China’s steel supply pressure persists despite production dip says MEPS analysis

A new MEPS assessment of worldsteel data shows that, despite a 2.1% drop in global crude steel output in the first ten months of 2025, China continues to exert strong downward pressure on international steel prices.

According to figures reviewed by MEPS, steelmakers in 70 reporting countries produced 1.52 billion tonnes. The decline does little to ease global overcapacity, which the OECD – cited by MEPS – expects to reach 721 million tonnes by 2027, far exceeding the crude steel output of all OECD members combined.

China’s production fell 12% year-on-year in October, to 72 million tonnes – its weakest month since late 2023. Year-to-date volumes are down 3.9% to 817.9 million tonnes. MEPS notes that, despite weaker output, China’s export presence remains undiminished.

Exports still rising, price pressure unchanged

MEPS reports that Chinese steel exports increased 6.6% between January and October, reaching 97.7 million tonnes. Lower selling prices pushed export revenues down 2.7% to USD 68 billion. The trend reflects ongoing weakness in China’s construction sector, with worldsteel – again cited by MEPS – estimating a 2% decline in Chinese steel demand in 2025 and a further contraction expected in 2026.

India expands as China restructures

India recorded the largest output increase globally, rising 10% year-to-date to 136 million tonnes. MEPS highlights that India’s steel demand is forecast to grow by another 9% in 2026.

China, meanwhile, is pursuing long-term restructuring. MEPS points to Beijing’s updated capacity-replacement rules, which require 1.5 tonnes of old capacity to be removed for every tonne of new capacity, with a policy push toward EAF, scrap-based and hydrogen-based routes. EAF production currently represents only about 10% of Chinese output.

According to MEPS, China’s decarbonisation efforts may help sustain its export competitiveness in the face of emissions-based trade instruments such as the EU CBAM. However, with new trade-defence measures emerging across Europe, the US and Asia, MEPS warns that China’s export options may narrow even as volumes continue to rise.

Source: MEPS, Photo: Fotolia