Driven by supply-side structural reforms and the push for green and low-carbon transition, China’s steel industry delivered an impressive performance in 2025. Notable achievements included effective management of annual crude steel output, steady progress in capacity replacement through reduction, and a 5.0% year-on-year increase in industry profits, demonstrating robust resilience and vitality. Propelled by technological innovation and industrial upgrades, the sector is accelerating its move towards high-end, intelligent, and green development, injecting new momentum into China’s high-quality economic growth.
1. Notable Capacity Control Results, Continuous Industry Structure Optimization
In 2025, the steel industry strictly adhered to the “dual carbon” goals, keeping annual crude steel output within a reasonable range and deeply implementing the capacity replacement through reduction policy. By phasing out outdated capacity and optimizing regional distribution, the industry’s capacity utilization rate rose to over 80%, leading to a more balanced supply-demand dynamic. Data from the Ministry of Industry and Information Technology showed the industry’s debt-to-asset ratio decreased by 1.2 percentage points year-on-year, significantly improving enterprise operational quality.
Consolidation in key regions accelerated during this capacity optimization process. Major steel provinces like Hebei and Jiangsu formed several internationally competitive large steel groups through mergers and acquisitions, further increasing industry concentration. Concurrently, the sector strictly prohibited new capacity, maintaining a “zero tolerance” approach to illegal construction projects to ensure capacity only decreased.
The government introduced multiple policies to support the steel industry’s transformation. Ultra-long special treasury bonds and central budget investments were channeled to support technological upgrades and green initiatives in steel enterprises. Annual funds for equipment updates reached 200 billion yuan, driving over one trillion yuan in industry investment. Guided by these policies, steel companies significantly increased R&D spending, focusing on overcoming bottlenecks in key materials like high-end steel and special alloys.
Leading enterprises, such as China Baowu Group and Ansteel Group, pioneered the construction of smart factories and digital workshops, achieving fully automated production processes. Industrial robots were widely adopted in rolling, inspection, and other processes, boosting production efficiency by over 20%. Furthermore, the steel industry deeply integrated new-generation information technologies like 5G, big data, and AI, accelerating the adoption of new models such as smart logistics and remote maintenance.
2. Accelerated Green Transition, Low-Carbon Development Reaches New Heights
Facing the “dual carbon” goals, the steel industry prioritized green and low-carbon development as its core strategy. In 2025, the sector implemented over a thousand energy-saving and carbon-reduction renovation projects, with key enterprises reducing comprehensive energy consumption per ton of steel by 3.5% year-on-year. Breakthroughs were achieved in low-carbon technologies like hydrogen metallurgy and short-process steelmaking, with the first zero-carbon steel plant demonstration projects launched in Inner Mongolia, Xinjiang, and other regions.
In resource recycling, the comprehensive utilization rate of bulk industrial solid waste in the steel industry reached 65%, with waste materials like tailings and steel slag being turned into resources. Simultaneously, the sector actively participated in the national carbon emissions trading market, with over half of the enterprises included in the carbon trading system, using carbon quota trading to promote emission reduction and cost control. Estimates indicate the industry’s total annual CO2 emissions decreased by 5.2% year-on-year, laying a solid foundation for achieving the carbon peak goal by 2030.
3. Structural Differentiation in Market Demand, Increased Share of High-End Products
Steel demand exhibited a pattern of “stabilization in traditional sectors, explosion in emerging ones.” Infrastructure investment sustained demand for construction steel, while sectors like new energy vehicles, wind and solar power, and high-end equipment saw surging demand for high-strength, corrosion-resistant steel. Statistics show high-end steel exports increased by 18% year-on-year, accounting for 45% of total exports.
In the new energy vehicle sector, the trend towards lightweighting drove demand for materials like ultra-high strength steel and aluminum alloys. Major domestic steel mills collaborated deeply with car manufacturers to develop customized specialty steel for battery packs and body structural components, rapidly gaining market share. Additionally, strong demand for steel used in renewable energy equipment like photovoltaic brackets and wind turbine towers pushed the industry towards high-end transformation.
While making significant progress, the steel industry still faced multiple challenges: weakening international demand slowing export growth, increased price volatility of raw materials like iron ore creating cost pressures, and stricter environmental regulations intensifying pressure for technological investment. In response, the industry proactively stabilized costs through long-term contract ore procurement and futures hedging, while accelerating the布局 of overseas mineral resources.
Looking ahead to 2026, the steel industry is poised for further development opportunities. The Government Work Report explicitly proposed launching a new round of equipment upgrades and consumer goods trade-in policies, injecting fresh impetus into steel demand. Meanwhile, cutting-edge technologies like hydrogen metallurgy and near-net-shape manufacturing are expected to see industrial application, driving the industry up the value chain.
Reprinted from steel.com
