According to the China Metallurgical News, the share of steel consumed by the construction sector is projected to decline from 58% in 2020 to 49% in 2025, while the share consumed by the manufacturing sector is expected to rise from 42% to 51%. For the first time in the nation's history, steel consumption in the manufacturing sector has surpassed that of the construction sector.

Steel serves as the skeleton of industrial civilization—an indispensable foundational raw material for building a modern nation. From the moment the first stream of molten iron flowed from the blast furnaces of Ansteel in 1949 to the completion of modern production lines at Baosteel along the banks of the Yangtze River, China’s steel industry has accomplished in just over seventy years an industrialization journey that took developed nations more than two centuries. Furthermore, by achieving an annual output exceeding the one-billion-ton mark, the industry has firmly cemented China’s status as a global manufacturing powerhouse.

Since the commencement of the "14th Five-Year Plan" period (2021–2025), the developmental trajectory of China’s steel industry has continued to undergo profound adjustments. During this period, the real estate sector—historically the primary consumer of steel—saw its average annual steel consumption drop to approximately 270 million tons, a decline of roughly 13% compared to the "13th Five-Year Plan" period. Yet, according to data from the National Bureau of Statistics, my country’s total steel output in 2025 reached 1.44612 billion tons, representing a year-on-year increase of 3.1%.

With demand from major clients receding while total output continues to rise, where exactly has China’s steel gone?

Field research conducted by reporters reveals that the massive flow of steel has quietly diverted away from the "concrete jungle" of traditional construction sites, deeply penetrating into a myriad of other industries—including new energy, high-end manufacturing, and marine engineering. The steel industry is now bidding farewell to a paradigm of "scale expansion and volume-driven competition," stepping instead into a new model characterized by "output reduction for quality enhancement, and efficiency gains for industrial upgrading." It is entering a brand-new era defined by winning through quality, forging ahead toward innovation, and achieving a significant leap in value.

Manufacturing Steel Consumption Surpasses Construction for the First Time

Data from the National Bureau of Statistics indicates that since the beginning of the "14th Five-Year Plan" period, the average annual growth rate of my country’s steel output has hovered around 2%, remaining generally stable throughout these years. Yet, beneath the surface of these steady statistics, a profound transformation in the structure of demand has been quietly unfolding.

Total steel consumption within the real estate sector has declined. As the real estate sector—once the largest downstream consumer of steel—its role as a "ballast" for the industry is undergoing a transformation. Since the commencement of the 14th Five-Year Plan period (2021–2025), the proportion of steel consumed by the real estate sector relative to total steel consumption has declined significantly, dropping from approximately 32% in 2021 to around 23% in 2025. Impacted by market adjustments, the average annual steel consumption in the real estate sector during the 14th Five-Year Plan period fell by approximately 13% compared to the preceding 13th Five-Year Plan period.

New growth in manufacturing translates into new demand for steel. As steel consumption in the real estate sector enters a phase of deep adjustment, the manufacturing sector is stepping in to fill the demand gap with robust growth momentum: the annual production and sales volume of new energy vehicles surged from 3.5 million units in 2021 to 16 million units in 2025; meanwhile, the shipbuilding industry secured 64.2% of all new global vessel orders, maintaining the world's largest market share for 16 consecutive years.

Data released by the Metallurgical Industry Planning and Research Institute reveals that in 2025, steel consumption in my country's automotive industry is projected to reach approximately 63.9 million tons—a year-on-year increase of about 10.9%—accounting for roughly 7.9% of the nation's total steel consumption. Steel consumption in the machinery sector is expected to reach approximately 180 million tons (up 1.7% year-on-year); the energy sector, 51.3 million tons (up 4.1%); the shipbuilding sector, 16.5 million tons (up 4.4%); and the bicycle and motorcycle sector, approximately 5.8 million tons (up 9.4%).

