What structural changes will occur in steel demand in 2026?
At the recently held 2025-2026 China Economic Annual Conference, a series of policies—including “promoting synchronized growth in residents’ income and economic expansion,” “expanding imports and exports,” “optimizing the ‘two new’ policies,” and “using the ‘dual carbon’ goals to lead the transformation”—were intensively deployed, injecting multi-dimensional momentum into the demand side of the steel industry. Against the backdrop of the “Work Plan for Steady Growth in the Steel Industry (2025-2026)” setting an annual average target of 4% growth in the industry’s value-added, this combination of policies will drive the steel demand from “traditional reliance” toward “diversified drivers,” achieving a dual breakthrough: stabilizing overall demand while upgrading its structural composition.
Income and consumption boost end-demand.
The synergistic effect of rising household incomes and upgraded consumption policies is becoming the core endogenous driver behind the growth in steel demand. The annual conference explicitly emphasized “promoting synchronized growth in household incomes and economic growth,” and laid a solid foundation for consumption through specific measures such as “raising basic pensions for urban and rural residents” and “implementing income-increase programs for urban and rural residents.” For every 1 percentage point increase in income levels, durable goods consumption will rise by 1.3 percentage points, directly boosting demand in the steel end-use market.
The deepened implementation of the consumer goods trade-in policy has become a key driver. In 2025, this policy has already spurred rapid growth in sales of related products. Following optimization and upgrades in 2026, its coverage will expand from automobiles and home appliances to an even broader range of sectors. Take new-energy vehicles as an example: by November 2025, their market penetration rate had already approached 60%. The trade-in subsidy policy—offering up to 20,000 yuan—will help push annual production beyond 35 million vehicles. Although each new-energy vehicle uses roughly 10% less steel than a conventional gasoline-powered car, the proportion of high-end steel grades such as high-strength steel and electrical steel has risen from 35% to 60%, boosting the added value of steel per vehicle by more than 40%. Meanwhile, the trade-in program in the home-appliance sector will further stimulate... Cold rolling Board, Galvanized Regarding board demand, steel consumption for home appliances is expected to grow by around 5% by 2026.
The upgrading of service consumption is indirectly driving an increase in steel demand. This year’s conference emphasized “unlocking the potential of service consumption” and “optimizing the environment for inbound consumption,” prompting accelerated development of supporting infrastructure such as sports venues and cultural and tourism facilities. A medium-sized sports venue requires between 8,000 and 12,000 tons of steel, with high-strength steel accounting for over 60% of the total. Meanwhile, in the construction of integrated cultural and tourism complexes, the proportion of steel structures used in applications such as steel curtain walls and specially shaped components has risen from 30% to 55%, making them a key direction for upgrading steel usage in construction.
Innovation and industrial upgrading are driving high-end demand.
Industry upgrading and green transformation driven by technological innovation are reshaping the structure of steel demand, with high-end and low-carbon development emerging as key growth drivers. This year’s conference explicitly expanded the scope of the three major international science and technology innovation centers, while high-end manufacturing clusters such as the Beijing-Tianjin-Hebei region and the Yangtze River Delta are accelerating their formation. These efforts are synergizing with the strategic deployment to "cultivate new growth areas such as hydrogen energy and green fuels," thereby opening up additional growth potential for specialty steels.
New energy and low-carbon industries have become the primary drivers of demand growth. As 2026 marks the inaugural year of shifting from “dual control over energy consumption to dual control over carbon emissions,” the construction of a new energy system is accelerating, with initiatives such as expanding the use of green electricity and building zero-carbon industrial parks directly boosting demand for special steel materials. In the wind power sector, the steel strength requirements for towers of wind turbines with single-unit capacities exceeding 15 megawatts have been upgraded from Q355 to Q690, increasing the amount of steel used per turbine to 2,000 tons. In the hydrogen energy industry, the hydrogen-based direct reduction iron process requires approximately 300 tons of special heat-resistant steel per 10,000-ton capacity. Meanwhile, the situation in which high-pressure hydrogen storage tanks used in hydrogen refueling stations relied heavily on imported steel is being broken, as domestically produced 304H steel begins to take hold. Stainless steel The replacement rate has risen to 45%. According to estimates, the new energy industry alone will add over 20 million tons of steel demand by 2026.
