Overview: Challenges and Opportunities in the Transformation of the Steel Industry
The steel industry, a crucial foundational industry for the national economy, is currently undergoing unprecedented changes. According to the “Steel Industry Steady Growth Work Plan (2025-2026)” issued in 2025, China’s steel industry is targeting an average annual growth rate of about 4% in value-added output for 2025-2026, while aiming to stabilize and improve economic efficiency and achieve a more balanced market supply and demand.
Current Industry Status and Challenges
- Supply-demand imbalance pressure: In the first quarter of 2025, China’s crude steel output was 259 million tons, a year-on-year increase of 0.6%, but apparent consumption of crude steel decreased by 1.2% year-on-year, reflecting a pattern where “supply exceeds demand”.
- Improved profitability: The total profits of key steel enterprises increased by 1.08 times year-on-year, with the average profit rate rising to 1.50%, though the sales profit rate remains significantly lower than the industrial average.
- High export levels: China’s steel exports exceeded 110 million tons in 2024, a year-on-year increase of 22.7%, but face challenges from increasing international trade friction.
Policy Guidance: Five Ministries Jointly Promote Industry Steady Growth
In August 2025, the Ministry of Industry and Information Technology, together with the Ministry of Natural Resources, Ministry of Ecology and Environment, Ministry of Commerce, and State Administration for Market Regulation, jointly issued the “Steel Industry Steady Growth Work Plan (2025-2026)”, charting the development direction for the industry over the next two years.
Main Objectives of the Work Plan
The “Work Plan” proposes to promote high-quality development through five aspects of work measures:
- Strengthening industry management: Through capacity reduction replacement and production control, implementing classified and categorized management.
- Enhancing industrial technological innovation: Improving the supply capacity of high-end products, focusing on addressing weaknesses.
- Expanding effective investment: Accelerating process equipment updates, digital transformation, and green low-carbon transformation.
- Expanding market demand: Promoting steel structures in construction, transportation, infrastructure and other fields.
- Deepening open cooperation: Stabilizing foreign trade markets and improving international development levels.
Green Transformation: From “Iron Man” to “Green Giant”
Hydrogen Metallurgy Technology Breakthroughs
HBIS Group secured an export order to the EU for ten-thousand-ton scale hydrogen-metallurgy green steel, achieving an industrial breakthrough of 50% carbon reduction per ton of steel, passing full-process carbon verification and obtaining an EPD environmental product declaration, complying with EU carbon footprint certification standards.
Table: Progress of Major Green Steel Projects in China
| Project Name | Enterprise | Technology Route | Carbon Reduction Effect | Industrialization Progress |
|---|---|---|---|---|
| Hydrogen Metallurgy Direct Reduction Plant | HBIS Group | Hydrogen-based direct reduction | Over 50% | 600,000-ton demonstration line |
| Hydrogen-based Shaft Furnace Project | Baowu Zhanjiang | Hydrogen-based shaft furnace + electric furnace | Over 30% | Under construction (1.8 million ton capacity) |
| Near-zero Carbon Production Line | Baosteel | Green electricity + electric furnace | Nearly zero carbon | In planning |
Accelerated Ultra-Low Emission Transformation
As of the end of July 2025, 600 million tons of crude steel capacity and 147 steel enterprises across China had completed whole-process ultra-low emission transformation. To date, China’s steel industry has cumulatively invested over 300 billion yuan in ultra-low emission transformation, with plans to cover 80% of capacity by the end of 2025.
Carbon Market Impact
As the steel industry is incorporated into the national carbon trading market, enterprises will complete their first compliance work by the end of 2025. Companies failing to meet carbon reduction targets through internal emission reductions will need to purchase additional quotas, increasing costs; while enterprises with lower carbon emissions per ton of steel can profit by selling carbon quotas.
Intelligent Revolution: AI Empowers Steel Manufacturing
AI Deployment by Leading Enterprises
In the first half of 2025, several listed steel enterprises mentioned deploying AI technologies to empower intelligent manufacturing in their annual reports:
- Baosteel: Launched 119 AI application scenarios, developed and operated 52 intelligent agents, achieving a data assetization rate of 74.2%.
- Shougang Steel: Completed the localized deployment of the DeepSeek large model, with its cold rolling company successfully selected as a global “Lighthouse Factory”.
- Nangang Steel: Collaborated with Huawei to launch a “steel large model 100-day campaign”, releasing a comprehensive industrial business digitalization blueprint.
