[SMM Analysis] Overseas Emerging Engines Surge While Traditional Industrial Hubs Face Transformation Pains

In 2025, the global steel industry underwent a profound decentralization shift. According to the latest data from the World Steel Association (WSA), global crude steel production reached 1.8494 billion tonnes in 2025, representing a 2% year-on-year decline. Beneath this overall contraction, the industry's center of gravity accelerated its southward migration toward emerging markets such as India, the Middle East, and Southeast Asia. Meanwhile, traditional producers—including the United States, Germany, and Japan—showed diverging performances under the dual pressures of soaring costs and structural transformation, marking the beginning of a new cycle driven by overseas domestic demand.

Source: WorldSteel

Macro Outlook: Who Is Rising and Who Is Retracting?

The global steel landscape underwent a quiet yet significant reconfiguration in 2025. While demand in parts of Asia remained robust, buoyed by market heating, traditional markets in Europe and North America generally faced stagnant growth. Simultaneously, emerging economies exhibited high activity levels, significantly outpacing the steady but slow-moving mature markets.

The Powerhouse Engines: India, Türkiye, and the Middle East

• India: In 2025, India's crude steel production reached 164.9 million tonnes, a dramatic surge of 10.4%, firmly securing its position as the world's second-largest steel producer . This growth was primarily fueled by the government’s $1.4 trillion National Infrastructure Pipeline and the "PMAY" affordable housing scheme.
• Türkiye: Annual production reached 38.1 million tonnes, growing by 3.3%. Benefiting from large-scale reconstruction efforts following the 2023 earthquake and enhanced export competitiveness due to the devaluation of the Lira, Türkiye emerged as one of the standout black horses of the year .
• Middle East: Regional production grew by 4.3% year-on-year. Specifically, Saudi Arabia (+12.3%) and Iran (+1.4%) leveraged energy export dividends to accelerate domestic industrialization.

Traditional Giants in Crisis: Germany and Mature East Asian Markets

• Germany: Production plummeted by 8.6%, reflecting the severe impact of high energy costs and the painful transition of the automotive industry toward electrification.
• Japan and South Korea: Production fell by 4.0% and 2.8%, respectively. Persistent labor shortages hindered domestic construction projects, while their automotive exports faced intense global competition from Chinese electric vehicle (EV) brands.

Source: WorldSteel

December Focus: "Fire and Ice" in Overseas Markets

In December 2025, global production dropped to 139.6 million tonnes, a 3.7% year-on-year decrease. Setting aside the massive double-digit decline in China, the performance of overseas regions offered striking contrasts:

• Türkiye's Year-End Sprint: December production skyrocketed by 18.5% year-on-year. This was driven by aggressive seasonal restocking from European buyers—who faced record-low inventories—alongside an end-of-year rush in domestic reconstruction projects.
• The EU's "CBAM Front-Running" Rebound: EU production saw an unexpected 3.9% increase in December, reaching 9.9 million tonnes. With the Carbon Border Adjustment Mechanism (CBAM) set to enter full implementation in 2026, local mills restarted blast furnaces to bolster domestic supply, anticipating that future imports might be curtailed by carbon cost uncertainties.
• The U.S. "IRA Dividend": December production grew by 3.6%. Despite the pressure of high interest rates, the Inflation Reduction Act (IRA) continued to spur investment in clean energy infrastructure and data centers, providing a stable floor for domestic steel orders.

Source: WorldSteel

Deep Analysis: Key Variables Affecting Production

• Structural Demand Shift: From Property to Machinery: Global steel demand is pivoting away from traditional real estate toward manufacturing and high-end energy infrastructure. In India and Southeast Asia, urbanization and transportation networks remain the primary drivers. In the U.S. and Europe, the green energy transition (such as wind power and EV supply chains) has become the core support for high-value flat steel production.

• Policy Games and Trade Barriers: 2025 saw a wave of protectionist measures. The U.S. reinstated 25% Section 232 tariffs, while the EU tightened safeguard quotas. These regional self-sufficiency policies forced global steelmakers to adjust production schedules based on the level of protection in their respective trade blocs.

• Labor and Energy Constraints: Production cuts in Japan and Germany were largely driven by fundamental survival challenges. In Japan, chronic labor shortages severely delayed construction deliveries, while in Germany, exorbitant electricity prices placed Electric Arc Furnace (EAF) producers at a competitive disadvantage against emerging market rivals.

Source: WorldSteel

China Enters the "Reduction Era" as the World Seeks New Balance

Although China remains the world's largest producer, 2025 marked its formal departure from the 1-billion-tonne era, with annual output settling at 960.8 million tonnes—a 4.4% decline. The collapse of the domestic real estate market has forced China's steel industry into a period of strategic contraction and structural optimization.

This transition signals that the growth engine of the global steel market has fundamentally shifted from China to emerging hubs like India and the Middle East. Future competition will no longer be determined solely by tonnage, but by a complex interplay of carbon emission quotas, the cost of green energy, and the resilience of regionalized supply chains.