Key Details
The report flags a widening mismatch between global steelmaking capacity and demand. While India remains the world’s fastest-growing major steel market, the report warns that expanding global overcapacity could intensify trade pressures, price volatility, and competition for exporters.
Indicator | What It Means |
|---|---|
Global Steel Overcapacity | Projected to reach 745 Mt by 2028, increasing downward pressure on global steel prices and profitability |
India’s Steel Demand | Grew 9.8% in 2025 and is expected to grow 6.7% in 2026, supported by infrastructure and manufacturing investment |
Capacity Addition | India added 41.4 Mt between 2021–2025 and plans another 31.8 Mt by 2028 |
National Target | Government aims to reach 300 Mt steelmaking capacity by 2030–31 |
Trade Position | India shifted from a net exporter to a net importer as domestic demand temporarily outpaced production growth |
Exports | India exported 9.9 Mt of steel in 2025, accounting for 3.1% of global exports |
Green Steel Advantage | India and Iran account for more than 70% of global DRI production, providing a foundation for lower-emission steelmaking |
Trade Defence Measures | India strengthened SIMS, BIS quality controls, safeguard duties, and domestic procurement requirements |
Summary
Global Steel Overcapacity Continues to Rise
The OECD’s Steel Outlook 2026 warns that global steelmaking capacity is expanding much faster than demand, with worldwide overcapacity projected to reach 745 million tonnes by 2028. According to the report, this surplus is likely to place sustained pressure on prices, profitability, and investment across the sector.
The OECD also highlights the role of industrial subsidies, state support mechanisms, and trade circumvention practices in distorting international steel markets. The report notes that heavily subsidised producers can continue expanding capacity even when market demand remains weak, creating persistent oversupply conditions.
India Emerges as the Fastest-Growing Major Steel Market
Against this backdrop, India remains one of the strongest growth centres in the global steel industry. Domestic steel demand expanded by 9.8 percent in 2025 and is projected to grow by another 6.7 percent in 2026, supported by continued investments in infrastructure, construction, manufacturing, transport, and urban development.
To meet this demand, India added 41.4 Mt of capacity between 2021 and 2025 and plans to add another 31.8 Mt by 2028. These additions support the national objective of achieving 300 Mt of steelmaking capacity by 2030–31.
Managing Trade and Capacity Risks
The report notes that India’s strong demand growth temporarily transformed the country from a net steel exporter into a modest net importer during 2024–25. At the same time, expanding domestic capacity could eventually create surplus production that will require access to export markets.
In response to growing concerns around steel dumping and unfair trade practices, India has strengthened the Steel Import Monitoring System (SIMS), tightened Bureau of Indian Standards (BIS) quality compliance requirements, introduced safeguard measures on selected imports, and expanded domestic procurement preferences for Indian steel.
The Emerging Green Steel Opportunity
The OECD also points to India’s strong position in Direct Reduced Iron (DRI) production. Together, India and Iran account for more than 70 percent of global DRI output, creating opportunities to accelerate the transition towards Electric Arc Furnace (EAF) technologies and future green-hydrogen-based steelmaking.
What is "Direct Reduced Iron" (DRI) in Steel Production?
Direct Reduced Iron (DRI), also known as sponge iron, is a high-quality metallic material produced by removing oxygen from iron ore pellets or fines in its solid state using a reducing gas, such as natural gas or hydrogen, without melting the ore in a traditional blast furnace. In modern metal manufacturing, DRI is a critical alternative raw material to steel scrap for Electric Arc Furnaces (EAF). In public policy planning, expanding DRI capacity is a key step toward industrial decarbonization. Because the process allows steelmakers to bypass highly polluting, coal-fired blast furnaces, it provides a direct technical pathway to integrate green hydrogen, helping lower carbon emissions across heavy manufacturing.
Policy Relevance
Protects Domestic Industry from Global Steel Gluts: Rising global overcapacity strengthens the case for targeted trade-defence measures against unfairly priced imports.
Supports India’s 300 Mt Steel Strategy: Capacity expansion remains essential to meet growing domestic demand and infrastructure requirements.
Highlights the Need for Export Market Development: Future production growth may exceed domestic demand, requiring stronger export competitiveness and market access strategies.
Strengthens Green Steel Transition Pathways: India’s leadership in DRI production provides an early advantage for low-emission steelmaking technologies.
Reinforces Quality and Standards-Based Trade Policy: Enhanced SIMS monitoring and BIS compliance requirements help safeguard domestic manufacturers from sub-standard imports.
Follow the Full Report Here: OECD Steel Outlook 2026.