Huatai Securities: The global steel industry prosperity may enter a sustained upward phase

Huatai Securities Research Report believes that the global steel industry’s supply and demand pattern will continue to improve from 2025 to 2030, potentially shifting to a shortage in 2029. Overseas supply and demand will turn from surplus to shortage in 2024, with the gap widening in 2025; from 2026 to 2030, this trend is expected to persist. China’s exports will be a necessary supplement to balance overseas steel supply and demand. The contraction trend on the domestic steel supply side began to establish in 2021. The proportion of real estate demand may drop to 13.2% by 2026 (from 39.4% in 2020), signaling the end of drag effects, and domestic steel demand may gradually enter a stable phase. From 2026 to 2030, the supply and demand surplus will continue to improve. Given the ongoing shortage overseas, a certain level of exports will become a “must-have.” The global steel industry’s prosperity may enter a sustained upward phase. Domestically, it is recommended to focus on leading steel companies and investment opportunities in carbon-related sectors that benefit significantly.

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Huatai | Steel: “Geopolitics + Dual Carbon” Boosts Industry Rejuvenation

We believe that the global steel industry’s supply and demand pattern will continue to improve from 2025 to 2030, potentially shifting to a shortage in 2029. The overseas supply and demand will turn from surplus to shortage in 2024, with the gap widening in 2025; from 2026 to 2030, this trend is expected to persist. China’s exports will be a necessary supplement to balance overseas steel supply and demand. The contraction trend on the domestic steel supply side began to establish in 2021. The proportion of real estate demand may drop to 13.2% by 2026 (from 39.4% in 2020), signaling the end of drag effects, and domestic steel demand may gradually enter a stable phase. From 2026 to 2030, the supply and demand surplus will continue to improve. Given the ongoing shortage overseas, a certain level of exports will become a “must-have.” The global steel industry’s prosperity may enter a sustained upward phase. Domestically, it is recommended to focus on leading steel companies and investment opportunities in sectors benefiting from carbon policies.

Core Views

Current Situation: Global surplus pattern began to improve in 2025

2025 may be a turning point for the global steel supply and demand pattern. According to WSA, the global steel supply surplus rate is expected to narrow to 5.74% in 2025. Overseas supply and demand gaps will continue the shortage trend that started in 2024, expanding to -2.3%. Although China’s steel supply and demand are still surplus, the surplus rate is beginning to converge. Looking ahead to 2026, China’s steel capacity ceiling, anti-inflation measures, and dual carbon policies will establish a continued supply contraction trend. The drag from real estate demand may near an end (real estate’s share drops to 13.2% in 2026), and demand will stabilize; meanwhile, overseas demand may continue to grow positively, with supply still short. Structural shortages overseas will have to rely on Chinese exports, so China’s ongoing supply contraction will have a significant marginal impact on global supply and demand improvement.

2026-2030 Global Steel: Reduced supply, increased demand, sustained growth

We estimate that the global steel supply and demand balance sheet may shift from surplus to shortage by 2029, with the supply gap expanding to 47.4 million tons in 2030, corresponding to a global shortage of about 2.54%. Industry profit margins are expected to rise, and China’s bargaining power as a “balancer” may be reconstructed. From 2026 to 2030, global steel supply may decline slightly, with geopolitical conflicts possibly leading to Iran’s production cuts; China’s crude steel output may continue to decrease, moving toward the 850 million ton target by 2030, with further increases in low-carbon electric furnace penetration; rapidly developing regions like India and ASEAN may see new capacity additions. On the demand side, driven by de-globalization, manufacturing returning to home countries, and increased defense spending, overseas apparent demand is expected to maintain a compound growth rate of 2.5%. The drag from domestic real estate may end, and domestic demand will gradually stabilize.

Under the dual carbon background, the domestic steel industry may continue its recovery cycle in 2026

According to Huatai Metals’ “Dual Carbon Emission Reduction Leads, Steel Industry May Achieve Performance Resilience” (26-02-27), recent two sessions’ emphasis on self-driven emission reductions may mark the start of substantive implementation of dual carbon policies. Supply constraints becoming normalized could be the core driver of industry profit recovery, with steel industry expected to rebound in 2026. Currently, industry prosperity is at a historic low, compounded by long-term declines in crude steel production, ongoing optimization of downstream demand structure, and a policy-driven recovery cycle characterized by supply contraction and profit elasticity expansion.

Steel Industry Prosperity Continues to Improve, Focus on Leading Companies and Structural Opportunities

We are optimistic about the improvement in the steel industry’s prosperity, focusing on leading steel companies and the opportunities brought by increased electric furnace penetration. We believe that companies meeting the “Steel Industry Standard Conditions (2025 Edition)” will establish competitive advantages through energy consumption and carbon emission metrics. Overseas, rising energy prices may lead to shutdowns or reductions in electric furnace lines, creating space for domestic short-process special steel exports; simultaneously, the continued increase in domestic electric furnace steel share may improve the supply-demand structure of upstream carbon materials.

Risk Tips: International geopolitical situations, policy implementation falling short of expectations, downstream demand underperforming; the steel supply and demand estimates in this article are based on assumptions and may differ from actual conditions.

(Source: First Financial)