• Global demand to stabilize in 2026, with a projected 1.7% growth in 2027
• 11% contraction in the Gulf in 2026: Regional conflict postpones steel demand without destroying it, pending supply chain normalization
• Middle East conflicts reverse the trajectory of one of the fastest-growing steel markets, pushing construction projects to 2027
• Gulf prepares for an 11.3% recovery: Expected rebound in regional demand to 2025 levels once the Strait of Hormuz reopens
• Structural slowdown in China and Middle East disruptions limit the pace of industrial recovery
• India's locomotive leads growth, while developed markets prepare for a radical transformation by 2027
World Steel Association (Worldsteel) expects global steel demand to remain flat and unchanged in 2026, reaching 1,722 million tons, before returning to a growth path of 1.7% in 2027 to reach 1,752 million tons, according to its Short Range Outlook for 2026 and 2027.
This cautious performance reflects a slower-than-expected global economic recovery, with factors such as the ongoing structural slowdown in China's real estate and infrastructure sectors, compounded by the repercussions of energy market disruptions stemming from instability in the Middle East, according to the report.
The association noted in its report a significant and positive shift in the industrial activity of developed countries and developing economies by 2027, supported by increased spending on energy transition, artificial intelligence, and infrastructure.
The report indicated that India is leading the global growth landscape as the fastest-growing major market, while other regions such as the Gulf countries and Europe face temporary challenges including project postponements, environmental transition pressures, and carbon regulations.
Global Outlook: Cautious Recovery
Alfonso Hied Al-Jo de Calerada, Chairman of the World Steel Association's Economics Committee, commented on these forecasts: "The path we set in April remains, but the expected recovery is proving slower and more gradual than we anticipated." He projected that global steel demand would be flat in 2026 instead of showing modest growth, and grow by 1.7% in 2027 instead of 2.2%. This entire adjustment is almost entirely attributable to China.
He added: "Outside of China, demand is growing by 1.5% this year and accelerating to 4.0% in 2027, precisely the rate we predicted six months ago, and rarely seen recently."
He continued: "The recovery we described in April is not weaker; rather, its momentum is overshadowed by the scale of the structural slowdown in China, exacerbated by energy market disruptions resulting from ongoing instability in the Middle East."
Significant Transformation Expected in 2027
The report highlighted that one of the most important messages from the association's October 2026 forecast is the confirmation of expectations for a significant transformation in the industrial activity of developed countries and steel demand in 2027. After a period of stability during 2025-2026, industrial activity in the developed world is expected to show a broad-based recovery in 2027, supported by growth in investments related to artificial intelligence, defense, energy transition spending, improved incomes, and a supportive policy framework.
The report noted that with the developed world growing alongside developing economies (excluding China), steel demand growth outside China is projected to reach 4.0% in 2027. Growth of this magnitude and breadth is rare in recent years and represents an encouraging sign for the steel industry and the broader economy.
Geopolitical Implications: Energy Market Resilience and Gulf Pressures
The report stated that based on data from June to September, it was assumed that the conflict in the Middle East would be resolved by June, and warned that a prolonged conflict would necessitate significant downward adjustments.
The report added: "The conflict has not been resolved, yet the initial shock to global activity was less severe than we assumed. Energy markets absorbed the disruption better than feared, and major economies proved more resilient than our downside case assumed."
He continued: "However, this resilience should not be mistaken for immunity. In areas with direct and acute exposure, such as the Gulf, the economic damage is undeniable. While the global economy has absorbed the initial impact, its capacity to absorb subsequent disruptions appears increasingly strained. For this reason, we maintain a degree of caution regarding the 2027 forecasts."
China: Continued Real Estate Contraction and Export Pressures
The report predicted that Chinese steel demand would contract by 2.0% in 2026, a downward revision from April forecasts, stating: "The contraction in real estate investment has not slowed as we expected. Instead of providing support this year as we anticipated, infrastructure investment has remained in negative territory."
It confirmed that steel demand from the manufacturing sector continued to grow, supported by export strength, but this was not enough to offset the weaker-than-expected performance of the real estate and infrastructure sectors.
For 2027, the report forecasts that the contraction in China will narrow to 1.0%. Real estate contraction is expected to slow down while remaining in negative territory, and the government maintains a cautious stance on expanding infrastructure investment. Manufacturing should maintain moderate growth, provided exports remain robust. However, trade friction emerges as a significant risk.
Sustainable Growth Driven by Asian Expansion and Postponed Gulf Demand
The report noted that steel demand in developing economies, excluding China, is expected to grow by 1.9% in 2026 and 5.1% in 2027. The moderation observed this year, compared to the annual growth of around 5% recorded in recent years, is attributed to the Middle East region, where regional conflict has reversed the trajectory of what was considered one of the strongest growth stories in the global market.
It pointed out that elsewhere in the developing world, underlying momentum remains intact, with the expected recovery in 2027 driven by developing Asia alongside a recovery in the Middle East.
India: The Engine of Global Growth
The report indicated that India will remain the fastest-growing major steel market in the world, while also forecasting that demand there will expand by 7.9% in 2026 to reach 172.4 million tons, and by 8.0% in 2027 to reach 186.2 million tons, with growth continuing to broaden.
