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Steel prices combine costs with market balance
A steelmaker first faces a cost curve: iron-bearing material, carbon, electricity or fuel, labor, maintenance, transport, financing and compliance. The finished-steel price is then determined by the market balance in a particular region and product. If buyers are competing for scarce sheet, bar or rebar, mills may pass higher costs through and preserve or expand margins. If demand is weak or supply is abundant, mills may have to absorb higher costs, cut production or accept lower margins.
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This is why a rise in iron ore or coal does not automatically produce the same percentage rise in every steel quotation. The effect depends on the mill’s route, its contracts and inventories, the product it makes, local energy and freight costs, and whether imports or exports are available.
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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsThe latest figures discussed here come from the OECD’s Steel Outlook 2026 and World Steel Association reference material. The OECD’s raw-material chart ends on 23 January 2026, so its 2025 changes are historical measures, not live October 2026 quotations.
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Which raw materials matter depends on the production route
BF-BOF: iron ore, coke and fluxes
In the blast-furnace/basic-oxygen-furnace route, iron ore is reduced to iron in a blast furnace using carbon-rich coke made from metallurgical, or coking, coal. The molten iron is refined in a basic oxygen furnace, usually with some recycled steel. Limestone and other fluxes help remove impurities. This route makes its cost structure particularly sensitive to iron-ore quality, coking-coal prices, coke yields, furnace efficiency and energy.
EAF: scrap and electricity
An electric arc furnace melts a charge that can be predominantly recycled steel. It may also use direct-reduced iron or hot metal when scrap quality or availability is insufficient. Electricity is a major variable cost, so the same scrap price can produce very different economics in regions with different power markets, grid charges and generation mixes.
Scrap is both an input and a supply constraint
World Steel Association material says scrap can account for up to 100% of EAF inputs and up to 30% of the BF route’s input mix. Scrap supply is tied to the amount of steel used in earlier decades, collection and recovery systems, and the time products remain in service. A sudden increase in current steel demand therefore cannot create an equal amount of scrap immediately. When obsolete material is scarce, EAF mills can face intense competition for suitable grades even if finished-steel demand is only moderate.
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Limestone, alloys and coating materials add to the cost of making specific grades and finishes. Stainless, electrical, coated and high-strength products have different alloy or processing requirements from commodity carbon steel. Comparing a raw-material index with a finished product without matching its specification can produce a misleading conclusion.
| Production route | Most important cost exposures | Typical market sensitivity |
|---|---|---|
| BF-BOF | Iron ore, metallurgical coal/coke, energy, limestone and some scrap | Iron-ore and coking-coal markets, furnace efficiency, seaborne freight and regional demand |
| EAF | Scrap, electricity, direct-reduced iron or hot metal where used | Scrap availability and grades, power prices, grid conditions and local supply |
What the 2025 raw-material figures actually show
The OECD reported that, during calendar 2025, iron-ore prices rose 9%, coking-coal prices rose 17% and scrap prices rose 2%. Its typical basket of raw materials used for steelmaking increased 10%. These percentages describe reported benchmark movements for 2025; they are not a single worldwide steel price and should not be read as October 2026 spot quotations.
| Benchmark or basket | Reported 2025 change | Qualification |
|---|---|---|
| Iron ore | +9% | OECD figure reported in the 2026 Steel Outlook |
| Coking coal | +17% | OECD figure reported in the 2026 Steel Outlook |
| Scrap | +2% | OECD figure reported in the 2026 Steel Outlook |
| Typical steelmaking raw-material basket | +10% | OECD composite measure for 2025 |
The OECD chart’s latest raw-material observation is dated 23 January 2026. The series uses examples such as 62% Fe iron ore, premium Australian coking coal and Northern European shredded scrap. Those are defined benchmarks, not interchangeable commodities: ore grade, coal quality, scrap chemistry and delivery location all matter.
