Global steel excess capacity continues to grow, driven by increasing subsidies in some major non-OECD steel-producing economies, while efforts to restore fair competition are increasingly undermined by circumvention of trade measures aimed at levelling the playing field, according to a new OECD report.
The OECD Steel Outlook 2026 projects global steel excess capacity to reach 745 million tonnes by 2028, exceeding the OECD’s current steel production by 319 million tonnes. Planned capacity additions of up to 139 million tonnes through 2028 represent a 5.7% increase from 2025 levels, while demand growth is expected to remain subdued at around 0.9% per year.
Most new capacity is being added outside the OECD, often with government support. In 2024, the median Chinese steel firm received 15 times more in subsidies, relative to their total assets, than producers elsewhere, up from 10 times in 2023. Chinese steelmakers exported a record 131 million tonnes in 2025, a 153% increase from 2020 and more than the European Union's total steel production in 2025.
"Excess steel capacity creates problems for everyone. It distorts global markets. It hurts economic security and resilience. And it discourages innovation and sustainability," OECD Secretary-General Mathias Cormann said at the OECD Ministerial Council Meeting. "We need to tackle the root causes - including harmful subsidies and other non-market practices. That means stronger international co-operation. A level playing field for steel producers everywhere."
The Outlook identifies trade patterns that indicate growing circumvention of trade measures, such as anti-dumping and countervailing duties on certain Chinese steel products. Exports of products like hot-rolled plates and hot-rolled wide coils from China to Southeast Asian countries have increased sharply, alongside increased exports of the same products from Southeast Asia to OECD markets.
The report further highlights a 300% increase in China's exports of semi-finished steel to Southeast Asia in 2025. This suggests that such products may be processed in third countries before being re-exported to OECD markets, potentially bypassing current trade measures.
The report also highlights growing pressures on raw material supplies. No steel-producing country is fully self-sufficient in the inputs required by its steel industry, and export restrictions on key raw materials for steelmaking are expanding worldwide, with 42 countries now restricting scrap exports. Rising energy costs linked to the conflict in the Middle East are adding further strain, as energy can account for up to 40% of steel production costs. These pressures are weighing on investment decisions across the industry, with several lower-emissions steelmaking projects now postponed.
The OECD Steel Committee and the Global Forum on Steel Excess Capacity are advancing a co-ordinated response by developing a comprehensive framework for joint action on steel, working with 28 major steel-producing economies accounting for almost 70% of global steel imports.
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