Steel Prices May Drop by 4% in 2025 Amidst Global Challenges
The global steel market is facing a turbulent 2025, as the simultaneous rise in Chinese steel exports and weak demand in key markets, particularly the European Union, threaten to further push prices down. China’s steel exports surged by 25 percent in 2024, reaching an impressive 115-118 million tonnes, while demand within the EU’s steel-consuming industries dropped by 3-4 percent. This has led to significant downward pressure on steel prices, particularly in the flat steel market, which saw an 11 percent year-on-year decline in prices during 2024. Many steel producers are now struggling to remain solvent, with some facing the threat of closure.
The situation is expected to worsen in 2025. Despite a forecasted decline in steel consumption in China by 1.5 percent, the country’s steel exports are expected to stay high, at around 100 million tonnes. As a result, global steel prices will continue to be under pressure, and analysts predict that average prices for flat products in the EU could fall another 4 percent. Globally, steel consumption is expected to decrease by 0.7 percent. The decline in iron ore prices is compounding the challenges for the steel sector. In 2024, the average price of iron ore in China dropped by 10 percent, to $110 per tonne, and it is expected to fall further by 13-14 percent in 2025, possibly reaching $95 per tonne. This decline is largely due to an oversupply of raw materials and high iron ore reserves. For countries like Ukraine, which rely heavily on vertically integrated steel production that incorporates iron ore, the falling ore prices are particularly damaging. These producers are already facing reduced margins, further threatening steel exports.
Ukraine’s steel industry, which primarily exports to the EU, has been hit hard by the weakening demand across the continent. The country has also been grappling with economic challenges, including energy price hikes that surpass European levels and rising transportation costs, which have increased by 10-15 percent due to railway tariff hikes over the past three years. These factors, combined with market volatility, are raising production costs for Ukraine’s iron and steel companies, and there are growing concerns that some plants may have to reduce output or shut down completely. In 2023, Ukrainian steelmakers managed to increase rolled steel production by 0.4 percent compared to 2022, reaching 5.37 million tonnes. However, pig iron production saw a significant decline of 6.1 percent, and steel production also dropped slightly by 0.6%. Exports of rolled steel products fell drastically from 8.34 million tonnes in 2021 to just 1.78 million tonnes in 2023. Despite these challenges, Ukrainian steelmakers are striving to maintain production levels while navigating the complex and highly competitive global steel market. As the global steel industry braces for another difficult year, it remains to be seen how domestic producers, particularly in Ukraine, will cope with continued volatility and increasing pressure from both external factors like Chinese exports and internal challenges such as rising production costs.
