If China strictly enforces the 50 million mt output cut in 2025, China’s steel prices are expected to see strong gains, while iron ore prices would take a hit later in the year, as total steel demand from both domestic and international markets is likely to fall just 1%-2% year over year, some market participants said.

However, other sources said that implementing such a move in 2025 could be challenging, as a production cut of 50 million mt may impose economic burdens on some local economies.

“If it turns out that there is no mandatory steel output cut of as high as 50 million mt for 2025, there may be still some downside room for steel prices, given sluggish domestic demand and shrinking exports amid rising trade barriers,” a mill source said.

According to market sources, without government-mandated steel output cuts, China’s crude steel output in 2025 is still likely to fall 10 million-20 million mt year over year in tandem with falling steel demand.

In 2023, given the pressure of economic growth, government mandated steel output cuts were not implemented, resulting in 0.3% year-over-year increase in China’s crude steel output to 1.022 billion mt, National Bureau of Statistics data showed. Similarly, 2024 also saw no mandated steel output cuts.