- Taigang Stainless Steel: Independently developed an “AI Intelligent Steelmaking Assistant” system, building a “digital twin cockpit”, reducing strategic order delivery cycles by 20%.
Digital Transformation Effectiveness
The application of AI technology in the steel industry is evolving from single-point applications to whole-process collaborative optimization, achieving multiple objectives including predictive maintenance, intelligent quality control, and energy efficiency optimization. For example, Bayi Steel uses AI models in its remote intelligent maintenance system to predict equipment failures, significantly reducing downtime; Liugang Steel uses digital tools to achieve a steel product qualification rate of 99.9%.
Regional Transformation Case: Tangshan’s Transition from “Steel City” to “New City”
Tangshan, a major steel production base in China, is transforming from a traditional “steel city” to a high-quality development “new city”.
Green Transformation
Shougang Qian’an Steel’s new generation of pickled low-carbon products achieve 100% recycling of scrap steel resources, reducing carbon emissions by over 30% overall. Meanwhile, Shougang’s near-“zero” carbon emission high-quality steel smelting project is expected to be completed and operational in the first quarter of 2026, reducing annual carbon emissions by 1.43 million tons upon completion.
Electrified Transportation System
As a pilot city for heavy-duty truck projects, Tangshan is accelerating the deployment of electric and hydrogen heavy-duty trucks in industries like steel and mining. By July 2025, the city’s electric heavy-duty truck fleet reached 16,200 vehicles, ranking first among prefecture-level cities nationwide, with an electrification rate of over 60% for short-distance port transportation.
International Markets and Trade Challenges
Changing Export Structure
In 2025, global economic recovery will drive steel demand growth abroad. The implementation of multilateral trade agreements such as RCEP provides new market opportunities for China’s steel exports. China’s direct steel exports are expected to remain high, around 100 million tons, with Southeast Asia, the Middle East, South America, and other emerging markets becoming major export destinations.
Increasing Trade Barriers
Trade remedy cases against Chinese steel products have increased significantly, with 33 cases in 2024, exceeding the total number of cases from 2020-2023 combined. The EU Carbon Border Adjustment Mechanism (CBAM) will be fully implemented in 2026, potentially increasing the cost of ordinary steel exports from China by 50-100 euros/ton.
Chart: Trends in China’s Steel Export Volume and Trade Remedy Cases (2020-2024)
Year Export Volume (Million Tons) Number of Trade Remedy Cases
2020 53.7 6
2021 66.9 8
2022 67.3 11
2023 90.2 15
2024 110.0 33Data Source: Comprehensive Industry Reports
Future Prospects: High-Quality Development Path
Increasing Industry Concentration
According to the “14th Five-Year Plan”, by 2025, over 40% of production will be concentrated in the top 5 steel enterprises, and over 60% will be concentrated in the top 10 steel enterprises. It is projected that by 2025, the top 10 steel enterprises in China will account for more than 70% of production.
Optimized Product Structure
The structure of steel demand is changing significantly, with plate demand steadily increasing, and high-end plate demand for automobiles, home appliances, shipbuilding, offshore engineering, and energy booming. Meanwhile, traditional construction steel demand is declining, with steel demand for the real estate industry in 2025 expected to decrease by about 9.1% compared to 2024 to around 200 million tons.
Technology-Driven Innovation
The steel industry’s R&D focus is shifting toward high-end special steel, green low-carbon processes, and digital transformation. The Yan Zhao Steel Laboratory has condensed and proposed 90 high-quality scientific research results, with technical products like extreme service environment railway frog steel and air pollution reduction technology reaching leading levels.
Conclusion
China’s steel industry is undergoing a profound transformation from quantitative change to qualitative change. Under the combined forces of policy guidance, technological innovation, and market forces, the industry is gradually achieving green, intelligent, and high-end development. The next five years represent a critical window for the industry’s transformation, requiring enterprises to improve quality and efficiency through product structure adjustment, process innovation, and business model transformation.
With the widespread application of technologies such as hydrogen metallurgy, short-process electric furnaces, and AI intelligent manufacturing, China’s steel industry is expected to achieve carbon peaking before 2030 and carbon neutrality before 2060, building a modern steel industry system with global competitiveness.
This article provides a general overview of the steel industry. For specific technical information or detailed data, please consult specialized industry publications and company reports.
