The OECD projects that global steel overcapacity could reach 745 million tonnes by 2028 as steelmaking capacity grows faster than demand. The gap could put pressure on steel prices, producers’ margins and investment in lower-emission steelmaking.
Global steel overcapacity through 2028
According to the OECD Steel Outlook 2026, the steel industry faces two simultaneous challenges: growing excess capacity and the need to move toward lower-emission production. The organization had previously estimated that global excess capacity would increase from around 601 million tonnes in 2024 to 721 million tonnes in 2027.
However, the latest OECD steel outlook shows that the upward trend is continuing, and global excess capacity could reach 745 million tonnes by 2028. According to the report, global steelmaking capacity is increasing while demand growth remains limited.
The OECD estimates that global steelmaking capacity will increase by around 5.7 percent by 2028 compared with 2025, with up to 138.8 million tonnes of new capacity coming online during this period. In contrast, global steel demand growth is forecast at around 0.9 percent per year through 2030.
Capacity utilization and investment
This widening gap between capacity and demand could also reduce steelmaking capacity utilization rates. The OECD forecasts that the rate will decline from 76 percent in 2025 to 74 percent or lower in 2028, a situation that will increase pressure on production costs and steelmakers’ profitability.
Meanwhile, the OECD said that a significant share of new capacity is being developed outside OECD member countries. According to the report, 51 percent of new capacity under construction or planned through 2028 involves electric arc furnaces (EAF), while 46 percent relates to blast furnace and basic oxygen furnace (BOF) projects.
The organization also emphasized in its report that excess capacity is not merely an issue related to production volumes and could affect steel prices, global trade, producers’ profit margins and investment in low-carbon technologies. The OECD believes that reducing excess capacity is essential for creating more stable conditions for long-term investment in the steel industry’s low-emission transition.
Related coverage: worldsteel’s 2026 steel demand outlook.
This report has been prepared by Steel World Review using reliable sources and information published by the OECD
