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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.

AEP Plantation (LSE:AEP) shares declined more than 8% on Monday after the oil palm plantation operator warned that El Niño conditions and prolonged dry weather could affect fresh fruit bunch production in 2027, despite reporting higher output for the first nine months of 2026.

The London-listed company said potential weather-related disruption could weigh on future yields, although it expects crude palm oil prices to remain supported during the fourth quarter of 2026 by food-sector demand, firm energy markets and Indonesia’s planned B50 biodiesel programme.

The warning accompanied a trading update showing growth across the group’s main production categories in the nine months ended 30 September 2026.

Own fresh fruit bunch production increased 13% year on year to 924,500 tonnes, compared with 816,200 tonnes in the corresponding period of 2025.

Crude palm oil production rose 18% to 379,200 tonnes from 321,600 tonnes, while palm kernel output advanced 17% to 93,100 tonnes from 79,600 tonnes.

The company attributed the increases primarily to higher production in South Sumatra, supported by its acquisition of Pinago Plantations, and improved output from operations in Bengkulu.

AEP Plantation reported net cash after borrowings of $99.0 million at 30 September, compared with $232.3 million at the end of 2025.

The reduction largely reflected acquisition expenditure, including $160.2 million for Pinago Plantations and $8.4 million for Admiral Potential Sdn Bhd and PT Jaya Jadi Utama.

The group also returned $33.2 million to shareholders through dividend payments and share repurchases during the period.

An interim dividend of 3.73 US cents per share was declared, unchanged from the comparable payment a year earlier.

Looking ahead, AEP Plantation expects the continued recovery in production and additional contributions from Pinago to support its full-year financial performance.

The board maintained its confidence in meeting market expectations for 2026, despite identifying potential production risks associated with drier weather conditions in 2027.

Gold prices declined on Monday as the US dollar strengthened, with investors assessing the potential impact of geopolitical developments on inflation and monetary policy. Markets were also monitoring US President Donald Trump’s announcement of an energy ceasefire between Russia and Ukraine alongside renewed attacks in the Middle East.

At 05:01 ET (09:01 GMT), spot gold (XAU/USD) fell 0.5% to $4,174.23 per ounce, while gold futures declined 0.4% to $4,198.05.

Other precious metals also weakened. Spot silver (XAG/USD) dropped 0.5% to $60.5075 per ounce, platinum (XPT/USD) lost 0.3% to $1,684.41, and palladium (XPD/USD) declined 0.2% to $1,150.30. Palladium futures, however, edged higher to $1,150.75.

The US dollar index gained 0.1% to 102.31, making dollar-denominated bullion more expensive for buyers using other currencies. Gold had advanced 1.3% during the previous week.

Russia-Ukraine Energy Ceasefire Announcement Draws Attention

Trump said an energy ceasefire between Russia and Ukraine had taken immediate effect, raising expectations that disruptions to fuel production and exports could ease.

The US president had previously urged Ukrainian President Volodymyr Zelenskyy to stop attacks on Russian oil refineries. He also said Moscow had agreed to release additional diesel supplies into international markets.

However, the ceasefire had not been independently confirmed by both governments, leaving uncertainty over whether the proposed arrangement would lead to a reduction in attacks on energy infrastructure.

Meanwhile, renewed violence in the Middle East continued to raise concerns about the stability of regional energy supplies.

King Khalid International Airport in Riyadh, Saudi Arabia, was reportedly attacked by Houthi forces on Sunday, following a strike on Saturday that killed 12 people and injured more than 300.

The Saturday incident was reported as the deadliest attack in Saudi Arabia since the conflict involving Iran began in late February.

The Houthis said their operations were in response to what they described as Saudi aggression, including an attack on the airport in Sanaa, Yemen’s capital.

The incidents have increased concerns about the possibility of further disruption to regional energy production and transportation.

Despite a recent decline in crude oil prices, gold has lost approximately one-fifth of its value since the US-Iran conflict began in late February.

Higher energy costs can contribute to broader inflation, potentially prompting central banks to maintain or increase interest rates.

Gold does not generate interest income, meaning higher yields on bonds and other financial assets can reduce its relative attractiveness to investors.

ETF Inflows and Central Bank Buying Provide Support

Analysts at ANZ identified stronger investment demand as a factor supporting gold prices despite concerns about inflation and interest rates.

According to Bloomberg data cited by the bank, inflows into exchange-traded funds backed by gold have reached their highest level in four years.

ANZ attributed the increased interest partly to concerns about government finances, including rising debt-servicing costs and changes in money supply.

