China will ban new capacity and reduce steel production

China will ban new steel capacity and cut steel production in the latest move to balance supply and demand in the industry, Bloomberg reports.

According to the 2025-2026 sector plan published by the Ministry of Industry and Information Technology and other agencies, the government’s measures also include increasing the production of high-quality steel and promoting its use in construction and transportation.

According to the statement, China will continue to implement the policy of production cuts, meet annual targets to control this process, support advanced enterprises and force outdated, inefficient capacities to be removed from the market.

According to Chinese media reports, the work plan states that in 2025-2026, Chinese steelmakers should strive for an average annual growth in value-added production of about 4%, improving economic performance, balancing supply and demand in the market, and optimizing the industrial structure.

It is also noted that the government recommends expanding effective investment in the steel industry to accelerate technological modernization, digital transformation and green transition.

As a reminder, in August 2025, China reduced steel production by 0.7% compared to August 2024 to 77.37 million tons. The figure fell by 2.9% month-on-month.

This is the third consecutive drop in monthly production volumes, which resulted in a drop in steel production to 671.81 million tons (-2.8% yoy) in January-August this year.

As GMK Center reported earlier, the country’s steelmaking companies reduced steel production by 1.7% year-on-year in 2024, producing 1.005 billion tons. This is the lowest figure in the last five years.