It affirmed that infrastructure-driven construction remains the primary driver. Private real estate demand is robust, and healthy growth in the manufacturing sector, a substantial pipeline of renewable energy projects, and continuous expansion of manufacturing capacities are all driving electrical and mechanical equipment, while automotive production is supported by domestic demand, export momentum, and policy support.
• Gulf Countries Caught Between Conflict Costs and Postponed Demand
The Gulf presents the clearest picture alone of the cost of conflict, as demand for steel in the GCC countries is projected to grow by 17.7% in 2025, driven by economic diversification programs, health project pipelines, and strong housing activity in Saudi Arabia and the UAE, according to the report.
In this context, the report expects demand in the GCC countries to decline by about 11% in 2026, considering this a sharp reversal from the trajectory published in April.
He said: "What we are witnessing is not a destruction of demand, but a postponement of it, as project awards, construction starts, and financing decisions are being delayed as long as the security situation remains unresolved. Accordingly, demand for steel in the Gulf should recover strongly once the uncertainty subsides, the Strait of Hormuz reopens, and supply chains normalize."
Reflecting this optimistic scenario, the report forecasts a 11.3% rebound in 2027, bringing regional demand back to its 2025 level.
ASEAN-5 .. Vietnam's Prominent Lead
The report expects demand in the ASEAN-5 countries to grow by 5.2% in 2026 before moderating to 3.2% in 2027.
In this context, the report considers Vietnam the most prominent country, as production and trade data indicate double-digit growth this year, raising apparent steel consumption in the country to about 30 million tons for the first time, supported by a record volume of residential and commercial buildings under construction and a strong public investment program.
Developed World .. Gradual and Limited Recovery
Demand for steel in the developed world is expected to grow by 1.0% in 2026 and 2.2% in 2027, following the stability recorded in 2025. The scale of the recovery should be put into perspective. The 2025 market was about 60 million tons, or 15%, smaller than in 2017-2018, and the growth we now expect during 2026-2027 only compensates for about 10 million tons of that gap. A full return to pre-crisis levels remains a long-term endeavor.
European Union: Regulatory Pressures and Temporary Decline
The report forecasts apparent steel consumption in the EU to decline by 0.3% in 2026 before growing by 3.1% in 2027, a downward revision of 1.5 percentage points for this year.
He added that the results for 2025 were stronger than expected, but a significant portion of that strength was due to inventory build-up before the Carbon Border Adjustment Mechanism (CBAM) comes into effect in 2026.
He continued that underlying conditions also disappointed, explaining that the construction sector's recovery is proving slower and more fragmented than expected, with residential building permits showing signs of bottoming out while the civil engineering sector remains in recession, and the automotive sector continues to be a burden. However, the overall trend is improving.
The report elaborated: "We expect a meaningful recovery in steel-consuming sectors starting in 2027, supported by infrastructure and defense spending under the new fiscal framework, improved real household income, and civil engineering activity related to energy and railway investment."
• United States .. Energy and Infrastructure Investments Lead Growth
Demand for steel in the United States is expected to grow by 2.0% in 2026. Growth is underpinned by strong investment in data centers and energy infrastructure, including power generation, renewables, and oil and gas, along with additional support from selected manufacturing sectors, according to the report.
The report also forecasts apparent steel consumption in the US to grow by about 1.5% in 2027. The US economy is expected to continue growing around its trend, with steel demand growth expected to remain concentrated in non-residential construction, particularly large infrastructure and energy projects, and selected manufacturing end-markets rather than residential construction, noting that residential construction activity remains relatively weak in 2027. Homebuilder sentiment remains subdued due to high mortgage interest rates, affordability constraints, and rising construction costs.
• Japan and Korea: Shallow Recovery After Difficult Years
The World Steel report confirmed that both Japan and Korea are preparing for a modest recovery after difficult years. It forecasts Japanese steel demand to grow by 0.9% in 2026 and 1.7% in 2027, with the construction sector shifting from a burden to a support, and corporate capital investment boosting machinery, while the automotive sector remains under pressure. In Korea, demand is expected to grow by 1.8% and 1.3% following a sharp decline in 2025.
The report emphasized the need for a partial recovery in the construction sector in the remainder of the second half of 2026, along with a return of automotive production and shipbuilding activity to modest growth, stating: "In both markets, the recovery is real but shallow, and neither is returning to pre-contraction volumes within the forecast horizon."
• The Short Range Outlook (SRO) report is a periodic reference published by the World Steel Association twice a year (April and October) to measure apparent steel consumption globally and regionally for two consecutive years. It analyzes market trends and demand drivers in major sectors such as construction, automotive, and energy, relying on data from the Association's members, who represent 85% of global production.
• Apparent steel consumption is a standard indicator used to calculate the total steel consumption in a specific country or region. It is calculated by an equation that sums domestic production, plus imports, minus exports.
• The Carbon Border Adjustment Mechanism (CBAM) is an environmental and regulatory legislation imposed by the European Union to levy charges on imports from countries with less stringent emission standards, aiming to prevent "carbon leakage" and protect its domestic industries.
