Steel demand growth from China to decline annually by an average of 5-7 Mt over next decade

China, the world's largest steel consumer, accounting for 49% of global demand, is expected to see consumption fall by an average of five to seven million tonnes (Mt) annually over the next decade, according to Wood Mackenzie. This dramatic shift creates significant overcapacity challenges whilst opening opportunities for India and Southeast Asia to emerge as growth powerhouses. 

“China's share in global steel demand is projected to drop sharply from 49% in 2024 to 31% by 2050. Meanwhile, India and Southeast Asia are emerging as growth powerhouses, with India alone projected to triple its demand, raising its market share from 8% to 21% by 2050,” said Charvi Trivedi, senior research analyst, steel and raw materials at Wood Mackenzie. 

Demand shifts create new geographic centres 

The Chinese economy's transition away from infrastructure-heavy growth models creates sustained headwinds for steel demand. Real estate development, previously a cornerstone of steel consumption, now experiences prolonged weakness. Construction activity remains subdued as policy makers prioritise economic rebalancing overgrowth at any cost. 

“China's overcapacity crisis is reaching unprecedented levels, with an expected surplus of 50 Mt in 2025 that could balloon to over 350 Mt long-term,” remarked Trivedi. “While this has triggered production cuts in key provinces like Shandong and Jiangsu, China's massive production infrastructure means the country will remain a dominant force in global supply dynamics despite potential output reductions of 240 million tonnes between 2024 and 2050.” 

Average annual steel demand, Mt 

Source: Wood Mackenzie  

India and Southeast Asia drive future growth 

In contrast to China's contraction, India’s steel market achieved 8% growth in 2024 and expects over 7% growth in 2025, supported by infrastructure development and manufacturing expansion. Long-term fundamentals remain robust with 4-5% compound annual growth expected through 2050, Wood Mackenzie reported. 

Infrastructure investment drives much of India's steel demand growth. Government initiatives in transportation, urban development and renewable energy create sustained consumption opportunities. Manufacturing sector expansion, particularly in automotive and machinery, provides additional demand support. 

“Southeast Asia follows a similar upward trajectory with 6% growth in 2024 and expected 4% growth in 2025, maintaining a 3-4% compound annual growth rate through 2050,” Trivedi. “The region's demand share is projected to double from 5% to 10% by 2050, with Vietnam, Thailand and Indonesia leading Southeast Asian steel demand growth as these markets experience rapid industrialisation whilst maintaining cost advantages over developed economies.” 

Production centres realign globally 

According to Wood Mackenzie, global crude steel production is expected to grow at a modest compound annual growth rate of 0.7% through 2050, as developed economies experience flat or declining production. This rebalancing creates new competitive dynamics and trade relationships.  

India is expected to nearly triple its steel production by 2050 to become the second-largest producer globally. The country's integrated steel mills benefit from domestic iron ore resources and growing local demand. Investment in modern production technology enhances efficiency and performance. 

Southeast Asia's production growth benefits from proximity to key raw material sources and lower labour costs, creating competitive advantages in supply chain positioning. New capacity additions focus on electric arc furnace technology and downstream processing capabilities. Regional producers target both domestic markets and export opportunities. Meanwhile, Chinese production faces structural headwinds despite maintaining global leadership as overcapacity pressures force consolidation and efficiency improvements. 

Trade tensions reshape global steel supply chain flows 

Global steel trade volumes of 381 Mt in 2024 will face a decline of 5.4% this year, Wood Mackenzie noted. This decline is primarily attributed to increasing trade barriers against Chinese steel exports and escalating protectionist measures. Chinese steel exports face mounting restrictions across key markets through anti-dumping duties and safeguard measures that limit market access whilst domestic overcapacity pressures persist.  

As protectionist measures gain momentum globally, the world is expected to export only 12% (in crude steel equivalent terms) of its steel production in the long term, down from the current 25%. This reflects a gradual shift toward more regionalised supply chains and reduced trade intensity. Regional trade agreements and bilateral relationships become increasingly important for steel trade flows as proximity advantages and established partnerships support continued commerce despite broader protectionist trends. However, adoption of carbon taxes in the future will structurally deter exports from emission-intensive steel producers. 

Annual steel trade, Mt 

Source: Wood Mackenzie  

Policy supports critical for industry transition 

According to Wood Mackenzie’s global steel industry's transformation scenario, China alone will face more than 350 Mt of excess capacity by 2050, much of it in carbon-intensive blast furnaces. Even in advanced economies, where EAF adoption is a policy priority, progress has been uneven. In Europe, of the 75-80 Mt of new EAF capacity announced, only 20-25 Mt is under construction, while another 15-20 Mt has been paused or cancelled – highlighting the widening gap between long-term climate ambitions and the short-term economic realities.  

Rising inflation, weak steel demand and margin compression have placed financial pressure on major players, making it increasingly difficult to finance capital-intensive green steel projects. “The combination of economic headwinds, insufficient policy support and limited markets for green steel premiums are constraining the industry's decarbonisation appetite,” concluded Trivedi. “Current market conditions require stronger government support and clearer regulatory frameworks to accelerate industry transition toward sustainable production methods.”