Against the backdrop of diverging global economic recovery momentum, escalating trade barriers, and accelerated energy transition, the international steel industry faced multiple shocks at the beginning of 2026. The accelerated restructuring of Chinese state-owned enterprises, the escalation of US semiconductor tariffs, and the flurry of winter stockpiling policies, among other events, not only reshaped regional market structures but also profoundly impacted the global industrial chain division of labor. This article analyzes current hot topics in the international steel industry from three dimensions: macroeconomic policy, trade frictions, and industrial transformation, and discusses future price trends and industry trends.
I. Macroeconomic Policy Game: A Tug-of-War Between Liquidity Easing and Export Resilience
1. The People’s Bank of China Releases Liquidity Through Reverse Repurchase Operations, Fueling Expectations for Stable Growth：On January 15, 2026, the People’s Bank of China announced a 900 billion yuan 6-month reverse repurchase operation, injecting a net 300 billion yuan of medium-term liquidity. This move aimed to alleviate the funding pressure from government bond issuance and a strong start to credit at the beginning of the year, providing support for the real economy. The market generally believes this move will indirectly benefit the steel industry—a rebound in infrastructure investment and a recovery in manufacturing may boost steel demand, especially providing a floor for construction steel such as rebar and hot-rolled coil.Expert Interpretation: The CITIC Securities macro team points out that China’s monetary policy remains focused on its own needs, and the loose liquidity cycle is expected to continue into the second quarter. If GDP growth stabilizes above 5% in 2026, downstream steel demand may increase by 3%-5% year-on-year, becoming a key variable in the global market.
2. US Tariff Barriers Escalate, Supply Chain Restructuring Accelerates
On January 15, the Biden administration imposed a 25% tariff on imported semiconductors, semiconductor manufacturing equipment, and derivatives, targeting Asian suppliers such as China. Although the tariffs did not directly target steel products, the chain reaction in the industrial chain it triggered cannot be ignored: Technological blockade forces Chinese steel companies to innovate independently: High-end special steel sectors (such as bearing steel and tool steel) are highly dependent on foreign sources, and the policy is forcing companies to accelerate technological breakthroughs.Southeast Asian capacity transfer accelerates: Vietnam, Indonesia, and other countries are absorbing some low-to-mid-end steel production capacity, but due to energy costs and environmental standards, they are unlikely to shake China’s dominant position in the short term.
Data supports this: Statistics from the World Steel Association show that in 2025, China’s crude steel production accounted for 54% of the global total, only 3 percentage points lower than ten years ago, highlighting the resilience of the industrial chain.
II. The shadow of trade friction: Global market restructuring under tariff barriers
1. The US-China-EU steel trade game enters a “deep water zone”：From January 1, 2026, the EU’s carbon border adjustment mechanism will be officially expanded to the steel industry, imposing carbon tariffs on imported high-carbon steel. Coupled with the normalization of US anti-dumping and countervailing duty investigations against Chinese steel products, Chinese steel companies are facing increased export cost pressures. However, market data shows:
In 2025, China’s steel exports to the US declined by 24% year-on-year, but exports to emerging markets such as ASEAN and the Middle East increased by 18%, demonstrating the effectiveness of regional diversification strategies.Europe’s domestic capacity utilization rate is less than 70%, forcing giants such as German ThyssenKrupp to shut down blast furnaces and turn to importing low-cost steel.Typical Case: Leveraging its geographical advantages and the EU’s tariff-quota system, Turkey’s steel imports from China surged by 40% in 2025, making it a new hub for steel trade across Eurasia.
2. The Rise of Emerging Markets: The Capacity Race Between India and Southeast Asia India’s Modi government proposed a “steel capacity doubling plan,” aiming to exceed 300 million tons of crude steel production by 2030, doubling current levels. Tata Steel and Jindal Southwest Steel are accelerating the expansion of blast furnaces and seizing infrastructure markets in Southeast Asia and the Middle East. Meanwhile, Vietnam, Malaysia, and other countries are leveraging their free trade agreements to absorb galvanized steel and color-coated steel production capacity transferred from China, forming regional industrial clusters.Challenges Remain: Emerging markets face problems such as power shortages and low-grade iron ore. For example, the iron content of domestically produced iron ore in India is only 58%, far lower than the average of 62% in Australia, resulting in high smelting costs.
