment.
India Provides Growth as Global Recovery Slows
India remains the fastest-growing major steel market, according to the association’s updated projections.
Steel consumption in the country is expected to increase by 7.9% in 2026, followed by an 8% rise in 2027.
The forecasts indicate that Indian demand will continue expanding at a considerably faster rate than consumption in other major markets.
India’s projected growth contrasts with the decline expected in China and the weaker conditions facing European steel consumers.
However, the positive outlook for India is not sufficient to prevent the association from forecasting a slight contraction in worldwide demand during 2026.
The revised figures suggest that global steel consumption will remain uneven, with stronger growth in selected markets offset by continued weakness elsewhere.
For steel producers, the outlook points to a challenging operating environment shaped by construction activity, regional investment trends and geopolitical uncertainty.
Although demand is expected to return to growth in 2027, the reduced forecast indicates that the recovery may be less pronounced than previously anticipated.
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