When these inputs rise faster than finished-steel prices, the steel-to-raw-material margin narrows. A mill can respond by improving yields, changing its blend, reducing output or attempting to raise its selling price. Whether customers accept an increase is a demand and competition question, not a mechanical consequence of the input index.
Energy costs connect the route to the region
Steelmaking is energy-intensive, but the relevant energy is not the same for every mill. BF-BOF plants use the chemical energy of coke and fuel to reduce iron ore, as well as electricity for equipment. EAF plants avoid part of that ore-reduction work but consume substantial electricity while melting the charge. Scrap-based production can therefore have a different energy profile from primary ironmaking.
World Steel Association guidance emphasizes that energy costs vary with both energy type and plant location. A region with inexpensive, reliable electricity can improve EAF competitiveness; a region with high power prices or constrained grid capacity can erase that advantage. Coal and gas are often priced through internationally traded markets, whereas electricity can be strongly local. As production shifts toward more electricity-intensive processes, regional power differences may weigh more heavily on delivered steel costs.
Energy shocks also illustrate the difference between a producer’s cost pressure and the market price. A plant may face a sharp increase in power or fuel costs while buyers, faced with weak orders and ample imports, refuse a matching increase. In that case the immediate result is a margin squeeze rather than a proportionate rise in steel prices.
Demand comes from steel-using sectors, not from one global buyer
Construction and infrastructure
Buildings, housing, bridges, roads, rail, ports and utilities consume large volumes of structural sections, rebar, plate, beams and fabricated products. Public budgets, interest rates, permitting and project pipelines can change this demand with a lag. A strong infrastructure program in one country can support regional mills without lifting every global benchmark.
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Manufacturing and durable goods
Automobiles, machinery, appliances, energy equipment and other manufactured goods use different grades and forms of steel. Their purchasing cycles, inventories and export exposure differ from construction. A factory slowdown can reduce demand for a specific flat product even while construction keeps long-product orders firm.
Regional activity matters more than a world average
The OECD’s 2026 outlook estimated that global steel demand contracted 2.6% in 2025. It projected growth of 0.4% in 2026 and average annual growth of about 0.9% through 2030. These are estimates and forecasts, not final results.
| Market or period | OECD estimate or projection | How to interpret it |
|---|---|---|
| Global steel demand, 2025 | -2.6% | Estimated contraction |
| Global steel demand, 2026 | +0.4% | Projected growth |
| Global average annual demand growth through 2030 | About +0.9% | Projection for the period |
| India, 2026 | +6.7% | Projected regional growth |
| China, 2026 | -0.6% | Projected regional contraction |
These figures show why a global average is not a local price forecast. India and China were expected to move in opposite directions in the OECD outlook. A mill serving a fast-growing market may see tight orders while another facing declining construction or manufacturing demand competes aggressively for export sales.
Excess capacity and trade can outweigh input costs
Supply must be considered alongside demand. The OECD’s 2026 outlook estimated global excess steelmaking capacity at 640 million tonnes in 2025 and projected 745 million tonnes by 2028. Excess capacity can keep plants running or encourage producers to seek export outlets, increasing the amount of steel competing for buyers. That pressure can depress finished-steel prices even when iron ore, coal or electricity costs are rising.
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Trade conditions affect both raw materials and finished steel. Export restrictions on scrap or other inputs can tighten availability for importing mills. Geopolitical disruptions can interrupt shipping routes, raise insurance or energy costs, and change which suppliers are economically reachable. The resulting effect is regional and product-specific: a disruption that lifts a delivered coil price in one market may have little effect on a domestic bar quotation elsewhere.
Inventories amplify these movements. Buyers holding substantial stocks can delay purchases after a price spike, while depleted inventories can make a modest improvement in orders feel urgent. Mills also manage operating rates and planned maintenance, so apparent supply can change before installed capacity does.
How cost changes pass through to a steel quotation
- Input movement: an ore, coal, scrap, electricity or freight benchmark changes.
