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Production dip reflects structural slowdown, not just demand
China’s steel production is projected to decline by 4% in 2025, marking a third consecutive year of contraction as the world’s largest producer continues grappling with sluggish domestic demand and structural shifts in its economy.
The primary drag remains the ongoing weakness in China’s real estate sector, which historically consumed over one-third of the nation’s steel output. With Beijing limiting stimulus to the property sector and focusing more on financial stability, the industry’s recovery remains muted, pulling down overall steel demand.
At the same time, China’s policy focus on reducing carbon emissions plays a critical role. The government is expected to strictly enforce production caps to meet its green targets, even if it comes at the cost of short-term output.
Analysts note that this downturn is more structural than cyclical. Unlike past slowdowns, this contraction is unlikely to be reversed by a large-scale stimulus or infrastructure push. The government’s commitment to high-quality, green development over quantity is reshaping the steel industry’s long-term trajectory.
Despite this, China will remain the world’s dominant steel producer in volume. However, the trend signals a transition period where efficiency, green innovation, and sectoral realignment will define its steel landscape in the coming years.
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