The global steel industry is experiencing its strongest rebound in three years, powered by a surge in infrastructure investments, energy transition projects, and improved industrial demand across key economies. After two years of stagnation marked by weak construction activity and high energy costs, producers now report rising order books and renewed optimism heading into 2026.
Infrastructure and Construction Drive Growth
Governments across Asia and Europe have accelerated infrastructure spending in an effort to stimulate post-pandemic growth. India and China continue to dominate consumption, with India alone accounting for nearly a tenth of global demand growth this year. In Europe, new investment in green energy facilities, transport networks, and residential housing is creating fresh demand for both flat and long steel products.
In Southeast Asia, Indonesia and Vietnam are leading a wave of new industrial zones and public infrastructure programs. These projects, combined with strong automotive production and machinery demand, have boosted regional steel consumption by nearly double digits compared to the previous year.
Producers Reactivate Capacity
The improving demand outlook has prompted major producers to restart blast furnaces and ramp up utilization rates. Several mills that had idled capacity in 2023 due to low margins and weak orders have returned to near full production. At the same time, companies are investing in technology upgrades to improve energy efficiency and reduce carbon emissions.
While the revival has created optimism, it also raises questions about overcapacity. China’s crude steel output remains high despite government pledges to curb production for environmental reasons. This has led to concerns of renewed price competition and potential market imbalances if demand softens in 2026.
Green Steel Gains Traction
A notable shift is the growing momentum behind “green steel” — production using low-carbon methods such as hydrogen reduction and electric arc furnaces powered by renewable energy. European and Japanese producers are at the forefront, supported by policy incentives and growing demand from automakers and construction firms seeking sustainable supply chains.
Analysts note that green steel still accounts for less than 5% of global production, but its share is expected to rise sharply in the coming decade. This trend is expected to reshape global trade flows and create new investment opportunities in renewable-powered metallurgy.
Outlook
The outlook for steel remains positive, though challenges persist. Rising energy costs, fluctuating coking coal prices, and uncertain geopolitical conditions could temper the recovery. Nonetheless, the structural demand from infrastructure, defense, and energy transition sectors provides a solid foundation for continued growth through 2026.