- Mill exposure: the producer’s route, purchasing contract, inventory and hedging determine how much of that change reaches its cost.
- Production response: the mill may alter its raw-material blend, operating rate, product mix or maintenance schedule.
- Competitive test: domestic rivals, imports, exports and customer inventories determine whether buyers accept a higher offer.
- Product-specific price: the final number reflects grade, dimensions, processing, delivery basis, currency and date.
This chain explains two apparently contradictory outcomes: finished steel can rise less than its inputs when supply is loose, or rise more quickly when demand is tight and buyers are competing for limited availability.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Compare steel prices on a like-for-like basis
Before deciding that one price has risen or fallen, record every item below:
- Product and specification: identify the form (such as sheet, plate, bar, beam or wire rod), grade, thickness or dimensions and finish where relevant.
- Geography: distinguish a domestic price from an import or export assessment, and identify the producing or consuming region.
- Delivery basis: check whether freight, insurance, duties, handling and inland delivery are included.
- Unit and currency: confirm the weight unit, currency and whether taxes or surcharges are included.
- Date and type of number: separate a spot quote, an index assessment, a contract reference, a monthly average and a forecast.
- Raw-material definition: match ore grade, coal quality or scrap grade and location before drawing a comparison.
A 62% Fe iron-ore benchmark cannot be substituted for a finished flat-steel quotation, and Northern European shredded scrap is not a universal proxy for every scrap market. Cross-market price divergence is normal when specifications, freight and local balances differ.
Useful scenarios for interpreting price moves
Raw materials rise, but steel prices lag
Coking coal and ore become more expensive while construction orders weaken and excess capacity keeps mills competing for volume. BF-BOF costs rise, but buyers resist increases. Margins narrow, and some producers reduce output instead of fully passing through the cost.
Demand rises while inputs are stable
A regional infrastructure program accelerates orders for rebar and plate. Mills have limited spare capacity and customer inventories are low. Finished-steel prices can increase even without a major move in ore, coal or scrap because the market is bidding for available tonnes.
EAF demand meets tight scrap supply
Manufacturing recovers in a region dominated by EAFs, but demolition and collection do not provide enough suitable scrap. Scrap prices rise and mills compete for grades that meet chemistry requirements. Electricity costs and local grid conditions determine how much of that pressure reaches the product price.
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Capacity and exports weaken a local market
Domestic demand is flat, but producers with underused capacity send more material into the region. Import competition caps mill offers, even if energy or raw-material costs are elevated. A local price can therefore fall while an upstream benchmark is rising.
A practical framework for buyers and analysts
- Define the exact market: write down product, grade, region, delivery basis and currency.
- Identify the marginal route: determine whether BF-BOF, EAF or a mix is most likely setting the offer in that market.
- Track the relevant inputs: use the ore and coal series for BF-BOF exposure, or scrap and electricity indicators for EAF exposure.
- Check demand indicators: review construction, infrastructure and manufacturing activity in the consuming region rather than relying only on global growth.
- Check supply and trade: look for excess capacity, operating-rate changes, import offers, export pressure, restrictions and freight disruptions.
- Compare dates consistently: do not compare a January benchmark, a monthly contract and a current spot quote as if they were simultaneous.
- State uncertainty: label forecasts as forecasts and explain when a benchmark is not a direct measure of the finished product being purchased.
What the available evidence can—and cannot—tell you
The OECD and World Steel Association material explains the main economic drivers and provides dated demand, capacity and raw-material indicators. It does not establish a single live steel price for October 2026. Without a specified product, grade, geography and delivery term, there is no defensible universal quotation to report.
The most reliable conclusion is conditional: raw materials set pressure on the cost side, demand sets the willingness to pay, and supply, trade, energy and regional conditions determine how much of that pressure appears in a particular steel price. Any serious comparison should preserve those qualifications instead of treating one benchmark as the whole market.
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