Predicting the material flow behaviour of steel is always an important undertaking especially when there is a need to decide on a suitable material required for a particular application. Compression test is normally considered as a standard bulk workability test and a common quality control test, which can be applied to hot forging operations, or cold upset forging. The test is useful when the friction conditions, especially in hot working, require an evaluation. The flow stress data for metals at various temperatures and strain rates could also be predicted. The aim of this study was to conduct a hot compression test on AISI 1016 carbon steel using finite element modelling (FEM) in order to predict the flow stress behaviour of the material including the damage prediction due to shear cracking. Three lubricating conditions namely: Coulomb μ= 0.3 (lubricated ), shear μ= 0.3 lubricated and dry μ= 0.7 were used in the modelling. The results indicate that the largest deformation appears as a shear cross in form of an hourglass in the plastic zone of the specimen at the centre of the cylinder and varies according to the lubricating condition, while the less deformed regions are stagnant as dead-metal zones (DMZ). The highest damaging parameter, though moderate appears at the bulge of the cylinder and this can be the source of shear cracking in the material. It was also observed that there is inhomogeneous deformation inside the workpiece, which could result in substantial damage to the forging process and forging quality respectively. Besides, inhomogeneous deformation could also worsen the finish-forging process.