Stainless Steel Market Growth Faces Overcapacity and Trade Barriers Despite Rising Demand

Global stainless steel production is forecast to exceed 70 million tonnes in 2027, while geopolitical uncertainty, uneven capacity expansion and restrictions on recycled material trade pose challenges for the industry.

The global stainless steel market is growing by around 5% annually, the highest growth rate among industrial metals, according to Dr Gerhard Pariser, Vice President Business Development at Steel & Metals Market Research (AUT). Speaking at the Bureau of International Recycling (BIR) World Convention in Malaga, Spain, on 26 October 2026, he highlighted the sector’s growth prospects alongside concerns over overcapacity, geopolitical tensions and increasingly restrictive trade policies.

Stainless Steel Production Shifts Towards Asia

Addressing the Stainless Steel & Special Alloys Committee plenary session, Dr Pariser described the metal’s growth rate as “extraordinary”, exceeding that of copper and aluminium. He reviewed global market developments, changing production patterns, demand trends and the importance of maintaining international trade in recyclable materials.

He identified four major challenges facing the stainless steel sector:

• Geopolitics: Conflicts involving Russia/Ukraine and the US/Iran, alongside increasing BRICS dominance.
• Global overcapacity: Melting capacity is increasing twice as fast as output, with expansion distributed unevenly across regions.
• Economic nationalism: Growing regionalisation and trade protectionism extending beyond ‘traditional’ measures.
• Unbalanced competitiveness: Mills operating under different rules and conditions across markets and regions.

Over the past 25 years, stainless steel production has shifted significantly towards Asia. In 2000, China and Indonesia together accounted for just 3% of production, while Europe contributed 40%. In 2026, Europe’s share has fallen to 9%, whereas China and Chinese-controlled plants in Indonesia account for 72%.

Planned capacity expansions in China, Indonesia and India could add approximately 15 million tonnes by 2031. This compares with less than 10 million tonnes of additional demand expected in the same countries over the same period.

During a panel session, Daniel Yang (CHN) of the BIR Young Traders Committee asked Dr Pariser how demand growth and overcapacity might develop. Dr Pariser said that additional capacity in China and Indonesia would exceed local demand, creating “a lot of extra pressure” and increasing the need to find markets for the surplus material.

Recycled Material Trade Remains Critical

The use of recovered material in 300 series stainless steel production has been growing at 3% annually. However, the proportion of recycled material used in China and Indonesia, as well as the global average, is declining. Dr Pariser described the situation as “quite bleak”. Globally, the average recycled content is around 30%.

“What is very critical in this whole industry is that we have as free as possible flow of material, because this is the only way to really bring that valuable [recovered] material to where it's actually needed,” he said.

India remains the largest importer of recycled material, with the US, EU and South Korea serving as its main suppliers. In recent years, the EU has shifted from being a net exporter to a region requiring imports to meet domestic production needs.

Dr Pariser described measures restricting trade for the EU as “very concerning”.

Committee Chairman Joost van Kleef, commercial director at Oryx Stainless BV (NLD), asked how the updated EU Waste Shipment Regulation, particularly its stricter rules on exporting recovered materials to non-OECD countries, could affect the sector.

Dr Pariser warned that using trade defence measures to protect markets could have a detrimental effect on Europe. He noted that stainless steel production in particular “requires import and third-party feed”.

Stainless Steel Demand Expected to Grow Through 2027

Global stainless steel demand is expected to increase by around 3.8% in 2026 and 4.4% in 2027. Consumer goods, infrastructure, energy and industrial applications are expected to support this growth.

“Stainless is – and remains – a growth story,” Dr Pariser said.

He emphasised that access to secondary raw materials is critical for stainless steel production outside China and that free trade is necessary to ensure these materials reach the markets that need them.

Global Scrap Markets Remain Broadly Stable

According to Omar Al Sharif, manager at Sharif Metals Group (ARE), global stainless steel and superalloy scrap markets remained broadly steady in 2026. Summarising BIR’s quarterly Stainless Steel and Special Alloys Mirror report, he said geopolitical instability, subdued industrial demand and cautious purchasing continued to influence trading activity worldwide.

In Europe, market conditions improved following the introduction of the EU’s Carbon Border Adjustment Mechanism and safeguard measures. However, high energy costs and weak demand could limit the recovery into early 2027.

Across Asia, buyers increasingly favoured locally sourced recycled stainless steel. India’s imports declined 6% year-on-year in the first quarter, while China’s stainless steel melting production rose 7.1% in the first half of the year.

In the US, production increased, but export demand for recycled stainless steel remained weaker than domestic demand.

During the panel discussion, Emily Sanchez, Chief Economist at ReMA (USA), was asked whether Europe could learn from the US approach to securing access to critical raw materials through domestic recycling and open international markets.

Ms Sanchez acknowledged that some US policies had benefited the domestic market but cautioned that some “are very broad and they're not considering necessarily the potential bottlenecks”.

She added that it was necessary to see how the issues “shake out” as new policies created challenges for US supply chains, including their integration with Mexico and Canada.

In the Middle East and Africa, demand remained relatively stable, supported by the energy, infrastructure and industrial sectors, Mr Al Sharif reported. Meanwhile, tungsten prices surged more than 300% against the benchmark, increasing the importance of accurate scrap identification.

New Guidance to Address Radioactive Contamination

Alvaro Rodríguez of Arka Consulting (ESP) announced that a new safety guide on controlling radioactive material in the metal recycling and production industries is due to be released in 2027.

The guidance recognises the recycling industry’s role in detecting radioactive metals that may enter the recycling stream. It recommends that governments cover the costs of recovering lost radioactive material instead of placing the financial burden on scrap recyclers who identify and report it.

According to Mr Rodríguez, the development follows decades of advocacy by BIR and the wider industry. It also draws on lessons from incidents such as the 1998 Acerinox case in Spain, which demonstrated the environmental, operational and financial consequences of radioactive contamination.

A free, multilingual training toolkit designed to help recycling facilities improve radioactive material detection and safe handling practices is also scheduled to launch in November 2026.