I. Key Trends in China's Steel Market in 2025

1. Structural Shifts in Demand

• Infrastructure Support: Major projects under the 14th Five-Year Plan (e.g., high-speed rail, water conservancy, urban renewal) will sustain steel demand, with infrastructure accounting for over 35% of total consumption.

• Manufacturing Upgrade: Rising demand for high-strength steel (EVs), thick plates (wind power), and specialty alloys (advanced equipment) will offset declining real estate demand (construction steel may drop to 25%).

• Green Transition: Stricter carbon policies will push electric arc furnace (EAF) steel production to 22% of total output, with scrap steel consumption exceeding 320 million tons annually.

2. Supply-Side Restructuring

• Capacity Optimization: The "capacity replacement" policy continues, phasing out blast furnaces below 500m³ in Hebei, Jiangsu, etc. Top players (e.g., Baowu, Ansteel) will consolidate over 50% of market share.

• Technological Revolution: AI-powered steelmaking and hydrogen-based iron reduction (e.g., Baowu’s Zhanjiang hydrogen DRI project) will expand, reducing carbon emissions per ton of steel by 15% compared to 2020.

3. Pricing & Costs

• Reduced Iron Ore Reliance: Increased scrap steel use and overseas equity mines (e.g., Simandou project in Guinea) will lower iron ore import dependency to 75%.

• Margin Pressures: Rising environmental costs will squeeze profits, but high-end products (e.g., automotive steel) will command premium pricing, concentrating profits among leading firms.

II. Key Adjustments to Steel Export Policies in 2025

1. Policy Shift: From Quantity to Quality

• Restricting Low-Value Exports: Further adjustments to export rebates (e.g., potential removal for hot-rolled coils) while maintaining rebates for high-grade products (e.g., silicon steel, galvanized sheets).

• Carbon Tariff Response: Pilot "carbon footprint" certification for steel exports to counter EU CBAM, incentivizing low-carbon steel (e.g., EAF steel).

2. Regional Market Strategies

• ASEAN as Key Market: Under RCEP tariff benefits, exports to Vietnam and Thailand may rise to 40% of total exports (vs. 32% in 2023).

• Avoiding Trade Barriers: Overseas production (e.g., Baowu’s Thailand cold-rolling plant) will relocate low-end capacity to bypass anti-dumping duties.

3. Export Volume Control

• Stable Annual Exports: Steel exports are expected to stabilize at 75-80 million tons (vs. 90.26 million tons in 2023), prioritizing domestic supply.

III. Risks & Challenges

• Overcapacity Resurgence: Economic stimulus measures could trigger illegal capacity restarts.

• Green Trade Barriers: EU/US carbon tariffs may add $50-100/ton to steel costs.

• Geopolitical Supply Risks: Vulnerabilities in iron ore shipping (Strait of Malacca) and coking coal imports (Mongolian rail capacity).

IV. Outlook

In 2025, China’s steel industry will advance on three fronts:

• High-End Transition: Value-added products (e.g., automotive steel, silicon steel) to exceed 30% of output.

• Low-Carbon Transition: Commercial scaling of hydrogen metallurgy and CCUS (carbon capture) technologies.

• Globalization: Overseas mines and greenfield steel mills to build resilient supply chains.

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(Note: Based on current policy trends; subject to adjustments following the 2024 Central Economic Work Conference.)