Fitch Ratings expects a modest recovery in the global steel market in 2026, supporting a ‘neutral’ sector outlook, as lower steel consumption in China will be counterbalanced by rebounding demand in other regions.

Easing monetary policy, continued infrastructure investment and a recovery in construction activity will support the steel market. Key risks to the demand recovery stem from geopolitical uncertainties, weakness in some manufacturing segments and ongoing trade tensions.

We expect China’s steel output to decline by 4.5% due to tighter production controls and increased trade barriers, which will slightly reduce exports from Fitch’s forecast of 118 million tonnes (mt) in 2025 to 109mt in 2026, according to Chinese steel producers’ margins recovered in 2025, and we expect further improvement into 2026, supported by efficiency gains and declining costs.

Growth momentum in India will continue, supported by sustained government spending and policy measures that underpin national infrastructure programmes, urban housing and the development of industrial corridors. Recent changes to goods and services tax will also reinforce demand from key end-use sectors and partially offset the adverse impact of international tariffs. Higher imports are the key risk to Indian domestic producers’ profitability.

Europe’s tighter import quotas and the rollout of a carbon tariff on imports will support margins, while higher infrastructure and defence spending will underpin a recovery in demand. The European Commission presented measures to protect its steel sector that are likely to take effect from July 2026, including tightening import quotas by around 47% to 18mt a year, doubling tariffs on import volumes exceeding quotas to 50%, stricter control of the origin of steel and ending the rollover of quotas. In addition, the Carbon Border Adjustment Mechanism will be introduced from 2026 and will gradually raise the cost of carbon for imports.

Infrastructure investment, an improved demand environment, lower interest rates and limited imports should support US producers. We expect demand to improve by low single digits in 2026 compared with 2025, supported by the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS Act, as well as a recovery in construction and auto demand after a weak 2025.

A modest recovery in the Brazilian steel market will be supported by the civil construction, agriculture and automotive sectors, with some upside from additional infrastructure spending.
Source: Fitch Ratings