Asia

China’s steel market entered 2026 with softer momentum, with the first quarter’s exports falling 9.9% year on year to 24.71 million tonnes following 2025’s record levels. Domestic demand has remained constrained by ongoing weakness in the property and construction sectors.

Crude steel production is expected to decline modestly in 2026, although persistent structural oversupply continues to pressurise mills into relying on export markets to balance excess output. Disruptions to Iranian billet supply are likely to create opportunities for Chinese mills to capture additional share in export markets across Asia, the Middle East and Africa. Overall, continued Chinese export competitiveness and subdued domestic steel consumption should remain a headwind for global recycled steel demand throughout 2026.

South Korea’s recycled steel market tightened in early 2026 as mills faced reduced import inflows and persistently constrained inventories, leading to firmer domestic buying conditions in a weak demand environment. At the same time, mills are operating under margin pressure amid elevated energy and freight costs linked to the ongoing Middle East conflict, while government pressure to stabilise finished steel prices is further limiting pricing flexibility. Import availability remains uneven as traditional suppliers such as Japan and the USA have been shipping less material than in previous years. Weak domestic steel demand and cost inflation have driven more defensive mill behaviour, including a suspension of export offers for certain steel products. This has left the market tight on recycled steel, with a weak consumption outlook.

Taiwan’s recycled steel imports declined sharply in the first quarter of 2026, falling roughly 30% year over year. Semi-finished imports are down approximately 50%, signalling broad-based contraction in raw material demand. Weak domestic conditions - particularly subdued construction activity - are continuing to limit recycled steel consumption. Crude steel production also remains below historical averages, reinforcing a cautious operating environment for mills. Although recycled steel prices in the region have firmed to two-year highs, the increase appears cost-driven rather than demand-led as higher energy and freight costs are supporting pricing despite soft underlying steel demand.

Traditional recycled steel-consuming countries such as Thailand, Vietnam, Indonesia and Malaysia have seen relatively stable demand into early 2026, with little meaningful change in overall purchasing behaviour. Abundant availability of alternative feedstocks continues to limit any material shift towards higher recycled steel consumption. Import volumes remain broadly in line with 2025 levels, with buying activity still largely concentrated on containerised shipments and opportunistic spot cargoes rather than on sustained deep-sea trade flows.

Bangladesh’s recycled steel imports started 2026 on a weaker note, with volumes down around 25% year on year in the first quarter as mills reduced buying activity. Purchasing has been more cautious amid higher energy costs, freight uncertainty and tighter import financing conditions, which have limited the ability of mills to secure funds for recycled steel. At the same time, broader supply chain disruption and elevated input costs have contributed to softer near-term demand visibility.

Indian steelmakers have continued the trend of shifting their raw material mix away from imported recycled steel and towards iron ore-based inputs amid persistently elevated recycled steel prices and weak import economics. Imported recycled steel remains less competitive owing to higher delivered costs, freight volatility and inconsistent availability, making domestic iron units a more stable and cost-effective option for mills. This has reinforced a broader structural preference for locally-sourced raw materials as mills prioritise supply security and margin stability.

The conflict in the Middle East has added significant disruption to global steel and recycled steel markets. Instability around the Strait of Hormuz has increased freight rates, insurance costs and volatility in energy and bunker fuel prices, raising delivered costs for metallics generally. This has reduced the efficiency of long-haul trade flows. At the same time, disruption to Iranian industrial activity and export capacity has removed marginal supply from the market. Thus, with system-wide cost inflation and logistics disruption, this is reinforcing regional sourcing and limiting global recycled steel mobility.