China will step up efforts to address the “involution-style” competition in its steel sector by implementing strict controls on crude steel output, exploring new mechanisms for capacity governance and promoting coordinated efforts among the government, industry and enterprises, said Xia Nong, vice-president of the China Iron and Steel Association.
“It is essential to strictly prohibit new capacity additions, open up channels for capacity exit and phase out outdated equipment with backward technology, heavy pollution and low efficiency, and establish and improve a sound, science-based long-term mechanism to guide enterprises in strengthening self-discipline,” Xia said.
He made the remarks at the 2026 Steel High-Quality Development Conference, co-hosted by the China Metallurgical Industry Planning and Research Institute and Jiangsu Yonggang Group, held on Friday in Beijing.
Xia said 2026 marks the opening year of China’s 15th Five-Year Plan (2026-30) and a crucial year for the steel industry to advance its campaign of “capacity reduction, structural optimization, quality upgrading and transformation”.
He said efforts should focus on three major initiatives — improving product quality, enhancing energy and carbon efficiency, and accelerating digital and intelligent transformation — while also promoting a new capacity governance mechanism, industry consolidation and restructuring, iron ore resource development, and steel application expansion programs.
Supply-demand imbalances in China’s steel sector remain. According to the National Bureau of Statistics, China’s crude steel output fell 4.4 percent year-on-year to 961 million metric tons in 2025, while apparent consumption fell 7.1 percent to 829 million tons. Meanwhile, steel product output rose 3.1 percent to 1.45 billion tons.
Wen Gang, director of the steel division at the department of raw materials industry under the Ministry of Industry and Information Technology, said that the mismatch between ample supply and soft demand continues to widen, and that coordinated efforts on both sides are essential.
“On the supply side, efforts should focus on controlling new capacity, optimizing existing capacity and regulating output. On the demand side, it is important to tap the potential of steel consumption, promote the application of steel structures, and advance the upgrading of steel and related materials to foster a dynamic balance between supply and demand at a higher level,” Wen said.
In 2025, steel consumption by China’s manufacturing sector overtook construction for the first time, with the share used in construction falling from 58 percent in 2020 to 49 percent, while manufacturing’s share rose from 42 percent to 51 percent.
Xia said that expanding the application scope of steel materials will be a key approach, both now and in the future, to addressing supply-demand imbalances in the industry.
Wen also stressed the need to advance the application of digital and intelligent technologies to raise the industry’s level of digitalization, as such technologies are expected to support the sector’s broader efforts to improve efficiency and facilitate structural adjustment.
He called for efforts to strengthen the foundation for digital transformation, promote innovation in artificial intelligence applications, and enhance overall digital and intelligent capabilities, with a focus on accelerating adaptive transformation, improving supporting systems, and expanding high-value AI application scenarios.
Zhong Shaoliang, chief representative of the Beijing office of the World Steel Association, said that in the long term, global steel demand still holds considerable growth potential, while overall capacity remains sufficient despite regional imbalances.
Zhong said that in recent years, the global steel industry has invested heavily in energy conservation and emissions reduction, steadily advancing its low-carbon transition, yet it still faces a daunting decarbonization task and multiple challenges.
Looking ahead, the low-carbon transition will have far-reaching impacts on global steel trade patterns, including both direct trade in steel products and indirect trade dominated by automobiles and electromechanical goods, he said.
“It is also expected to increase the share of direct reduced iron in both production and trade,” Zhong said, adding that emerging concepts such as “green feedstock”, “green iron” and “green DRI” are likely to become new focal points in international steel trade amid the global push for decarbonization.