Steel

Overview

Steel is an alloy of iron and carbon, usually with small additions of other elements to adjust strength, hardness or corrosion resistance, and it remains the most-used metal on earth by a wide margin. Global crude steel production reached roughly 1.85 billion tonnes in 2025, according to the World Steel Association, dwarfing every other industrial metal in sheer volume — a scale that makes steel demand one of the most closely watched proxies for broader industrial and construction activity worldwide.

That scale also means steel's raw material chain, starting with iron ore, carries outsized weight in global commodity markets. Iron ore is steel's single largest cost input, which is why iron ore benchmark prices — like those set monthly by major miners — flow through fairly directly into steelmakers' production costs and, eventually, into the price of everything from rebar to car bodies.

How Steel Is Made

There are two dominant production routes. The traditional integrated route smelts iron ore in a blast furnace to produce molten pig iron, which is then refined into steel in a basic oxygen furnace (BOF) — a process well suited to large-scale, continuous production but heavily reliant on iron ore and coking coal as inputs. The alternative route, electric arc furnace (EAF) steelmaking, melts scrap steel (or, increasingly, direct-reduced iron) using electricity rather than starting from raw ore, making it less iron-ore-intensive and, when powered by cleaner electricity, significantly lower in carbon emissions.

The balance between these two routes varies enormously by country: China and India, the world's two largest steel producers, still rely heavily on blast-furnace production, while regions with abundant scrap supply and cheaper electricity, such as parts of the United States and Europe, lean more on EAF steelmaking. That split matters for iron ore demand specifically, since EAF-heavy steel industries need far less of it than blast-furnace-heavy ones.

Market Dynamics

Steel demand tracks construction and infrastructure spending more closely than almost any other industrial metal, which makes it unusually sensitive to government capital budgets, property-sector health and, in major producing economies like China, industrial policy decisions. Because steelmaking is capital-intensive with high fixed costs, producers often keep running even when margins compress, which can lead to periods of oversupply and price weakness that ripple back up the chain into weaker demand — and therefore weaker pricing power — for iron ore miners.