The formation of high-end manufacturing clusters is supported by differentiated demand. The Beijing-Tianjin-Hebei region, leveraging the expansion of its science and technology innovation hub, is focusing on developing aerospace equipment, thereby driving growth in demand for ultra-high-strength titanium alloy steel plates. Domestically, the self-sufficiency rate for this product has already risen from 20% to 50%. In the Yangtze River Delta, the focus is on semiconductor equipment and high-end robotics, which in turn are boosting demand for precision mold steels. Bearing steel In terms of demand, the import substitution rate for high-end mold steels—whose service life exceeds 1 million cycles—has surpassed 30%. The Pearl River Delta is strengthening its supply of automotive sheets, with galvanized automotive sheet production expected to rise by 8%, thereby meeting the lightweighting requirements of new-energy vehicles.
Policy benefits provide a guarantee for industrial upgrading. This year’s conference proposed “making greater efforts to address the issue of overdue payments to enterprises” and “improving supporting regulations for the Law on Promoting the Private Economy,” which will help ease financial pressures on steel enterprises. Moreover, policies explicitly outlined in the “Work Plan for Steady Growth in the Steel Industry”—such as special re-lending for technological innovation and support through ultra-long-term special government bonds—will accelerate the release of high-end production capacity and boost the supply capacity of high-end steel by more than 20%.
Openness and cyclical upgrades expand both domestic and foreign demand.
The policy combination of “expanding imports and exports” and “building a unified large market” is forging a new pattern of internal and external circulation for steel demand, providing dual support for the industry’s stable growth. The annual conference emphasized that “we must both expand exports and increase imports,” echoing the call to “deeply advance the construction of a nationwide unified large market.” This approach not only optimizes the structure of external demand but also unlocks the potential of the domestic market.
The upgrading of export structures is driving high-end steel products to go global. In 2025, China’s foreign trade bucked the trend and achieved growth, laying a solid foundation for 2026. The strategic initiatives of “developing green trade” and “diversifying exports” will propel the transformation of steel exports from “scale expansion” to “value enhancement.” Starting in 2026, certain low-value-added steel products will be brought under export licensing management, compelling enterprises to focus more on high-end segments. The export growth rate of green steel products—such as steel for new-energy vehicles and wind power—is expected to reach 15%. Leading domestic companies have already achieved “green steel” exports through carbon verification, with each ton of steel reducing carbon emissions by up to 50%, thus meeting the requirements of the EU’s Carbon Border Adjustment Mechanism. Their market share in emerging markets such as Southeast Asia and the Middle East has risen to 35%.
Imported supplementary supplies ensure the security and quality upgrade of the industrial chain. Against the backdrop of dual control over carbon emissions, China’s domestic steel industry is seeing rising demand for high-quality raw materials, prompting expansion. Iron ore 、 Scrap steel Imports can both make up for the inadequacy of domestic resource endowments and provide support for the production of high-end steel. In 2026, scrap steel imports are expected to increase by 10%, helping to raise the share of electric furnace steel capacity to 30%, while ensuring high-quality... Iron ore imports The proportion will increase from 65% to 75%, boosting the qualification rate of products such as automotive panels and home appliance panels by 3 to 5 percentage points.
The construction of a unified large market is unlocking the potential of domestic demand. This year’s conference proposed “comprehensively addressing involutionary competition” and “standardizing law enforcement practices involving enterprises,” which will break down regional market barriers and promote the efficient allocation of steel resources. The application of steel structures in the construction and transportation sectors is accelerating, with steel consumption for steel structures expected to grow by 12% by 2026. Among these, demand for weathering steel used in bridges and seismic-resistant steel for buildings is particularly prominent. Meanwhile, as local autonomy expands, regional steel demand centers tailored to distinctive local industries are emerging—for instance, the southwestern region is focusing on steel for hydropower equipment, while the northeastern region is strengthening its supply of pipeline steel, further enriching the diversity of demand levels.
In the long run, “unlocking economic potential” and “combining investment in physical assets with investment in people” will continue to drive infrastructure improvements to address existing shortcomings and upgrade the manufacturing sector, thereby providing a stabilizing force for steel demand. By 2026, the steel industry will enter a policy-driven period of demand restructuring, as the demand landscape shifts from being “real estate-dependent” toward a diversified model characterized by “manufacturing-led growth, consumption-supported demand, and upgraded exports.” High-endization and green development will become the core drivers of growth, injecting strong momentum into the industry’s achievement of its 4% value-added growth target.
