INTERVIEW: Ex-China steel 2026 output growth seen minimal; nonferrous outlook more rosy: RHI Magnesita

Steel output growth outside China will be flat to minimal in 2026, though it should benefit from reinforced market protection measures in the US, China's commitment to pare down excess capacity, and infrastructure projects in the EU, according to the head of global refractory materials producer RHI Magnesita, while the outlook for nonferrous metals is more optimistic, with orders picking up after the investment cycle lull.

The Austria-headquartered company's forecast for India is bullish overall, but will depend on decisions on trade measures, while it expects a 1% increase in steel production in the US, CEO Stefan Borgas told Platts in a recent interview.

In Latin America, steel output will be flat at best due to imports and weak local growth, and in Europe -- after a 5% reduction in H1 2025 -- the next couple of years could see stabilization, with the increases to defense budgets that the EU has pledged helping a little.

"It's a market that was weak for decades and is now becoming stronger as a customer industry," Borgas said of Europe, though he cautioned against exaggerating the impact of defense spending.

The amount of funding going into infrastructure should have a much bigger effect, he believes. The new German government has allocated Eur500 billion for defense over the next 10 years, but also Eur500 billion for bridges, railroads, housing, and other infrastructure. "Germany has more than 1,000 highway bridges that are in a dangerous state and will be rebuilt, and this is a much better story for steel demand than defense," Borgas noted.

In India, steel production will continue to grow, supported by sharply rising demand. "Because of imports, it has been growing at half the [rate of] demand so far, and the question is, will it grow at 3%-4% [in 2026] or on par with the demand, at 7%-9%? And the discussion is very much around whether India will put more protective measures," said Borgas.

China surplus

China is expected to continue tackling its surplus capacity, "but I still do not expect China to reduce its exports significantly, not yet next year," said Borgas.

Given the weight of Chinese exports, and because overall demand stays flat, mills outside China cannot utilize their capacities optimally and have very thin margins as a result, he said, adding that the big cost pressures they have to grapple with "commoditizes" everything else around steel. Some steel companies in places like India and the Middle East are showing little interest in buying high-performance refractories, according to Borgas, instead making do with low-performance ones because they do not need to maximize output.

On the new tide of tariffs since Donald Trump was re-elected that is meant to accelerate a rebalancing towards local producers benefiting from local demand, Borgas said that for many countries deterring Chinese exports with impunity is complicated.

"The US has the power to impose tariffs on Chinese steel, as there are not very many consequences if they do, but for other countries, the retaliation might be severe," Borgas said.

In Europe, some countries would like stronger protection for the steel industry, but some, such as Germany, do not want to be too aggressive because of negative repercussions for their automotive and chemical industries, according to Borgas.

Nonferrous cycle

In the nonferrous metals sector, similar concerns and uncertainties over the outlook have led to investments being put on hold. Even projects that are close to completion have been delayed recently, with many orders for RHI Magnesita moved from the first into the second half of the year.

That said, the global copper, zinc and lithium markets look good thanks to the whole electrification and energy transition, with planned new capacities needed quickly.

"The nickel market has cooled a little after the Indonesia-driven boom, but fundamentally remains strong because nickel improves the quality of so many metals," said Borgas.

The aluminum market is somewhat different; it is too competitive and oversupplied and is linked to the glass and solar businesses, where demand is no longer booming as it was three years ago, while Chinese exports are keeping aluminum production depressed in many places. Capacities are not being phased out there, but aluminum producers are instead idling furnaces that are near the end of their campaign life, according to Borgas.

RHI Magnesita is waiting for the inflection point when remaining furnaces are not sufficient to meet demand, and reinvesting in the idled equipment will be advantageous.

This will happen in a big way once China completes its transition from a supply- and volume-driven to a demand- and value-driven economy. The motivation for that push is ripe as Chinese producers are losing money in all sectors, he noted.

"We have 20% to 40% market shares in many countries except for China, where we have 3%-4%. We have very good plants there, producing both raw materials and finished products, and we've had opportunities to make further acquisitions, but every time we stopped because it's very difficult to run a profitable business in China if it is just for the Chinese market," said Borgas.