Global steel prices will likely rise only moderately from current levels for the remainder of 2025 as the market continues to face negative sentiments, rising Chinese exports and trade uncertainty due to US trade tariffs.
“We maintain our 2025 global average steel price forecast at $630/tonne... That said, for the year, we expect prices to rise slightly higher as US prices potentially receive support from protectionist measures under Donald Trump, offsetting bearish pressure from lacklustre Mainland Chinese demand,” said research agency BMI, a unit of Fitch Solutions.
During May-end, the year-to-date global average for longs and flats steel was $597/tonne, up from $592 as of February 26. Prices have remained on a downward trend since the start of 2024 across major markets.
Flat output
However, the World Bank said in its Commodities Outlook that China’s struggling property sector and weak industrial activity in major economies are expected to keep the demand subdued throughout the forecast period for iron ore, the main raw material for steel. This outlook holds good for steel also.
The Australian Office of the Chief Economist (AOCE) said the production is expected to be flat in 2025 and then slowly pick up over the five-year outlook period, reaching just under 2 billion tonnes by 2030.
The AOCE said the expected growth in global steel production could be met using existing production capacity. “Global crude steelmaking capacity exceeded global steel production by over 600 million tonnes in 2024,” it said.
US investment banker JP Morgan has lowered its production forecast for steel by 2 per cent, given the quicker-than-expected peak and demand destruction concerns looking ahead.
Trade protectionism
However, BMI said it expects steel prices in 2025 to be driven largely by steeper trade protectionism, most notably, potential Trump-led trade policy shifts, alongside China’s economic turnaround momentum.
At the same time, steel production remains depressed across major markets following higher supply. On the global demand side (ex-China), the manufacturing sector continues to drag on growth in developed markets, said BMI, justifying its outlook.
The AOCE said substantial new steel capacity — either under construction or planned — is expected over the outlook, with large-scale projects in Asia, North America, Europe and the Middle East.
BMI said: “While faltering domestic demand in China, resulting in an increase in relatively cheaper Chinese products on the global market, has placed downward pressure on the global average, steeper protectionist measures globally will start to drive up steel prices in markets with protectionist government policies in 2025.”
Upside potential
It also saw a potential upside to prices if the Chinese property sector turnaround momentum appears to be stronger than our current expectations in the wake of a possibly larger stimulus package in 2025, or if the Chinese government imposes large supply side reforms that would restrict the production of steel.
The Australian Office of the Chief Economist said India and South-East Asia will drive growth in global steel output to 2030. At the same time,
China’s steel demand could keep falling due to demographic and structural factors.
“Further falls are forecast over the rest of the decade, reducing China’s annual steel output by 55 million tonnes by 2030 relative to 2024,” it said.