Reporters learned that the share of steel consumed by the construction industry is projected to decline from 58% in 2020 to 49% in 2025, while the share consumed by the manufacturing industry is expected to rise from 42% to 51%. "For the first time in my country's history, steel consumption in the manufacturing sector has surpassed that of the construction sector. This outcome reflects the steel industry's successful adaptation to shifting demand patterns and its efforts to drive product quality improvements and upgrades," stated Jiang Wei, Vice Chairman and Secretary-General of the China Iron and Steel Association.

A profound transformation in developmental logic is underway. Li Gang (a pseudonym), a researcher at the Angang Economic Development Research Institute, observed that the shifting structure of steel consumption fundamentally mirrors a deeper, structural transformation occurring within the nation's overall economy. Currently, the Chinese economy is undergoing a profound transformation characterized by the transition from old to new growth drivers. Traditional growth engines—such as real estate and certain conventional infrastructure sectors—are seeing their stimulative effects gradually wane, while new growth drivers—exemplified by high-end equipment manufacturing and strategic emerging industries—are rapidly expanding and gaining strength. According to the *2025 Statistical Communiqué on National Economic and Social Development*, within the industrial sector above a designated size in 2025, the value added of high-tech manufacturing grew by 9.4%, accounting for 17.1% of the total value added of industries above a designated size; meanwhile, the value added of digital product manufacturing grew by 9.3%, accounting for 12.5% ​​of the total.

In the face of profound adjustments in demand structure, China's steel industry is deeply embedding itself within this economic structural transformation. Driven by diversified demand, it is restructuring its industrial ecosystem and forging a new development path characterized by greater resilience and sustainability.

From Rebar to Invar Steel: A Reshaping of Value

Behind the story of China's steel industry—as the real estate boom recedes and the manufacturing sector takes the baton—steel is not merely shifting direction; it is pursuing deep-seated value creation.

Driving the Optimization and Innovation of Product Mix. At the Shougang Zhixin Electrical Steel production line, an electrical steel product with a thickness of just 0.1 millimeters made its global debut in August 2025. "This product targets the trend toward smaller, higher-power motors in new energy vehicles; immediately upon its launch, over a dozen automakers expressed interest in collaboration," explained An Dongyang, Chief Technical Expert at Shougang Zhixin. "Compared to the 0.25-millimeter-thick products widely used across the industry, this new material reduces iron loss by over 30%, thereby effectively extending the driving range of new energy vehicles."

This is merely the tip of the iceberg. Upgrades in downstream industries are driving systemic product innovation within the upstream materials sector. Moving beyond the mere satisfaction of basic strength requirements to the pursuit of lightweight design, high strength and toughness, and multi-functionality, steel enterprises are no longer simply "selling steel"; instead, they are continuously enhancing their capacity to supply high-end materials. This transformation has permeated numerous sectors of the national economy: In the automotive sector, the proportion of high-strength steel utilized in new energy vehicles has risen from 30% to between 40% and 50%. In the shipbuilding sector, the boom in the construction of high-end vessel types—such as LNG carriers—has driven breakthroughs in the domestic production of specialized steels, including Invar steel and high-strength shipbuilding plates. Regarding "national strategic assets"—ranging from the safety containment walls of the *Hualong One* nuclear power plant to the specialized steels used in the *Fujian* aircraft carrier—a series of cutting-edge products that fill gaps not only domestically but globally have transformed what was once a list of "choke-point" vulnerabilities into a "report card" demonstrating national strength.

The shift toward a newer and more optimized product mix is ​​not merely a simple extension of product lines; rather, it represents a fundamental transformation in developmental logic. Steel is no longer merely a basic raw material; it has become a key enabler driving the high-end upgrading of the manufacturing sector and safeguarding the security of industrial supply chains.

The industry is transitioning from "product supply" to "value co-creation." Consequently, the steel sector is undergoing a qualitative upgrade across its supply methods, production models, and overall industrial structure.

