Australian steel fabricators are experiencing challenges from heavily subsidised steel distorting markets, destroying competition, and threatening the visibility of market-based producers worldwide, according to the Organisation for Economic Co-operation and Development’s (OECD) latest report.
The Australian Steel Institute says the timing could not be more significant and relevant to the Productivity Commission‘s current safeguard investigation into a glut of low-price imported fabricated steel flooding the market.
The OECD Steel Outlook 2026 reports that global excess steelmaking capacity is forecast to rise from 640 million tonnes in 2025 to 745 million tonnes by 2028. This figure would exceed the combined annual steel production of all OECD member countries by 319 million tonnes.
Over the same period, demand is projected to grow by only 34 million tonnes, while planned new capacity additions reach up to 139 million tonnes.
The OECD states that the cause of this issue is escalating government subsidies in major non-OECD steel producing economies, with the median producer in some countries receiving up to 15 times more support relative to its total assets than producers in market-based economies — up from 10 times in 2023.
The Australian Steel Institute says the result is a flood of artificially priced steel into open markets, with record export volumes reaching 131 million tonnes in China alone in 2025.
A threat to going green
OECD also warns that this issue is threatening the global green steel transition, with around one-fifth of planned low-carbon steelmaking projects worldwide suspended due to unfavourable market conditions.
Green steel is steel-produced with near-zero greenhouse gas emissions, achieved by replacing traditional coal-fired blast furnaces with electric arc furnaces. These are powered by renewable energy, and by using green hydrogen instead of fossil fuels to extract iron from ore.
Earlier this year, the Institute of Energy Economics and Financial Analysis (IEEFA) revealed that Europe’s momentum on the phasing out of coal and turning to steel technology has slowed down.
As previously reported, Swedish company Stegra experienced a funding shortfall. The company has a green steel plant under construction and needs more than US$1 billion ($1.42 billion) to cover additional costs.
Stegra is also a key investor in Northvolt, another company experiencing a funding shortfall partly due to a lack of financial support from the Swedish Government.
Australian Steel Institute CEO Mark Cain says the OECD has confirmed that subsidised overcapacity is distorting global steel markets and causing “real injury” to market-based producers.
“Australian fabricators have been living this reality for years,” Cain says.
“The Productivity Commission inquiry is our opportunity to respond with the kind of targeted, proportionate measure the OECD itself says is justified.
“We respectfully urge the commission to consider the OECD report as part of the evidence being gathered.”
The Australian Steel Institute is the peak body representing the nation’s steel industry, including manufacturers, distributors, fabricators, and allied industries.
Write to Aaliyah Rogan at Mining.com.au
Images: OECD
