China continues efforts to regulate steel production

The industry association recommends switching from capacity expansion to quality growth

China is advancing efforts to regulate steel production in the country to restore the balance between supply and demand amid a slowdown in the market, representatives of the China Iron and Steel Association (CISA) said at a first quarter briefing, Mysteel Global reports.

Wang Bin, Director of Planning and Development at CISA, stressed that control over steel production remains a critical tool for stabilizing the sector in the absence of more effective mechanisms.

According to him, strict adherence to steel production controls at both the local and enterprise levels will help stabilize the industry.

Wang emphasized that the Chinese steel industry should move from capacity expansion to quality-oriented growth. In addition, production control should be guided by environmental indicators, energy consumption and carbon emissions, etc.

A performance-based evaluation system should be created. This would allow advanced production assets to operate at full capacity and direct support and resources to more competitive enterprises. Such actions will facilitate the orderly decommissioning of inefficient and outdated facilities.

The CISA representative also emphasized the need to create a new capacity management system that would combine state supervision, industry self-regulation, and market principles. The government is already taking steps in this direction. In August last year, the Ministry of Industry and Information Technology suspended the current steel capacity exchange scheme. In early 2025, updated regulatory standards were released.

In addition, a revised plan to implement the guidelines for the exchange of steel capacity is already being developed. Wang again called for the abolition of such exchanges between different steel companies or groups to eliminate speculative trading in capacity quotas. In his view, the integration of production capacities should be allowed only through significant mergers and acquisitions. This, among other things, will help reduce the number of redundant players.

As GMK Center reported earlier, China is planning to restructure its steel industry by reducing production in the sector. This was announced in March this year by the National Development and Reform Commission (NDRC). The authorities did not provide specifics on the possible scope of cuts in the industry. The market speculated that steel production could be cut by 50 million tons per year.