China has announced plans to reduce steel output as part of a broader effort to restructure its massive steel industry and address overcapacity, a move that could ease global trade tensions sparked by the flood of cheap Chinese steel exports. While the government did not specify the scale of the cuts, the announcement marks a significant shift in policy, with analysts speculating that Beijing may target a reduction of around 50 million metric tons of crude steel output.
The plan, outlined in an official report on Wednesday, aims to “promote restructuring of the steel industry through output reduction” and resolve structural problems in key industries. “We will introduce policies and measures for resolving structural problems in key industries and end the phenomenon of rat-race competition through industrial regulation and upgrading,” the report stated.
This is the first time China’s National Development and Reform Commission (NDRC) has explicitly proposed steel output cuts in its draft plans, according to Citi analysts. Previous efforts focused on industrial transformation, carbon emissions, and consolidation within the sector.
The announcement surprised analysts and traders, who viewed it as a clear signal of the government’s intent to regulate steel production this year. “This is a clear signal delivered by the government that it will regulate steel production this year,” said Xu Xiangchun, director of content at consultancy Mysteel.
China’s steel industry has faced mounting challenges, including a prolonged property market downturn that has dampened domestic demand and growing trade frictions as countries impose anti-dumping duties on cheap Chinese steel. Vietnam and South Korea, two of China’s largest steel export markets, announced anti-dumping measures in February.
Despite these challenges, China’s steel exports have surged, reaching 90.26 million metric tons in 2024, the highest since 2016. This has exacerbated global oversupply and drawn criticism from trading partners.
China’s steel output has already declined by 5.6% from its 2020 peak of 1.065 billion metric tons, reaching 1.005 billion metric tons in 2024. The new output cuts are expected to further reduce production, helping to stabilize global markets and support domestic industry restructuring.