Central bank purchases have also continued to contribute to demand.

The People’s Bank of China increased its gold holdings by 740,000 ounces in September, marking its 23rd consecutive month of purchases.

However, ANZ warned that the possibility of further monetary tightening by the US Federal Reserve could limit gains in bullion prices if inflation remains elevated.

The prospect of higher interest rates remains an important consideration for investors, particularly as geopolitical developments continue to influence energy prices.

Market participants will therefore monitor the proposed Russia-Ukraine energy ceasefire, developments in the Middle East and forthcoming inflation indicators for signals about the direction of monetary policy and precious metal prices.

Oil prices recovered from earlier losses on Monday as investors assessed the impact of attacks in Saudi Arabia and the Strait of Hormuz alongside US President Donald Trump’s announcement of additional Russian diesel supplies.

Brent crude futures for December delivery increased by 69 cents, or 0.7%, to $105.41 per barrel by 09:23 GMT. US West Texas Intermediate (WTI) crude rose 57 cents, or 0.6%, to $92.42 per barrel.

The gains followed renewed concerns about energy supplies from the Middle East, where attacks on transport infrastructure and commercial shipping have continued.

The Iran-aligned Houthi movement claimed responsibility for an attack on Riyadh’s international airport on Saturday that reportedly killed 13 people and injured more than 300. Additional attacks were reported on Sunday.

Security concerns also increased around the Strait of Hormuz, where further incidents involving oil tankers have been reported this month.

United Kingdom Maritime Trade Operations (UKMTO) said a tanker was struck by a drone near Sohar, Oman, while another vessel sustained damage while travelling through the strait.

The incidents raised questions about the recovery in Middle Eastern crude exports recorded during September, as continued attacks could disrupt shipping operations.

Goldman Sachs revised its December Brent crude forecast to $90 per barrel from $85, incorporating an estimated geopolitical risk premium of slightly more than $20 per barrel.

The bank also provided forecasts for US crude prices, citing the unusually wide difference between WTI and Brent.

“We forecast WTI prices, which are unusually low vs Brent because of high US-Europe shipping costs, to average $81 in December 2026 and $73 in 2027,” Goldman Sachs analysts said.

Separately, Shell, Chevron and BP were preparing to return personnel to offshore facilities and resume production in the Gulf of Mexico following Hurricane Isaias, which made landfall early on Saturday.

Russian Diesel Announcement Weighs on Gasoil Futures

European gasoil futures declined 4.3% to $1,419.50 per metric tonne after Trump announced on Friday that Russia would immediately supply more than 300,000 metric tonnes of diesel to US and international markets.

The proposed shipments represent approximately 2.25 million barrels, with the president indicating that additional volumes could become available later.

However, analysts questioned Russia’s capacity to increase exports following repeated attacks on its refining infrastructure.

“The immediate impact of the deal is questionable, as Russia’s refining capacity has been severely reduced,” PVM analyst Tamas Varga said.

“However, Moscow has partially lifted its ban on diesel exports, allowing 500,000 tons (around 3.7 million barrels) to be released onto the international market —equivalent to roughly one day of US consumption and around 13% of global demand.”

The reported partial easing of Russia’s export restrictions could make additional diesel available internationally, although refinery disruptions remain a constraint on potential shipments.

Trump also announced on Sunday that Russia and Ukraine had agreed to an energy ceasefire.

Ukrainian President Volodymyr Zelenskiy said he was awaiting details of the proposed arrangement, while Moscow had not commented.

The announcement therefore remained unconfirmed by both sides, leaving uncertainty over whether attacks on energy infrastructure would be suspended.

International Energy Agency Executive Director Fatih Birol also called on member countries to assess whether further releases of diesel supplies were necessary.

Birol urged countries that had not yet delivered their pledged volumes to accelerate releases, giving priority to diesel.

Oil markets consequently faced two competing developments: the possibility of additional Russian fuel supplies and continuing risks to energy shipments from the Middle East.

The timing and scale of any increase in Russian diesel exports remain uncertain, while attacks on regional shipping routes and energy infrastructure continue to affect supply expectations.

European stock markets advanced on Monday as crude oil prices declined following a ceasefire proposal announced by US President Donald Trump concerning energy infrastructure in Russia and Ukraine. Investors also looked ahead to the start of the third-quarter corporate earnings season and upcoming US inflation data.

The pan-European Stoxx Europe 600 index gained 0.5% in early trading, recovering some stability following fluctuations during the previous week.

