Global steel production was approximately 1.89 bn metric tons in 2024*, with China producing about 54% of that. India is the second largest producer. This is down from 2021, when just short of 2 bn metric tons was produced. These come as no surprise, given the size of both countries by a measure of land mass and population.
Ironically, the more conventional steel that is produced is simply going to deliver more recycled steel into the steel-making process. This will have a significant impact on the future use of iron ore and coking coal in conventional steel production over the longer term.
So, what is the circular economy and what is its importance on the topic of steel production and recycling?
The circular economy is a move from linear business models, in which products are manufactured from raw materials and then discarded at the end of their useful lives, to circular business models, where intelligent design leads to products or their parts being reused, remanufactured, and recycled.
Over the past 50 years, the steel industry has invested in research and technology to create new grades of advanced and ultra-high-strength steels. These grades have considerably reduced the weight of many steel applications.
In construction, substituting high-strength steels for regular steels can achieve a CO2 reduction of around 30% in steel columns and around 20% in steel beams due to the reduced tonnage of steel products needed for the same function.
Since 1900, the global steel industry has recycled over 25 billion tonnes of steel. This has reduced iron ore consumption by around 33 billion tonnes, as well as cutting coal consumption by 16 billion tonnes.
The industry has also dramatically reduced the use of energy. Producing one tonne of steel today requires just 40% of the energy it did in 1960. Over the same period, steel production has increased nearly ten times.
Replacing energy produced from fossil fuels with energy produced by renewable sources is becoming increasingly more important for the steel industry.
Recycle
Melting steel scrap from products at the end of their useful life to create new steels. Recycling alters the physical form of the steel object so that a new application can be created from the recycled material while maintaining the inherent properties of the original steel.
The high value of steel scrap ensures the economic viability of recycling. With its inherent magnetic properties, steel is easy and affordable to recover from almost any waste stream.
This is why steel is the most recycled material in the world. Around 680 million tonnes (Mt) of steel were recycled in 2021, avoiding over one billion tonnes of CO2 emissions that would have been emitted from the production of virgin steel.
Steel Production and Demand Beyond 2025
The global metals and steel industry is facing an unsettled time, with headwinds from several different directions. These include the latest wave of tariffs imposed by President Trump on imports to the US, the clean energy transition, which can involve costly capital investment to replace coke and coal-fired furnaces with electric arc furnaces, and the glut of global products caused by oversupply. Global forecasts point to a slowdown in production output in every subsector over the next couple of years. Analysts predict basic metals growth of just 2.2% this year, slowing to a meagre 0.7% in 2026.
Whilst steel production will plateau in China over the rest of this decade, India and emerging market economies will be key engines of supply growth over the entire forecast. New capacity additions in advanced economies, especially in Europe, will focus on greener technologies, replacing highly polluting blast furnaces, rather than increasing overall domestic capacity. Net of these predictions, there may well be a fairly balanced supply and demand situation.
What impact will this have on Australian Iron Ore Mining Companies and the local Steel Industry?
In Australia, Government projects are likely to underpin the steel industry despite overseas competition.
Steel imports have risen by 50% in the past two years, and the tariffs are likely to see more steel bound for Australia. That said, government-backed infrastructure projects, ongoing housing demand, renewable energy projects, and higher defence spending will sustain domestic steel consumption in the mid-term.
BHP, Rio Tinto, and Fortescue have progressively reduced the all in cost per tonne of average grade iron ore, and their premium products > 65% Fe will maintain a healthy premium over average grades. Their margins are still significant and, as in the past, should have ample buffer to offset potential price volatility on the downside.
China vs India
Rather like chalk and cheese but understandably, China, after decades of fast-paced growth, will slow down whilst India will see some of the world’s strongest basic metals production growth with 6.1% in 2025 and 6.5% in 2026. Demand is driven by robust economic growth. This could well provide a fairly neutral outcome between demand and supply. India does not have enough high-grade iron ore to meet its growing steel production plans.
Iron Ore price forecasts for 2025 and beyond.
Cost position advantages: Most Australian operations maintain favourable positions on the global cost curve, enabling continued profitability even during price downturns. This cost competitiveness provides a buffer against market volatility while ensuring operational continuity.
Supply disruptions: Weather events, operational challenges, or regulatory interventions could temporarily constrain output from major producing regions. Australian cyclone seasons and periodic Brazilian mine safety inspections represent recurring risk factors for global supply.
Tactical Chinese policy interventions: China may periodically implement stimulus measures targeting infrastructure development or construction activity to address economic growth concerns. Such interventions could temporarily boost steel production and iron ore demand, creating price rallies.
Production discipline: Major producers might adjust expansion plans or operational output in response to price signals, potentially limiting the severity of oversupply conditions. Historical precedent suggests producers become increasingly responsive to price deterioration as margins compress. Not dissimilar to OPEC oil supply management, although we don’t have the cartel model with iron ore.
*World Steel Association 2024
Next week, we will look at Copper, which has maintained a relatively strong price performance.
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