III. Industry Transformation: Central State-Owned Enterprise Restructuring and Green Transformation as Dual Drivers
1. Mergers and Acquisitions in China’s Steel Industry Enter “Deep Waters”On January 14, 2026, Minmetals Development announced its plan to inject the iron ore assets of Minmetals Mining and Luzhong Mining to create an integrated industrial chain of “mining-smelting-processing.” This move marks another step forward in the “strong alliance” within China’s steel industry:Accelerated Integration of Central State-Owned Enterprises: Baowu Group and Ansteel Group have completed the integration of over 100 million tons of capacity, and will next focus on overseas mining layout.Intensified Reshuffling of Private Enterprises: Small and medium-sized steel enterprises are accelerating their exit due to insufficient environmental protection investment and financing difficulties. The national crude steel capacity utilization rate is expected to rebound to 82% in 2025.Industry Impact: Increased concentration will enhance bargaining power. China’s dependence on imported iron ore is expected to decrease to 65% in 2025, a 10 percentage point decrease compared to 2020.
2. Green Transformation: The Breakthrough Path of Hydrogen Metallurgy and Electric Arc Furnace SteelTo achieve the “dual carbon” goal, global steel companies are accelerating the deployment of low-carbon technologies:Europe leads in hydrogen-based direct reduced iron: ArcelorMittal built the world’s first green hydrogen zero-carbon plant in Hamburg, Germany, reducing production costs by 20% compared to traditional blast furnaces.
China’s electric arc furnace steel share exceeds 20%: With a well-developed scrap steel recycling system, electric arc furnace steel plants in Guangdong, Jiangsu, and other regions have been put into operation intensively, but the pressure on the power grid load is becoming increasingly apparent.Technological Bottlenecks: Hydrogen metallurgy has high energy consumption and is difficult to commercialize, making it difficult to replace traditional processes on a large scale in the short term. The International Energy Agency estimates that by 2030, the global green hydrogen metallurgy capacity share will only reach 5%-8%.
IV. Market Outlook: The Game Between Short-Term Fluctuations and Long-Term Upward Trend
1. Short-Term Price Pressure, Significant Regional Differentiation：China Steel Market: Winter stockpiling policies stimulate downstream restocking; rebar and hot-rolled coil prices may fluctuate within the 3100-3200 yuan/ton range in the short term. However, Tangshan billet inventory has reached a record high, and post-holiday destocking pressure should be monitored.
European and American markets: A recovery in the manufacturing PMI is driving demand for plate steel, with hot-rolled coil (CRU index) expected to exceed $900/ton, but high electricity prices are constraining the pace of electric arc furnace steel production resumption.Emerging markets: Domestic prices in India rose 15% year-on-year, but export competitiveness was weakened by the depreciation of the rupee; Southeast Asia’s import dependence is deepening, and price fluctuations are significantly affected by Chinese policies.
2. Long-term trend: A structural bull market is expected.Demand side: The global infrastructure investment boom, new energy infrastructure, and the trend towards lightweight electric vehicles will drive an average annual growth of 4%-6% in demand for specialty steel.Supply side: Capacity expansion is limited under carbon constraints, intensifying competition for high-quality iron ore and scrap steel resources. International mining giants are accelerating their investment in high-grade iron ore projects in Africa and Western Australia.Technological innovation: Disruptive processes such as 3D-printed steel and nano-coating technology are gradually being industrialized, driving the steel industry from “scale expansion” to “value creation.” V. Risk Warnings and Investment Recommendations
1. Key Risks
Geopolitical Risks: Escalating conflict between Russia and Ukraine could lead to another surge in European energy prices, impacting local steel mill production.
Policy Uncertainty: Inconsistent carbon tariff standards across countries could trigger a new round of trade frictions.
Lower-than-Expected Demand: If the global economy falls into stagflation, the recovery of the steel industry will be significantly delayed.
2. Investment Themes
Resources are King: Companies with high-quality iron ore assets will benefit in the long term.
Technology Leaders: Technological pioneers in hydrogen metallurgy and electric arc furnace steelmaking have valuation premium potential.
Regional Leaders: Southeast Asian steel companies benefiting from the infrastructure boom and leading companies in specific Chinese sectors.
The international steel industry in 2026 stands at a crossroads of unprecedented change: facing both short-term pain from rising trade barriers and long-term opportunities from green transformation and industrial upgrading. As the world’s largest producer, China’s policy guidance and market resilience will continue to lead the industry’s development; while the competition between the return of high-end manufacturing from Europe and the US and the expansion of capacity in emerging markets may reshape the global value chain. For investors, seizing structural opportunities amidst volatility is key to gaining a competitive edge in the new era of the steel industry.
Note: Reprinted from steel.com