Germany’s DAX and France’s CAC 40 both advanced 0.5%, while London’s FTSE 100 increased 0.6%. Spain’s IBEX 35 outperformed the other major European benchmarks, rising 1.4%.

Oil prices moved lower after Trump announced what he described as an immediate “energy ceasefire” between Russia and Ukraine over the weekend. However, the announcement had not been accompanied by confirmation that attacks on energy infrastructure had stopped.

Brent crude futures for December delivery declined 1.8% to $102.84 per barrel, reversing part of the approximately 3% increase recorded during the previous week amid geopolitical tensions.

Trump’s proposal also included an increase in Russian diesel exports to the United States and international markets. Questions remain over Russia’s ability to expand shipments, given the effects of Ukrainian drone attacks on its refining infrastructure.

Repeated strikes against Russian refineries have affected domestic processing capacity, raising uncertainty over the availability of additional diesel supplies for export while meeting domestic demand.

Military activity continued over the weekend despite the ceasefire announcement.

Russia carried out further attacks on Ukraine’s electricity infrastructure, while Ukrainian strikes reportedly targeted facilities deeper inside Russia, including data centres operated by technology company Yandex.

The reported attacks disrupted some regional internet and banking services.

Market participants also remained cautious following a similar ceasefire initiative announced by Washington in September that did not result in a confirmed suspension of attacks.

Alongside geopolitical developments, investors are preparing for the start of the third-quarter corporate earnings reporting period.

Major US banks are scheduled to publish their quarterly results on Tuesday, providing an early indication of business performance and financial conditions.

European investors will also assess corporate earnings guidance for evidence of how companies are managing borrowing costs and changes in input prices.

Attention will subsequently turn to the release of US Consumer Price Index (CPI) data on Wednesday.

The inflation figures are expected to provide further information on price pressures in the US economy ahead of the Federal Reserve’s next monetary policy meeting.

Investors will examine the report for indications of whether the central bank is likely to maintain its restrictive monetary policy stance or leave interest rates unchanged.

The combination of developments in energy markets, corporate earnings announcements and US inflation data is expected to remain central to market attention during the week.

Shares in European automotive manufacturers advanced on Monday after the European Union and China reached a preliminary understanding aimed at reducing Chinese exports of hybrid and plug-in hybrid vehicles to the European market.

European Trade Commissioner Maros Sefcovic announced the development following two days of negotiations in Beijing, indicating that the arrangement could reduce Chinese hybrid vehicle exports to the EU by more than half.

According to Sefcovic, the understanding could result in several million fewer vehicles being imported into the bloc over a four-year period. However, he did not provide details on how the proposed restrictions would be implemented.

European automotive stocks recorded gains following the announcement. Stellantis (BIT:STLAM) and Renault (EU:RNO) both rose more than 2%, while Volkswagen (TG:VOW3) and Porsche (TG:PAH3) advanced by over 1%.

The development comes as European carmakers face pressure from US tariffs and increasing competition from Chinese manufacturers, factors that have weighed on the sector over the past two years.

Sefcovic described the agreement as an initial measure in addressing trade imbalances between the EU and China.

“This is far from the end. It is a crucial first step – but only a first step – in the process of rebalancing,” he said.

The EU’s trade deficit with China has increased to more than €1 billion per day, according to the figures cited during the discussions.

European Union leaders are scheduled to review the outcome of the negotiations at a summit in Brussels next Thursday.

The talks also produced agreements covering tariffs on European exports and Chinese export licensing procedures.

China agreed to reduce import duties on approximately €4 billion worth of EU exports, including automotive components, olive oil and footwear.

Both sides also reached an understanding on facilitating Chinese export licences for rare earth elements and permanent magnets, materials used in several European industrial sectors.

Bernd Lange, chairman of the European Parliament’s trade committee, said the approach to hybrid vehicle imports should be extended to other industries. He also called for more effective use of the EU’s existing trade defence instruments.

China’s Commerce Minister Wang Wentao rejected the suggestion that China was responsible for the European Union’s economic difficulties.

According to China’s Commerce Ministry, Wang said China was “not the root cause” of the EU’s problems but a partner in addressing them.

The negotiations come amid concerns among EU governments over increasing Chinese vehicle imports and employment reductions across the European automotive industry.

Volkswagen has announced job reductions affecting approximately 100,000 positions, according to the figures cited in the report.

Imports of plug-in hybrid vehicles into the EU increased by 86% in the year to September, while their prices declined by 20%. More than half of these imported vehicles now originate from China.

Although the preliminary understanding signals potential changes to trade flows, the timing, implementation mechanisms and final scope of the proposed restrictions have not yet been specified.