Asian Steel Market in Q1/2026 Under Pressure from Policy Uncertainty and Global Overcapacity

This report is part of the S&P Global Energy – Metals Trade Review series, analyzing key trends in iron ore, metallurgical coal, copper, alumina, cobalt, lithium, nickel, steel, and scrap, while assessing supply–demand shifts, arbitrage opportunities, and quality differentials in the months ahead.

Overall Picture: Intensifying Export Competition, Prices Under Pressure

In Q1/2026, the Asian steel market is expected to face increasingly intense export competition, putting downward pressure on prices as companies navigate an environment of policy uncertainty.
Meanwhile, steel mills in Taiwan are likely to continue prioritizing domestic scrap, as long steel prices remain low and downstream demand stays weak.

Policy Uncertainty Weakens Trading Activity

Market participants are adjusting to a wave of new policies in Q1/2026, most notably:

• The EU’s Carbon Border Adjustment Mechanism (CBAM) officially coming into force

• China placing steel products under export licensing requirements

According to market sources from Platts (part of S&P Global Energy), these policies have made market sentiment noticeably more cautious, reducing trading volumes amid already slow year-end activity.

Overcapacity and Rising Trade Protectionism

The market is also witnessing a surge in trade protection measures aimed at supporting domestic steel industries amid global overcapacity:

• India finalized safeguard duties on non-alloy and alloy flat steel

• The European Commission (EC) proposed reducing duty-free import quotas and increasing out-of-quota tariffs

According to analysis by S&P Global Energy CERA, the new protectionist measures, combined with additional costs arising from CBAM, have made buyers and importers hesitant to source steel from outside the EU.

As a result, many shipments originally destined for the EU have been redirected to Southeast Asia and the Middle East, intensifying competitive pressure in those markets.

China: Export Licensing Has Significant Market Impact

Market participants are closely monitoring the impact of China’s export licensing requirement on export volumes in Q1/2026.

According to traders, non-VAT-refund offers nearly disappeared in Q4/2025 due to risks and uncertainties related to the licensing mechanism. Whether these offers return in Q1 will directly affect Chinese steel export prices, according to at least five traders.

India Expands HRC Exports to Southeast Asia

The hot-rolled coil (HRC) market in Asia is expected to remain under downward pressure in Q1 due to:

• Rising export competition

• Persistently weak demand

Although China’s domestic demand weakened in Q4/2025, import prices in Southeast Asia fell even faster, partly due to aggressive offers from mills in India and South Korea.

Notably, Indian mills have shifted their focus to the Southeast Asian market, amid intense competition in the Middle East and cautious buying from the EU.

According to Platts data, the number of Indian HRC offers, bids, and trade indications on a CFR Vietnam basis surged to 143 in Q4, compared with just 20 in Q3.

Despite limited improvement in domestic demand, safeguard duties on flat steel helped Indian domestic prices recover. Platts assessed Mumbai ex-works HRC at 52,000 rupees/mt ($573/mt) on January 16, up 13% from early December.

However, traders believe the sustainability of the price rally depends on domestic demand recovery, while mills are likely to continue pushing exports to manage excess supply.

Chinese Construction Steel Exports Pressure Prices in Singapore

In Singapore’s rebar market, prices are expected to remain under pressure in Q1 due to increased exports from China aimed at alleviating domestic overcapacity.

According to a mill source in Zhejiang, domestic demand in sectors such as shipbuilding, construction machinery, and high-speed rail has peaked, forcing producers to increase reliance on exports, potentially driving prices lower.

Chinese customs data show rebar exports to Singapore rose from 266,089 mt in 2024 to 544,898 mt during January–November 2025, representing a 105% increase.

Conversely, countries such as Turkey, Vietnam, and Qatar — which accounted for 18.6% of Singapore’s rebar imports in 2024 — saw their share drop sharply to 1.3% in 2025.

Platts assessed Southeast Asia CFR rebar (BS4449, 16–32 mm) in Q4/2025 at $469/mt, down 7.3% year-on-year.

Traders noted that Singapore’s small geographic size limits demand growth potential, while low-priced Chinese steel continues to intensify competitive pressure.

Taiwan Cautious on Imported Scrap

Imported steel scrap prices into Taiwan are expected to remain under pressure in Q1/2026 due to weak demand and policy uncertainty.

According to Platts, containerized scrap CFR Taiwan edged up slightly to $299/mt at end-December, mainly due to seasonal supply tightening and higher Turkish scrap prices.

However, amid weak downstream demand, Taiwanese mills are prioritizing domestic scrap over imported scrap and billet. This trend is expected to continue into Q1, putting pressure on imported scrap demand.

Customs data show total scrap and billet imports in October 2025 fell 31% year-on-year.

Bangladesh: Scrap Market Awaits Political Signals

In Bangladesh, the scrap market remained subdued in early January due to limited offers and a wide gap between bid and offer prices.

Market participants are closely watching the February 2026 election, hoping for greater clarity on the new government’s policies and their potential impact on the scrap and domestic steel markets.

Market Insight Conclusion

➡️ Q1/2026 is likely to remain a defensive phase for the Asian steel market
➡️ Policy and trade protectionism are the primary driving variables
➡️ Overcapacity is making exports a source of pressure rather than opportunity
➡️ The scrap market remains under strain due to weak demand and a wait-and-see sentiment