SunSirs: China's Crude Steel Output Falls Below 1 Billion Tons for First Time Since 2020

China's crude steel production has declined once again.

Data released by the National Bureau of Statistics on January 19 showed that China's crude steel output for the full year of 2025 was approximately 961 million tons, a year-on-year decrease of 4.4%. This marks the first time China's annual crude steel output has fallen below 1 billion tons since reaching its peak in 2020.

According to NBS data, since 2020, China's crude steel output has generally trended downward, with only a slight increase in 2023.

China's crude steel output was 996 million tons in 2019 and reached a historic high of 1.053 billion tons in 2020. It then declined for two consecutive years, remained largely flat year-on-year in 2023, and has fallen again in the following two years.

From 2020 to 2025, China's annual crude steel output cumulatively decreased by 92.19 million tons.

China's Crude Steel Output from Enterprises Above Designated Size, 2020-2025

Source: National Bureau of Statistics

China's crude steel output falling below 1 billion tons resulted from the combined effects of macroeconomic policy adjustments and shifts in market demand.

The deepening implementation of the “dual control” policy on production capacity and output volume is one of the primary reasons for the decline in crude steel output. Since the introduction of the “dual carbon” goals in 2020, the steel industry—a key carbon-emitting sector—has remained a focal point for capacity regulation. Certain energy-intensive, high-emission, and outdated production capacities were forcibly phased out for failing to meet environmental standards.

In March this year, the National Development and Reform Commission (NDRC) confirmed that crude steel output regulation would continue through 2025, alongside promoting industrial downsizing and restructuring, setting the overall tone for “reduced-scale development” throughout the year.

In early July, the Sixth Meeting of the Central Financial and Economic Affairs Commission emphasized the need to regulate low-price, disorderly competition among enterprises in accordance with laws and regulations, promote the orderly exit of outdated capacity, and send a new signal of national-level “anti-involution” policies.

Later that month, Zhao Mingge, President of the China Iron and Steel Association, stressed at an industry conference that amid the imbalance between aggregate supply and demand, the industry must strengthen self-discipline and “anti-involution,” adhere to the “three fixes and three don'ts” principle, and stabilize prices through self-regulated production control.

In September 2025, the Ministry of Industry and Information Technology and other departments jointly issued the “Steel Industry Growth Stabilization Work Plan (2025-2026),” further clarifying crude steel production control requirements (setting a 4% annual average growth target for the steel industry's value-added over the next two years and strictly prohibiting new capacity additions). This plan pushes localities to strictly enforce capacity replacement policies, reduce excess capacity, and control crude steel output at the source.

Meanwhile, the structure of downstream demand is undergoing profound changes.

Data indicates that with the downturn in the real estate economy, demand for construction steel has significantly contracted. Construction steel transaction volumes declined by 19.37% in 2024 and continued to fall by 18.14% from January to July 2025. Construction steel once accounted for over half of total steel consumption, and its contraction has a significant impact on overall demand.

On the other hand, while the share of steel used in manufacturing has steadily increased and growth is expected in certain sectors, the overall incremental volume and growth rate remain insufficient to fully offset the demand gap created by the decline in construction steel.

According to data from the China Iron and Steel Association, the share of steel used in manufacturing rose from 42% in 2020 to 50% in 2024.

Driven by policies like “old-for-new” initiatives, steel demand in the home appliance sector is projected to grow by 8.4% year-on-year in 2025. In the shipbuilding sector, new orders maintained high growth, supporting demand for high-end plates, yet this remains insufficient to offset the overall manufacturing slump.

In 2024, China's apparent steel consumption decreased by 5.3% year-on-year; From January to October 2025, apparent domestic consumption reached 710 million tons, with the year-on-year decline widening further to 6.4%.

Facing structural weakening in domestic demand, exports have become a crucial diversion channel. According to General Administration of Customs statistics, China exported 108 million tons of steel from January to November 2025, marking a 6.7% year-on-year increase.

However, intensifying international trade disputes and tariff barriers will constrain sustained high export levels. On December 12 last year, the Ministry of Commerce and the General Administration of Customs jointly issued Announcement No. 79, deciding to implement export license management for certain steel products starting January 1, 2026.

Additionally, starting January 1, 2026, the EU Carbon Border Adjustment Mechanism (CBAM) will conclude its transition period and enter mandatory enforcement. As a key sector under CBAM coverage, the steel industry will directly face carbon cost pressures.

Under the combined influence of policy, market dynamics, and global regulations, China's steel industry now stands at a critical juncture where it must deepen its transition toward greener and higher-end development.

If you have any questions, please feel free to contact SunSirs with support@SunSirs.com.