China Unveils Two-Year Plan to Curb Steel Overcapacity
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The new plan mandates precise regulation of both steel capacity and output. Photo: VCG
China will tighten control of steel production and new capacity under a new two-year plan aimed at stabilizing an industry plagued by oversupply and shrinking profits.
The Work Plan for Stabilizing Growth in the Steel Industry, published on Sept. 22, was jointly issued by five government agencies, including the Ministry of Industry and Information Technology (MIIT). It extends a crude steel output control policy that has been in place since 2021.
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- China’s new two-year steel plan extends output controls, tightens capacity swaps, and introduces a three-tier steelmaker classification to tackle oversupply and low profits.
- Steel industry profits fell 42.6% year-on-year to 66.3 billion yuan ($9.3 billion) in 2024, with 2025 profits partially rebounding, but overcapacity persists.
- Current crude steel capacity exceeds 1.3 billion tons, while 2035 demand is projected at only 800 million tons, highlighting long-term structural imbalance.
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Who’s Who
- Mysteel
- Mysteel is an industry data provider. Xu Xiangchun, the chief information officer at Mysteel, stated that controlling production is key to stabilizing growth in China's steel industry. He emphasized that controlling steel output is essential to achieve a dynamic balance between supply and demand.
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What Happened When
- 2021：
- China began implementing a crude steel output control policy to address oversupply in the steel industry.
- 2023：
- A previous initiative for the steel industry met added value and investment targets, but fell short in rebalancing supply and demand.
- 2024：
- The Chinese steel industry's profit fell by 42.6% year-on-year to 66.3 billion yuan, with many companies operating at a loss.
- August 2024：
- China froze approvals of new steel capacity swaps due to unintended supply increases caused by earlier policies.
- First seven months of 2025：
- Profits in China's steel industry recovered to 83 billion yuan, though stability remained precarious.
- September 22, 2025：
- The Work Plan for Stabilizing Growth in the Steel Industry was published, introducing new controls on steel production and capacity.
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