The steel market outlook on the verge of change
A look at the impact of China’s overproduction, the shift toward green steel, and Iran’s situation
The importance of steel: construction, infrastructure, and the backbone of the economy
Steel is a metal that plays a role in nearly all infrastructure, construction, industrial, and civil engineering sectors from roads and bridges to buildings, metro lines, and factories.
For this reason, global steel demand is highly dependent on construction trends, infrastructure development, and the overall health of national economies.
China’s overproduction and its global impact
• According to official reports, global excess steelmaking capacity in 2025 could exceed 680 million tonnes.
• Despite a decline in domestic steel demand in China, production has remained substantial; as a result, Chinese steel exports to international markets have surged. For example, China’s steel exports in the first eleven months of 2025 reached approximately 107.7 million tonnes.
• This overproduction and massive export volume effectively place heavy downward pressure on global steel prices, intensify competition, and put exporters from other countries in a challenging position.
• Therefore, when the global steel market is under pressure from supply exceeding demand, a period of price stabilization or even price declines begins a factor that can affect the profitability of steel producers in different countries.
“Green” steel and environmental pressure — an inevitable shift
• According to the World Steel Association, crude steel production emitted approximately 1.92 tonnes of CO₂ per tonne of steel produced in 2023.
• Given steel’s significant contribution to global carbon emissions, moving toward lower-emission steel production — “green steel” — has become one of the industry’s key priorities.
• This policy shift — particularly in advanced economies and regions with strict environmental regulations — is increasing demand for low-carbon, environmentally compliant steel, creating opportunities for producers that are ready to invest and innovate.
• Therefore, over the coming decade, the combination of price competition driven by oversupply, environmental pressure, and rising demand for green steel could reshape the steel market, potentially sidelining “dirty” steel produced using traditional methods.
A complex situation for Iran
• At a time when the global steel market is under pressure, countries such as Iran — which face challenges including currency volatility, energy crises, and raw material supply constraints — are in an even more difficult position. Adapting to green steel standards while also competing with low-priced export steel requires careful policymaking and significant investment.
• If Iran is able to move toward low-carbon steel production, it may be able to benefit from the opportunity created by growing demand for green steel; otherwise, there is a risk of losing share in global or even domestic markets.
• Additionally, given the lack of stability in the global steel market, decision-making in domestic construction and civil engineering projects also faces challenges — meaning higher costs and greater risk.
Why is the future of steel full of ups and downs?
• Steel remains the backbone of the construction and infrastructure economy worldwide; therefore, the state of the macroeconomy and construction projects is a key determinant.
• China’s overproduction and extensive exports have put pressure on prices and competition — meaning cheaper steel for buyers, but serious challenges for producers.
• Environmental pressure and the shift toward low-carbon steel are pushing the market toward innovation and change; producers must adapt to this trajectory.
• For Iran, there is both opportunity (green steel) and threat (competition, volatility, and uncertainty); policy and planning are crucial.
