China will push to cut steel production between 2025 and 2026, according to an official document reviewed by Reuters and a source with knowledge of the matter, as the country tackles overcapacity that has pressured prices and fueled a global protectionist backlash.
The world’s largest steel producer will strictly curb new capacity and reduce output, the planning document from the industry and environment ministries showed.
“The steel industry is currently facing excess supply and insufficient effective demand, leading to a supply-demand imbalance that affects development quality and efficiency,” the document read.
The draft did not specify numerical targets for output cuts, although the government pledged earlier this year to curb steel production. Crude steel output already dropped 3.1% in the first seven months of the year.
China’s industry and commerce ministries did not immediately respond to Reuters’ request for comment. A source familiar with the discussions confirmed the accuracy of the document, describing it as a final draft. The source requested anonymity given the sensitivity of the matter.
A previous 2023 attempt to restructure the industry faltered, partly due to mixed signals from Beijing about how aggressively it would enforce capacity cuts.
The latest plan sets out a target for the industry’s value-add to grow by 4% annually, while also calling for investment in new technologies and encouraging greater steel use in infrastructure and residential construction. Analysts say this raises questions about how forcefully Beijing will pursue its capacity-reduction ambitions this time.
