China's steel sector is undergoing profound and systematic transformation—not merely fluctuations in output or structural adjustments, but a comprehensive reshaping of development philosophies, competitive paradigms, and industrial ecosystems. At the 2025 Annual Meeting and Energy Conservation & Environmental Protection Technology Exchange Conference of the China Iron and Steel Association's Energy Conservation and Environmental Protection Committee on November 19, Jiang Wei, Deputy Secretary of the Party Committee, Vice President, and Secretary-General of the China Iron and Steel Association, stated that since the start of the 14th Five-Year Plan period, China's steel industry has reshaped its landscape through reduced-volume development and achieved breakthrough upgrades through green transformation, steadily advancing toward a new phase of high-quality development. “This marks the first time China's steel sector has faced a ‘reduced-scale development’ phase characterized by prolonged duration, significant reduction, and accelerated pace, with the industry's development model undergoing pronounced transformation,” Jiang Wei noted.

Zhang Longqiang, Deputy Secretary-General of the China Iron and Steel Association and Party Secretary and President of the Metallurgical Industry Information and Standardization Research Institute, believes that the future competition in China's steel industry will no longer revolve around scale and cost, but rather comprehensive competition encompassing technology, brand, standards, and ecosystem. Low-carbon development is not an option but a necessity; digitalization is not an elective but a compulsory course; internationalization is not optional but mandatory. “The steel industry is thus undergoing three major transformation trends: shifting from general to high-quality products, from high-quality to specialized products, and from construction materials to industrial materials. The pain of high-level redundant construction is approaching, and reduced-volume, high-quality development is the only way forward,” Zhang stated.

In fact, China's steel industry has already transitioned from a “follower” to a “leader.” Zhang Longqiang analyzed that looking ahead, China's steel industry will face a more complex and volatile environment, with six major shifts reshaping the industry landscape. First, the shift in supply and demand: from overall growth to reduced volume and enhanced quality. Second, the shift in profitability: from stable operations to profit erosion. Third, the shift in product mix: from construction-dominated to manufacturing-led. Fourth, policy shifts: from lax oversight to coordinated tightening. Fifth, competitive dynamics: from domestic rivalry to global expansion. Sixth, technological evolution: from independent innovation to global leadership.

Future competition will hinge on value chains and innovation ecosystems.

Today, China's steel sector has evolved from a “steel giant” to a “steel powerhouse,” now advancing toward becoming an even stronger global leader. Zhang Longqiang asserts that the rise of China's steel industry represents an unprecedented miracle in global industrial history. In just a few decades, it has traversed a journey that took developed nations over a century, achieving a historic leap from “whether it exists” and “whether it is sufficient” to “whether it is good” and “whether it is strong.” In 2024, China's crude steel output reached 1.005 billion tons, maintaining its position as the world's largest producer with over 50% of global output for eight consecutive years, underscoring the sector's pivotal role in the global supply chain.

The World Steel Association asserts that future competition will no longer revolve around scale but rather around value chains and innovation chains. Leading enterprises that have optimized resources and achieved technological breakthroughs through restructuring are pioneering a new path of high-quality development: shifting from “individual battles” to “collaborative development,” and from “scale expansion” to “value co-creation.” The narrative of China's steel industry is being rewritten. “As the golden age of construction steel recedes, China's steel industry is undergoing unprecedented structural transformation,” said Yan Dandan, a steel analyst at Jinlianchuang.

China's steel sector remains in a downturn characterized by falling volumes and prices, yet positive signals emerge within this trend. Feng Chao, Deputy Secretary-General of the China Iron and Steel Association, noted that while pig iron and crude steel output declined year-on-year in 2025, steel product consumption increased, indicating a rise in value-added products. This reflects adjustments in both the product mix and consumption structure of China's steel sector. Particularly noteworthy is the significant decline in production of hot-rolled ribbed steel bars—once China's top steel product primarily used in construction. Replacing it as the leading product is hot-rolled wide steel strip, mainly employed in industrial manufacturing. This shift signals a change in the top spot for steel products.

In fact, China's steel industry is currently experiencing its sixth market downturn since the 1990s, characterized by an L-shaped trajectory and a decline across various product categories. Zhang Longqiang noted that today's steel sector no longer relies solely on scale for success but is driven by a dual focus on quality and scale, inevitably undergoing a transformation that streamlines operations and strengthens its foundation. Looking toward the 15th Five-Year Plan period, it is essential to deeply understand historical trajectories, accurately grasp future changes, and clarify development paths amid shifting circumstances to steer the industry toward a higher-quality, more sustainable future.

The shift in China's top steel product rankings reflects the transition of economic drivers from old to new. Feng Chao observes: "Downstream demand in the steel industry remains robust, but the required products have changed. Current steel demand in industrial manufacturing sectors like automotive and shipbuilding maintains solid growth, while the real estate market is seeing orderly release of demand for both essential and upgraded housing." Yan Dandan, an analyst at Jinlian Steel, notes that amid the waves of greening, intelligent manufacturing, and high-end development, China's steel industry will present a new competitive posture on the global stage—shifting from volume-driven dominance to quality-driven leadership. As high-strength steel bodies for new energy vehicles and grain-oriented silicon steel cores for ultra-high voltage transmission become keywords for industrial upgrading, China's steel sector is quietly undergoing a profound transformation from “scale expansion” to “quality and efficiency.”

