Today, September 22, the Ministry of Industry and Information Technology (MIIT) of China and other departments jointly released the Work Plan for Stabilizing Growth in the Steel Industry (2025-2026), setting the steel sector’s average annual value-added output growth target at about four percent for the next two years. Meanwhile, China will implement precise regulation of production capacity and output, advanced tiered and categorized management of steel enterprises, and strictly prohibit the expansion of new production capacity. Moreover, the plan clearly requires that by the end of 2025 more than 80 percent of steel production capacity must complete ultra-low emission upgrades.
Experts stated that the new plan will set "equipment upgrading" and "low-carbon transformation" as the two central themes for future competition among steel enterprises.
The four percent growth target will be below that of GDP, but it signals the shift from past scale expansion to quality and structural optimization in the steel sector. It might also mean that large-scale steel enterprises will expand their advantages through mergers and acquisitions, achieving higher industrial concentration. In the future, prices and supply of common steel products may be stable, while the market for high-end steel will be more competitive. Strict emissions standards will likely raise production costs in the near term, but consolidation and capacity controls will stabilize growth and reduce overcapacity. China aims to eliminate outdated capacity and support advanced capacity via both market mechanisms and administrative measures, pushing forward to high-end, green and intelligent development of the steel industry.
The Work Plan states that China will stabilize raw material and fuel supply and accelerate the launch, operation and capacity expansion of key domestic iron ore projects. China will support compliant mining enterprises in maintaining normal production, avoiding simple one-size-fits-all management in rectification measures. China will strengthen efforts to ensure supply and price stability for iron ore, coking coal, and other raw materials, and support steel enterprises in signing long-term agreements with coking coal and coke producers. Moreover, China will encourage the import of high-quality coking coal and high-grade recycled steel materials. Furthermore, it will develop integrated bases for steel scrap collection, processing, distribution, and smelting.
The market reaction to today’s news has been mildly positive with rebar spot prices increasing by RMB 24/mt since Friday to RMB 3,257/mt ex-warehouse. “The market response is positive. Chinese futures rose mildly on Monday and there is no significant change in supply and demand. Mills’ output is still on the high side,” a Chinese trader noted. Another large trader said that he expects that the market will be rather stable with small gains possible, as both demand and supply will be better and a clearer price trend will be seen after the National Day holiday in early October. “This is a clear signal for the mills, but the impact on the market will be seen after some time. There are still no production cuts announced for this year or next year,” another source said.