Against the backdrop of severely squeezed industry profitability and increasingly acute supply-demand imbalances, a collective “anti-involution” initiative led by major steelmakers has officially begun. On September 15, the China Iron & Steel Industry Association, together with 44 major steel companies including Baowu, Ansteel, HBIS, Shougang, and Shagang, jointly issued the Initiative on Comprehensive Self-Discipline in Production Control and Inventory Reduction Across the Steel Industry. The initiative directly addresses the vicious cycle of “overproduction and aggressive order grabbing” and “low-price competition,” calling on the entire industry to take action on the supply side. This is widely regarded as a key signal that, on the eve of the 15th Five-Year Plan, China’s steel industry is shifting from “volume expansion” toward “capacity optimization and quality-driven development.”
The initiative focuses on three major directions, aiming to reverse the industry’s passive situation of “strong supply, weak demand; low prices, weak profitability.”
Strictly Control Output and Resist Overproduction. Companies are required to strictly implement crude steel production controls, voluntarily refrain from producing beyond capacity or confirmed orders, and ensure that annual production-control targets are implemented effectively and firmly.
Produce to Order and Reduce Inventories. In response to high inventory levels, steelmakers are encouraged to organize production according to actual market demand, proactively reduce excessive inventories, and promote a return to dynamic balance between supply and demand, thereby avoiding inventory accumulation that puts downward pressure on steel prices.
Maintain Market Order and Prevent Dumping. The initiative emphasizes the role of the industry’s price-monitoring mechanism and calls for a firm end to dumping products below cost. Leading steelmakers are expected to set an example, while smaller and medium-sized enterprises are encouraged to coordinate their efforts to maintain a normal market pricing order.
Why have 44 companies chosen to speak out collectively at this particular time? The answer can be found in the industry’s difficult operating data.
Since the beginning of this year, the steel industry has been trapped in a cycle where “the more it produces, the more it loses.” According to Mysteel data, the proportion of profitable steel mills among 247 surveyed mills across China once fell to as low as 7.79%, while losses on some products, including cold-rolled steel, exceeded RMB 300 per ton. At the same time, blast furnace capacity utilization remained above 88%, while daily crude steel output at major steel enterprises stayed at relatively high levels. This phenomenon of “blast furnaces roaring while balance sheets bleed” is essentially a classic industry “prisoner’s dilemma”: every steel mill fears that cutting production first will result in lost market share, ultimately leaving the entire industry trapped in collective losses.
The joint initiative is therefore an attempt by leading steelmakers to break this prisoner’s dilemma. Through collective self-discipline and mutual supervision, they aim to guide the industry away from the vicious cycle of “competing for orders through low prices → profits approaching zero.”
The market responded quickly after the initiative was released. On September 16, rebar futures strengthened against the broader trend, with the most actively traded contract moving back above RMB 3,120 per ton. Spot prices in Shanghai, Hangzhou, and other markets followed with increases of RMB 10–20 per ton, while some traders showed greater reluctance to sell. In the short term, the initiative has provided a noticeable boost to market sentiment and steel product margins. However, whether the rebound in steel prices can continue will depend on three key factors: the actual strength of demand during the traditional “Golden September and Silver October” peak season, the intensity of restocking ahead of the two major holidays, and whether steelmakers can genuinely implement production controls and inventory reductions.
Standing at the starting point of the 15th Five-Year Plan, the initiative reflects a profound restructuring of the steel industry’s underlying development logic. The industry needs to move away from the old model of “competing on scale, price, and energy consumption” and enter a new stage of “competing on product performance, service, and carbon competitiveness.” A single initiative will not be enough to resolve structural overcapacity. Going forward, new mechanisms for capacity governance, mergers and restructuring, ultra-low-emission upgrades, hydrogen metallurgy, and green production routes such as short-process electric arc furnaces will also need to advance simultaneously. Leading steelmakers with capabilities in high-end specialty steels, electrical steel, shipbuilding plates, and high-strength automotive steel are expected to have stronger positioning as the industry undergoes restructuring.
“Controlling output is not the ultimate goal; improving quality is the way forward.” As 44 major steelmakers jointly press the “pause button,” China’s steel industry is standing at a historic crossroads in the transition from old growth drivers to new ones, waiting for a genuine return to value.
Excerpted from Steel.com
