World Steel Lowers 2026 Demand Forecast Due to China and Middle East Conflict

The World Steel Association has downgraded its 2026 global steel demand forecast to a 0.1% decline. The organization cites a persistent property sector slump in China and rising geopolitical instability in the Middle East. This outlook marks a reversal from the association's April forecast, which projected 0.3% growth for the year.

The industry group also lowered its expectations for 2027. It now anticipates demand growth of 1.7%, down from its earlier estimate of 2.2%. These revisions highlight the challenges facing the global construction and manufacturing sectors as key economies manage structural shifts and regional conflicts.

"What we observe in the Gulf is the deferral of demand rather than its destruction, as project awards, construction starts and financing decisions are pushed back while the security situation remains unresolved," said Alfonso Hidalgo de Calcerrada, chair of World Steel’s economics committee.

Regional Impact and Market Deferrals

The Middle East, specifically the Gulf region, is facing volatility in consumption patterns. According to the latest World Steel forecast, steel demand in the region is expected to drop 11% in 2026. The committee anticipates a subsequent rebound of 11.3% in 2027, assuming that deferred infrastructure and industrial projects resume as security conditions stabilize.

China's Property Downturn

Beyond geopolitical friction, China remains the primary driver of global steel demand trends. The ongoing contraction in the country's real estate market continues to weigh on overall consumption figures. As the world's largest consumer of raw steel, China’s domestic construction activity serves as a benchmark for the global industry. The current slowdown has forced producers to recalibrate their output and supply chain expectations for the coming years.

What Is at Stake for Global Markets

The downward revisions highlight the sensitivity of the global steel market to macro-policy in major economies and regional stability. For stakeholders, including mining companies, industrial manufacturers, and construction firms, the shift indicates a period of extended uncertainty. The transition from anticipated growth to a contraction in 2026 suggests that the industry is entering a phase where project timelines are susceptible to external shocks instead of purely market-driven demand cycles.