Li Gang told reporters that, in response to new demands for high-end and customized solutions, the steel industry is evolving from a simple supply-and-demand matching model into a new phase characterized by deep technological integration and bidirectional value co-creation. "Some steel enterprises have established closely integrated processing lines with automakers and shipbuilders, enabling them to provide tailored R&D, processing, and distribution services based on downstream requirements—essentially achieving a one-on-one customized service model," Li Gang noted.

A domestic manufacturer of metal gaskets had long relied on imports for the material used in a critical component of gearbox valve bodies. Faced with the user's urgent need to localize this material, Angang Steel Co., Ltd. assembled a dedicated task force. Working directly on-site at the user's facility, the team began with fundamental research, systematically conducting detailed characterizations of the material's surface properties and investigating the mechanisms influencing its surface tension. After multiple rounds of experimentation and repeated rolling trials within the actual production environment, they successfully achieved breakthroughs in a series of key technologies for the precise control of surface tension. This effort culminated in the independent development of a high-surface-tension cold-rolled hard plate product which, while retaining the excellent mechanical properties inherent to cold-rolled hard plates, significantly enhanced surface performance—making it perfectly suited for high-end coating and bonding processes.

"Whatever the customer needs, the enterprise customizes." Users specify their required performance metrics and application scenarios, while steel enterprises collaborate on R&D and customized development, thereby establishing a closed-loop process encompassing "demand—R&D—verification—mass production." This new model of service-oriented manufacturing is driving steel enterprises to transform from mere suppliers into innovative partners, and shifting the industrial chain from a transactional relationship toward an ecological alliance characterized by technological symbiosis and shared value.

The entire industry is ascending to higher tiers of the value chain. Xu Xiangchun told reporters, "In the past, ordinary construction steels—such as rebar and wire rod—were mass-produced; these are now being supplanted by high-tech, high-value-added products. This structural upgrade in downstream demand has, in turn, propelled the entire steel industry to achieve a significant leap in value." Data released by the Metallurgical Industry Planning and Research Institute at the end of 2025 indicates that 16 steel enterprises nationwide have either approached or attained world-class standards. This represents not merely an optimization of production capacity, but serves as a microcosm of China's manufacturing sector transitioning from being merely "large" to becoming "strong"—a journey toward excellence.

In terms of technological breakthroughs, the steel industry has continuously enhanced its capabilities for technological self-reliance and self-strengthening. Data reveals that between 2020 and 2024, R&D expenditures among key enterprises monitored by the China Iron and Steel Association (CISA) rose from 111.8 billion RMB to 156.5 billion RMB—a growth of 40%—while the ratio of R&D spending to operating revenue increased from 2.17% to 2.72%. In 2024, the overall R&D intensity (expenditure as a percentage of revenue) for 28 key listed steel enterprises reached 4.3%, marking an increase of 0.8 percentage points over 2023.

Leveraging these advancements, the steel industry has successfully resolved a host of critical, common technical challenges in recent years—ranging from large-scale equipment manufacturing technologies to low-carbon metallurgical processes. Furthermore, the industry published the List of Best Available Techniques (BAT) for Ultra-Low Emissions in the Steel Industry, thereby propelling the innovation and application of low-carbon metallurgical technologies to the forefront of global standards. For instance, a series of pioneering low-carbon metallurgical demonstration projects have been successfully implemented: China Baowu’s Hydrogen-Rich Carbon Cycle Blast Furnace (HyCROF) commercial demonstration project; HBIS Group’s world-first "Hydrogen-Based Shaft Furnace – Near-Zero Carbon Electric Arc Furnace" short-process project and the world's first continuous casting line for green automotive steel utilizing hydrogen metallurgy; and CISRI’s world-first pure-hydrogen shaft furnace demonstration line. Additionally, projects involving technologies such as thin-strip casting and rolling, as well as dry granulation of blast furnace slag, have come to fruition, collectively offering a "Chinese Solution" for the global steel industry's green and low-carbon transition.

