In its assessment, Fitch highlighted that easing monetary policies, ongoing infrastructure investments, and the expected recovery in the construction sector are likely to support the steel market. However, the agency noted that geopolitical uncertainties, weakness in certain manufacturing segments, and ongoing trade tensions remain the main risk factors for a full demand recovery.
On the China front, tighter production controls and rising trade barriers are expected to lead to a 4.5% decline in steel output. Fitch also expects this to be reflected in exports, projecting Chinese steel shipments to fall from 118 million tons in 2025 to 109 million tons in 2026.
Regarding India, Fitch indicated that the country’s growth momentum is likely to be maintained. Recent adjustments to the goods and services tax are expected to strengthen demand from key end-use sectors, partially offsetting the negative effects of international tariffs.
In Europe, stricter import quotas and the introduction of a carbon levy on imports are expected to support margins. Fitch also noted that increased infrastructure and defense spending could contribute to a gradual recovery in steel demand.
For the U.S. market, infrastructure investments, an improving demand environment, lower interest rates, and limited imports are seen as supportive factors for domestic producers. Following a weak 2025, Fitch expects steel demand to increase by low single-digit percentages in 2026, supported by a recovery in construction and automotive demand, alongside the effects of the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the chips Act.
On the Brazilian front, Fitch anticipates a modest recovery in the steel market. Demand from the construction, agriculture, and automotive sectors is expected to support the rebound, with additional upside potential if further infrastructure spending is implemented.
Sourced by Bloomberg
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