China’s crude steel capacity is likely to have reached around 1.25-1.3 billion mt by the end of 2024, according to industry sources.

From January to mid-August in 2025, China commissioned 5.43 million mt/year of new pig iron capacity and 2.75 million mt/year of new crude steel capacity, predicated on closure of existing 5.62 million mt/year pig iron and 1.44 million mt/year crude steel capacity, according to calculations by Platts based on company announcements.

But due to slumping new home sales and new construction starts, China’s domestic apparent steel consumption had declined from 1.048 billion mt in 2020 to 880 million mt in 2024, according to China Iron & Steel Association.

Demand is likely to drop further in 2025 by 2% year over year, Commodity Insights data showed.

“Reducing steel capacity will be a lengthy and complex process, and I don’t think we will see capacity decline at least this year [2025],” said a mill source.

“This is not only because there is no more so-called ‘outdated’ capacity in the steel industry after years of capacity swaps that began in 2018, but more importantly, China’s job market has already been under pressure, so if capacity reduction is enforced at this moment, it will only make employment more difficult,” the source said.