The world has too much steel, but no one wants to stop making it

The global steel industry is witnessing an unprecedented paradox: while steel production is outpacing demand, countries across the world continue to expand capacity. This oversupply, driven by a mix of strategic policy decisions, economic stimulus packages, and geopolitical ambitions, has triggered price volatility, trade tensions, and environmental concerns. Yet, despite clear warning signs, no major steel-producing nation is willing to cut output.

This crisis of abundance is increasingly being recognized as unsustainable, but with employment, strategic autonomy, and green transition agendas at stake, steelmakers and governments appear trapped in a cycle of overproduction.

Global Steel Production Outpaces Demand

In 2024, global steel production surged to approximately 1.95 billion metric tonnes, even as demand remained largely flat. According to industry data, this represents a 2.8% year-on-year growth in output, while consumption barely nudged forward by 0.9%. This disconnect has led to stockpiles, falling prices, and low capacity utilization across several regions.

China, India, and Russia remain the top steel producers, with India being the fastest-growing among them. Despite slowing infrastructure growth in several developed nations, Asian economies continue to ramp up capacity, seeing steel as a strategic industry tied to national development and defense.

Why No One Wants to Stop Producing Steel

There are three primary reasons why countries remain committed to producing more steel, even when the market doesn’t demand it:

1. Strategic Importance: Steel is fundamental to infrastructure, automotive, defense, and housing. Governments see it as a pillar of industrial autonomy and national security.
2. Employment Protection: Steel plants employ hundreds of thousands directly, and millions indirectly. Shutting down production risks massive job losses and political backlash.
3. Global Race for Dominance: Countries like China and India view steel as a geopolitical asset. Export dominance helps expand soft power and strengthen global trade leverage.

India’s Position in the Global Steel Conundrum

India has emerged as the second-largest steel producer, with its output growing at nearly 7% annually. Backed by policies like the National Steel Policy 2017, PLI Scheme for Specialty Steel, and continued infrastructure push under PM Gati Shakti, Indian firms have ramped up both crude and finished steel capacity.

Despite domestic oversupply concerns, India continues building steel plants to meet its long-term infrastructure and export goals. However, this puts it on a collision course with global steel dumping issues, especially from China and Vietnam.

Impact of Oversupply on Prices and Trade

The global steel glut has pushed down prices, making it harder for companies to operate profitably. Spot prices for hot-rolled coil (HRC) have dropped 12–18% year-on-year in key markets.

Countries are responding with anti-dumping duties, import tariffs, and trade barriers, but these measures only provide short-term relief. Steel diplomacy, especially between the US, EU, and Asian nations, is now a regular part of international negotiations.

Environmental Consequences: Steel’s Carbon Dilemma

Steel is one of the most carbon-intensive industries, responsible for 8% of global CO₂ emissions. Overproduction not only burdens the market but also undermines global climate targets.

The push to decarbonize steel production through green hydrogen, electric arc furnaces (EAFs), and carbon capture technologies is gaining momentum. However, the transition is slow and capital-intensive, especially for developing countries.

If global overproduction continues without a shift toward cleaner methods, steel could become a major obstacle in achieving net-zero goals.

The Way Forward: Coordinated Cuts or Green Transition?

Despite knowing the risks, no nation wants to be the first to cut production. The fear of losing economic competitiveness and geopolitical influence leads to a “prisoner’s dilemma” scenario.

Solutions discussed at global forums include:

• Production Quotas: A WTO-backed steel agreement setting annual caps for each country
• Green Steel Alliances: Partnerships among like-minded nations to jointly invest in clean steel
• Carbon Border Tax: Imposing tariffs on imports from carbon-heavy producers
• Scrap-Based Production Incentives: Promoting circular economy in steel

India has taken early steps by launching green steel missions, with Tata Steel and JSW Steel piloting hydrogen-based furnaces. However, unless there’s global alignment, these efforts will be drowned in a sea of continued high-emission output.

Conclusion

The global steel industry is at a crossroads. Overproduction, environmental damage, and trade conflicts are mounting. Still, with steel being tied to national pride, jobs, and geopolitical muscle, halting the production boom is not politically palatable.

Unless countries agree to coordinated action, the world risks facing a multi-pronged crisis—an economic glut, environmental backslide, and eroding trust in multilateral trade systems.

The question remains: who will blink first?

Disclaimer: This article is intended for informational purposes only and reflects current trends and publicly available data in the global steel industry. It does not constitute financial, environmental, or trade policy advice. Readers are advised to consult relevant regulatory and market sources for updates.