Undeniably, China's steel industry is navigating a decade of challenges, grappling with the heavy costs of ultra-low emissions, the weighty responsibility of standardized development, and the mounting pressure of low-carbon transition. Liu Huaiping, Chairman of Jiangsu Kunlun Interconnect New Energy Group Co., Ltd., believes China's steel industry transformation must focus on three dimensions: restructuring emission reduction technologies from end-of-pipe treatment to full-process system optimization; upgrading energy architectures through synergies of “green power + energy storage + energy efficiency”; and shifting value orientation from scale-driven profits to quality-driven efficiency. These efforts will help shape a more responsible international image for China's steel sector.

Steel enterprises must undergo comprehensive renewal in awareness, strategy, and implementation pathways.

Currently, China's steel industry faces fundamental shifts in supply-demand dynamics, with deepening contradictions, severe internal competition, and marginal profit struggles profoundly impacting its transformation model. Jiang Wei notes that as total steel output declines, the traditional approach of expanding scale and competing on volume has changed, giving way to a focus on optimizing existing capacity and winning through quality. Over the past four years, Chinese steel enterprises have actively explored new business models under reduced production. Small and medium-sized enterprises have achieved lower costs, higher quality, and better efficiency by focusing on niche markets, while large enterprises have proactively assumed self-regulatory responsibilities. In the first half of 2025, the crude steel output of 20 enterprises with annual production capacity exceeding 10 million tons decreased by 3.7% year-on-year, exceeding the national average decline and effectively stabilizing the fundamental dynamic equilibrium between supply and demand.

The future transformation of the steel industry presents both challenges and opportunities. Zhang Longqiang believes that in the face of profound changes, steel enterprises must comprehensively renew their mindset, strategy, and approach to seize the path of certainty amid uncertainty. First is the renewal of mindset: shifting from protecting market share to protecting prices. The core of countering internal competition lies in safeguarding prices rather than market share. After crude steel production peaks, oversupply will become the norm. Industry self-regulation will outweigh scale expansion. Enterprises must abandon the inertia of volume-driven competition, reshape their competitive mindset, and achieve reasonable profits through output control, structural adjustment, and product optimization.

Second is maximizing potential: shifting from traditional cost-cutting to “three extremes.” Currently, the steel industry's cost-cutting efforts have reached a bottleneck, with traditional models hitting their ceiling. There is an urgent need to rebuild competitiveness through the “three extremes.” Extreme Cost: Leveraging digitalization and intelligence to achieve full-chain cost reduction, systematically tapping into cost-cutting potential through raw material optimization, production reengineering, and product upgrades. Ultimate Cost-Performance Ratio: Delivering more stable, higher-performance products paired with extreme yet controllable costs to establish competitive advantages in niche markets. Ultimate Customer Loyalty: Building stable client relationships through comprehensive enhancements in brand, service, reputation, standards, and market influence to withstand market volatility risks.

Strategic Reconstruction: Transitioning from isolated breakthroughs to systemic empowerment, steel enterprises in the 15th Five-Year Plan period must establish six major empowerment systems to achieve qualitative transformation. First, High-End Empowerment: Focusing on new demands and requirements in traditional industries, material innovations for emerging sectors like new energy and high-end equipment, and future industries such as embodied intelligence and 6G technology. Conduct fundamental research, product development, and high-quality user services to elevate product quality. Second, digital-intelligent empowerment: Implement data governance, intelligent diagnostics, and transformation upgrades. Deploy end-to-end intelligent control systems, advance artificial intelligence and large-scale model deployment, significantly enhance total factor productivity, safety standards, and quality stability, achieving management cost reduction and compliance-driven cost savings.

Third, Green Empowerment: Transcend the “cost-centric perspective” and establish a “development-oriented perspective.” Accelerate ultra-low emission retrofits, advance extreme energy efficiency, strengthen resource security, increase the proportion of green steel, tackle low-carbon technologies, establish robust carbon management systems, enhance carbon management capabilities, and transform carbon costs into drivers and benefits.

Fourth, Chain-based Empowerment: Strengthen horizontal and vertical cooperation and co-construction across industrial chains, promote shared and coupled development, and achieve shared interests and value distribution. Build innovation consortia and new application ecosystems, develop cost-effective products, technologies, and processes, guide consumption upgrades, and advance the entire industry chain toward high-end positioning.

Fifth, Standard Empowerment: Establish a dual-wheel drive model of “standard R&D + process breakthroughs,” forming an innovation closed loop driven by standards. Cultivate R&D and brand advantages to achieve “quality premium” and “brand premium,” breaking through homogeneous competition. Sixth, International Empowerment: Seize the 5-10 year window to expand overseas through multiple channels and diversified approaches, fully engage in global competition, elevate China's steel industry's international influence, and transition from a domestic-only market to a dual-circulation domestic-international market.

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