Regarding the leadership role of standards, the steel industry is leveraging high-level standards to underpin the large-scale application of high-end steel products. During the 14th Five-Year Plan period, my country's steel industry took the lead in publishing 47 international standards—ranking first globally. For instance, my country spearheaded the formulation of the international standard for "Ultra-low Carbon, High-boron Steel Wire Rods for Copper-clad Steel Wire," thereby driving the internationalization of my country's metal products sector. Additionally, Anshan Falan Blueing Co., Ltd. led the development of the first international standard in my country's packaging sector—"Steel Strip for Packaging"—facilitating the global trade of packaging steel strips. Experts interviewed on the subject believe that China's steel industry has transitioned from passively adhering to international rules to actively participating in their formulation; consequently, Chinese standards are fast becoming a "green pass" enabling high-end steel products to reach the global market.

This leap—from "following the pack" to "running alongside," and ultimately to "taking the lead"—signifies that China's steel industry has moved beyond the traditional stage of competition based solely on scale. It has now entered a new phase centered on value reshaping, driven by technological innovation, structural optimization, and synergy across the industrial chain.

From Supporting China to Benefiting the World

The market boundaries for Chinese steel are also continuously expanding. Since becoming a net exporter of steel products in 2006, China has seen its share of global steel exports trend upward, gradually establishing itself as a central player in the international steel export market. The stable supply of Chinese steel is currently playing a pivotal role in assisting numerous nations with the development of their infrastructure and industrial systems.

By serving the "Belt and Road Initiative," China's steel industry is contributing significantly to the development of emerging economies. According to data from the General Administration of Customs, my country exported 119 million tons of steel products in 2025—a year-on-year increase of 7.5%—with a total export value reaching US$82.63 billion. Li Gang, an industry expert, attributes this growth in China's steel exports to a confluence of factors: significant cost advantages, quality standards aligned with international benchmarks, and a comprehensive range of product varieties.

In terms of regional distribution, while Asia remains the dominant market for China's steel exports, the market is becoming increasingly diversified. There is a gradual strategic shift toward emerging markets—particularly those participating in the "Belt and Road Initiative"—where demand is currently more dynamic.

In recent years, my country has undertaken a growing number of new overseas contracted projects within the countries and regions participating in the "Belt and Road Initiative." These projects span a wide array of sectors, including power engineering, residential and commercial construction, transportation, petrochemicals, and telecommunications. Crucially, steel serves as a vital raw material for the construction of all these projects. From the Jakarta-Bandung High-Speed ​​Railway to the China-Laos Railway, and from power plants in Serbia to railway line upgrades in South Africa—driven by the "Belt and Road Initiative"—infrastructure projects across the Middle East, Southeast Asia, Africa, and South America continue to advance, generating a steady demand for Chinese steel products.

From exporting commodity steel to exporting premium products: the transition toward high-end product specialization serves as a key manifestation of the Chinese steel industry's strategy to "win by quality" in global markets. In recent years, China's steel sector has achieved continuous breakthroughs in the R&D and production of high-end steel materials, leveraging its formidable technical prowess to successfully gain entry into the world's most sophisticated markets.

In 2025, Xinsteel Group successfully secured export orders totaling over a thousand tons of high-end wear-resistant steel plates from markets in North America and Southeast Asia; these plates are destined for use in manufacturing critical components for heavy engineering machinery. The products are required to meet rigorous standards, simultaneously satisfying requirements for ultra-high strength, exceptional low-temperature impact toughness, and superior machinability.

Industry data reveals that, compared to 2020, the export volume of steel plates surged by over 100% in 2025. Furthermore, export volumes for heavy plates, hot-rolled thin wide strips, hot-rolled sheets, steel rebar, and large-scale structural steel shapes each increased by more than fivefold. Meanwhile, the export volumes of coated plates (and strips) as well as medium-to-heavy wide strips each exceeded 12 million tons. These various metrics collectively demonstrate that China's steel industry is transitioning from merely "exporting commodity steel" to "exporting premium products," thereby steadily ascending the global value chain.

