Overview of China's Steel Industry in 2025
Date:2026-02-09
In 2025, China's steel industry is undergoing a profound and systematic transformation under the guidance of the national "dual carbon" target, the transformation of the macroeconomic structure, and changes in the global market. The industry as a whole exhibits the significant characteristics of "demand plateau, strong supply constraints, accelerated green and intelligent development, and reshaping of profit models," steadily moving towards high-quality development amidst both challenges and opportunities.
I. Core Characteristics and Operating Trends
Demand Enters a Plateau Period of Declining Overall Volume and Structural Optimization
Overall Volume Peak and Decline: As China's industrialization and urbanization enter the mid-to-late stages, demand in traditional steel-consuming sectors (such as real estate) continues to contract. Apparent crude steel consumption in 2025 is expected to continue its slight decline, remaining at a plateau level of around 900 million tons.
Significant Structural Upgrading: Demand growth points are rapidly shifting towards manufacturing, green energy, and high-end equipment. Strong demand for high-strength, corrosion-resistant, and special steels required by industries such as new energy vehicles, wind and solar power, ultra-high voltage power transmission, high-end equipment manufacturing, and aerospace is becoming key to supporting industry profits.
On the supply side, a dual-track system of "output control" and "capacity management" is implemented.
Output control is normalized: The state will continue to implement a crude steel output control policy oriented towards carbon emission reduction, ensuring dynamic matching between output and demand, avoiding disorderly market competition, and stabilizing the industry's fundamentals.
Capacity structure continues to be optimized: Through strict environmental protection, energy consumption, quality, and safety standards, outdated and ineffective capacity will be eliminated in accordance with laws and regulations. Advantageous capacity will be further concentrated in coastal bases, areas with large environmental capacity, and large, technologically advanced enterprise groups.
Green and low-carbon transformation becomes the core theme of survival and development.
Ultra-low emission transformation is fully completed: Key enterprises have basically completed ultra-low emission transformation, environmental protection operating costs have become rigid expenditures, and environmentally leading enterprises have gained greater production space and competitive advantages.
Low-carbon technology routes are being explored at an accelerated pace: Breakthrough low-carbon technologies such as hydrogen metallurgy, carbon capture, utilization and storage, and short-process electric arc furnaces using all-scrap steel have moved from demonstration to small-scale commercial applications. Green and low-carbon products (such as "green steel") are beginning to generate market premiums. The national carbon emission trading market's constraining and incentive effects on the steel industry are becoming increasingly prominent.
Deepening Smart Manufacturing and Supply Chain Collaboration
Digital Transformation: The application of 5G, artificial intelligence, big data, and the Industrial Internet across the entire process of production, management, logistics, and services is becoming more widespread. Smart factories and "lights-out" workshops are increasing, significantly improving efficiency, reducing costs, and ensuring safety.
Strengthened Supply Chain Collaboration: Leading enterprises are extending resource security upstream and collaborating with users downstream to develop material solutions, transforming from "material suppliers" to "material service providers," building a more robust industrial ecosystem.
II. Challenges Faced
Profitability Under Pressure: Prices of raw materials such as iron ore and coking coal remain dependent on major international suppliers, resulting in continued cost pressure. Meanwhile, on the demand side, structural transformation is leading to shrinking profits in traditional sectors and intensified competition in emerging sectors, squeezing the overall profit margin of the industry.
Persistent Homogeneous Competition: While breakthroughs have been achieved in high-end products, homogeneous competition in the low-to-mid-end general materials market remains fierce, with supply and demand imbalances in some regional markets.
Low-Carbon Transformation Financial and Technological Pressures: Achieving deep decarbonization requires huge investments and disruptive technologies, posing a severe test to corporate cash flow and technological innovation capabilities, especially for small and medium-sized enterprises (SMEs).
The international trade environment is complex: Increased uncertainty in global economic growth and the emergence of green trade barriers such as "carbon border adjustment mechanisms" pose new challenges to the cost and market access of China's steel exports.
III. Major Development Trends
Mergers and Acquisitions are Deepening: Driven by policy guidance and the market, cross-regional and cross-ownership mergers and acquisitions will become more active, and industry concentration is expected to further increase, forming several globally competitive and rationally positioned world-class super-large steel groups.
Product Upgrading and Materialization: Continued increase in R&D investment, focusing on "bottleneck" materials and cutting-edge materials, such as high-end special alloys and composite materials, to meet the needs of major national projects and strategic emerging industries.
A New Stage of Globalization: A shift from simple "product export" to "capacity cooperation" and "globalized industrial chain layout," with greenfield investments or mergers and acquisitions in resource-rich areas and target markets to build a more resilient international supply chain.
Enhanced Status in the Circular Economy: A more complete scrap steel recycling system will be established, the proportion of electric arc furnace steel will steadily increase, and the social role of urban steel mills will shift towards "urban waste disposers and resource recycling centers."
IV. Policy Environment Outlook
The policy will continue the general tone of "strictly controlling production capacity, regulating output, encouraging innovation, guiding restructuring, and vigorously promoting low carbon." More incentive policies will be tilted towards areas such as low-carbon technology research and development, breakthroughs in high-end materials, intelligent manufacturing demonstrations, and the security of industrial and supply chains. Industry supervision will focus more on "intensity constraints" of energy consumption and carbon emission intensity, rather than simply "total quantity constraints."
