The global steel industry is facing a deepening crisis as subsidized production and excess capacity continue to distort markets. The Organisation for Economic Co-operation and Development (OECD) points out that state-supported steel production, particularly in China, is putting increasing pressure on producers in Europe and other OECD economies.
Global steel production capacity continues to expand despite weak demand, threatening to lower prices and disrupt competition, Euronews reports, citing the OECD.
Steel is an important material for a wide range of industries, from construction and manufacturing to electric vehicles and data centers.
The OECD argues that government subsidies are a major driver of global overcapacity, with much of the increase in steel production capacity over the past two decades occurring outside OECD countries, often with government support.
According to the group, in 2024, the average Chinese steelmaker received subsidies 15 times larger than those provided to companies in other countries, relative to total assets.
At the same time, Chinese producers exported a record 131 million tons of steel in 2025, an increase of 153% compared to volumes in 2020 and exceeding the total steel production of the European Union (EU) in the same year.
The warning comes amid OECD expectations that global steel overcapacity will grow from 640 million tons in 2025 to 745 million tons by 2028, as capacity continues to grow much faster than demand.
China is expected to play a major role in this expansion, with the country planning to increase its steel production capacity to 38.6 million tons by 2028.
If these projects proceed, the OECD argues that global excess capacity will exceed the current annual steel production of all OECD countries by nearly 320 million tons, highlighting the scale of the imbalance facing the industry.
Policymakers fear that this overcapacity could undermine the profitability and long-term viability of domestic steel industries, increasing dependence on imports of a material considered strategically important for construction, defense, energy infrastructure, and manufacturing.
The OECD also finds evidence that some exporters may be circumventing trade barriers by shipping semi-finished steel to Southeast Asia for processing before re-exporting it to OECD markets.