Evolving toward an "Integrated Ecosystem" approach to benefit local industries: China's steel sector has already successfully achieved the goal of "exporting products" and is now actively exploring strategies to "export production capacity" and "export industrial ecosystems." By leveraging comprehensive, systemic solutions—which integrate materials, processing, distribution, and after-sales services—the industry ensures that its supply aligns more precisely with overseas demand, while simultaneously fostering the development of related local industries.

For instance, Tsingshan Group has strategically relocated its smelting operations upstream to the actual resource extraction sites. This approach has enabled the creation of a fully integrated industrial chain spanning the entire upstream, midstream, and downstream segments of the stainless steel sector—encompassing the entire process from nickel ore mining and ferronickel smelting to stainless steel refining and deep processing. Currently, the Group operates eight major production bases across locations such as Indonesia, India, and Zimbabwe, thereby significantly boosting local employment, increasing residents' incomes, and stimulating the growth of related industries.

This represents not merely a physical relocation of production capacity, but—more fundamentally—a strategic leap forward: a transformation from simply "selling products" to "building an industrial ecosystem." Many interviewees believe that the simultaneous rise in both the volume and quality of China's steel exports is not merely a means to absorb excess domestic capacity during a critical transitional period for domestic demand; rather, it serves as a powerful testament to the global competitiveness of China's steel industry. "High-quality, cost-effective products; state-of-the-art smelting equipment and technology; a skilled workforce; and a highly efficient supply chain system—together, these elements constitute the distinct advantages of China's steel sector," noted Xu Xiangchun. He added that as the industry accelerates its "going global" strategy, these advantages will increasingly benefit the global steel industry as a whole.

Why the Steel Industry Is So "Resilient"

In narratives surrounding China's steel industry, one frequently encounters two somewhat extreme metaphors: it is portrayed either as an industrial titan "at the zenith of its power" or as a "sunset industry" in terminal decline. However, on-the-ground investigations reveal that the reality is far more nuanced. As a quintessential example of a traditional industry, the steel sector has not faded into obscurity amidst the structural shifts in demand accompanying China's transition from old economic drivers to new ones; on the contrary, it has demonstrated remarkable resilience through its heightened adaptability, innovative capacity, and foundational support role.

This resilience is primarily manifested in the industry's acute sensitivity to shifting demand and its precise, agile responses. As traditional steel-consuming sectors—such as real estate—have contracted, emerging fields—such as high-end manufacturing and new energy—have rapidly stepped in to fill the void, thereby fostering a dynamically balanced industrial ecosystem. Wherever demand arises, steel-based solutions follow. This underlying logic—whereby "demand pulls supply" and "supply creates demand"—has emerged as a defining characteristic of the industry.

Concurrently, the very nature of the industry is undergoing a profound transformation, shifting from a landscape defined by individual enterprise competition to one characterized by ecosystem-wide competition driven by systemic synergy.

The industry is actively extending downstream, engaging in customized material production and service-oriented manufacturing; on the export front, it is focused on forging an integrated service chain encompassing production, processing, and distribution. Consequently, the industrial chain has become more resilient, and the value chain more tightly interconnected. The qualitative transformation of China's steel industry entails far more than a mere improvement in product quality; it encompasses a comprehensive restructuring of the supply framework, production methods, and overall industrial landscape.

China's steel industry is proactively embracing innovation and change, leveraging its own transformation to support and facilitate the upgrading of countless other sectors. This does not signify decline, but rather an evolution toward greater maturity and strategic steadfastness.

Today, China's steel industry resembles a steadfast expanse of earth—unostentatious and unassuming, yet silently bearing the weight of a multi-trillion-dollar manufacturing ecosystem. Its roots run deeper, and it now upholds a backbone built for the long haul.

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