Steel industry accelerates shift towards green technologies amid surging demand

The global iron and steel market is on a robust growth trajectory, driven by rapid urbanisation, infrastructure expansion, and industrial development, particularly across emerging economies in Asia-Pacific, which captured 65% of the market revenue in 2025. According to a comprehensive report from Towards Chemical and Materials Consulting, the market size was valued at USD 1.83 trillion in 2025 and is projected to reach approximately USD 2.95 trillion by 2035, registering a compound annual growth rate (CAGR) of 4.85% over the forecast period. This growth is underpinned by the dominant role of the construction and infrastructure sector, accounting for around 50% of market applications, and the commercial and infrastructure construction segment, which held a 45% share in end-user industries.

The foundational players in the iron and steel market include global giants such as ArcelorMittal, China Baowu Steel Group, Tata Steel, JSW, Nucor Corporation, Nippon Steel Corporation, HBIS Group, POSCO, and SAIL, among others. These companies are actively engaging in both organic and inorganic growth strategies, forming partnerships, investing in capacity expansion, and adopting innovative technologies, to meet expanding demand across automotive, construction, industrial machinery, and energy sectors. For example, Tata Steel’s planned $2 billion investment towards decarbonising its European plants targets net-zero emissions by 2045, reflecting the industry’s urgent shift to sustainable practices.

Production methodologies continue to evolve, with basic oxygen furnace (BOF) technology holding a 60% revenue share due to its high capacity and efficiency. However, electric arc furnace (EAF) technology, driven by increasing scrap metal use and decarbonisation efforts, is the fastest-growing segment. The EAF’s lower carbon footprint, especially when combined with scrap steel and renewable energy, is transforming production landscapes in developed and developing markets alike. Japan’s JFE Steel announced a $2.26 billion investment in a large EAF facility to cut emissions, underscoring this trend. Parallel to this, emerging production via direct reduced iron (DRI) methods is gaining traction for its energy efficiency and low emissions profile, spurred by advancements in hydrogen-based steelmaking.

The steel product mix is dominated by carbon steel, representing 65% of revenue share, largely because of its versatile applications in construction, infrastructure, automotive, and renewable energy sectors. Finished steel products, including sheets, coils, and structural components, constitute 55% of the market revenue, reflecting demand for ready-to-use materials that enhance construction and manufacturing efficiency. Advanced high-strength steels (AHSS) and alloy steels are also experiencing rapid uptake, particularly in the automotive industry where lightweight, high-strength materials are crucial for meeting stringent fuel efficiency and safety regulations.

Regionally, Asia-Pacific remains the powerhouse of the iron and steel market due to vast industrial bases in China, India, Japan, and South Korea. Governments in the region continue to invest heavily in infrastructure modernisation, urban development, renewable energy, and automotive manufacturing. India, for instance, is accelerating steel capacity expansion through initiatives like ‘Make in India’ and the National Steel Policy. The Middle East and Africa have emerged as fast-growing markets as well, driven by large-scale infrastructure projects and economic diversification efforts in countries such as the UAE, Saudi Arabia, and Egypt.

Amid this growth, the steel industry faces critical pressures to reduce its considerable carbon footprint. Coal traditionally serves as a primary reducing agent in steel production, contributing to high CO2 emissions. Although crude steel production has seen marginal improvements in emissions intensity, comprehensive decarbonisation remains paramount to align with global net-zero targets by 2050. Noteworthy efforts include partnerships between global mining and steel companies to develop and deploy cleaner technologies. BHP and Rio Tinto are collaborating on a pilot plant in Western Australia to produce low-carbon iron using renewable energy and direct reduced iron technology. Similarly, BHP and Korea’s POSCO signed an agreement to build a hydrogen-based ‘near zero emissions’ iron demonstration plant in South Korea, aiming for operational status in early 2028.

Private sector investments are aggressively targeting greener production. Swedish company H2 Green Steel has committed $3 billion to a Brazilian plant that uses green hydrogen for steelmaking, a carbon-free approach. In the US, Nucor is investing nearly $860 million in a rebar micro mill designed to enhance efficiency and sustainability. These initiatives reflect a broader industry pivot towards ‘green steel’, characterised by hydrogen reduction, electric arc furnaces powered by renewable energy, and increased scrap recycling.

The integration of Artificial Intelligence (AI) and Industry 4.0 technologies is further revolutionising the sector by driving operational optimisation and sustainability. AI enables predictive maintenance to reduce downtime, enhances raw material and energy use efficiency, and improves supply chain management. Such digital transformation is vital to enhancing productivity and lowering the environmental impact of steel production.

However, challenges persist in managing capacity, supply-demand imbalances, and navigating geopolitical trade tensions that affect raw material flows and market dynamics. For instance, Nippon Steel, having faced regulatory hurdles in acquiring U.S. Steel, is channeling expansion efforts towards the US and Indian markets to counterbalance Chinese import pressures.

In response to capacity concerns and environmental regulatory pressures, Malaysia has launched a decade-long roadmap to green its steel sector by 2050, focusing on capacity management, carbon pricing, and financing mechanisms to support the transition. These policy-driven approaches are crucial for aligning emerging steel-producing nations with sustainability objectives.

In summary, the global iron and steel market is experiencing dynamic growth backed by infrastructure and industrial demand, particularly in Asia-Pacific. At the same time, it is undergoing a technological and environmental transformation, embracing low-emission technologies, digitalisation, and strategic investments aimed at balancing expansion with decarbonisation imperatives. Industry leaders and governments alike are poised to shape a resilient and sustainable steel future that supports the world’s energy transition and industrial decarbonisation ambitions.