On June 11, 2026, the China Iron and Steel Association (CISA) held a national policy promotion meeting on steel production capacity replacement in Kunming, Yunnan Province, comprehensively interpreting the newly revised Measures for the Implementation of Production Capacity Replacement in the Steel Industry issued by the Ministry of Industry and Information Technology. Centering on three core priorities of production capacity optimization, low-carbon transformation and compliance management, the updated measures mark a new stage of refined high-quality development for China’s steel industry, focusing on restraining new capacity growth, optimizing industrial structure, cutting energy consumption and improving product quality, which is expected to resolve chronic problems including structural overcapacity, uneven progress in low-carbon renovation and low industrial concentration.

Wen Gang, Director of the Steel Division of the Raw Materials Industry Department of MIIT, interpreted the core clauses of the new policy. Compared with previous rules, the latest version imposes stricter controls on capacity replacement, explicitly forbidding new steel smelting capacity and standardizing cross-regional and cross-enterprise replacement procedures. Preferential policies will be granted to projects adopting advanced low-carbon smelting technology, ultra-low emission facilities and intelligent transformation, while backward and inefficient capacity will be phased out resolutely. Detailed criteria for green capacity recognition have been formulated, giving priority to enterprises that have finished full-process ultra-low emission renovation and energy-saving technical upgrades.

China’s steel sector has made remarkable progress in green transformation. In accordance with the three-year energy-saving and carbon reduction campaign released by the National Development and Reform Commission, the steel industry will carry out targeted technological upgrades from 2026 to 2028, renovating traditional blast furnaces and converters and popularizing environmentally friendly technologies such as hydrogen-based shaft furnaces and short-process electric furnace steelmaking. So far, more than 900 million tons of crude steel capacity across the country has realized full-process ultra-low emission transformation, accounting for over 70% of total domestic capacity.

In the first half of 2026, the steel market shows differentiated yet resilient demand. Steel consumption from high-end equipment manufacturing and new energy sectors keeps rising, offsetting weak demand from real estate and conventional infrastructure. The implementation of the new policy will push backward capacity out of the market, balance supply and demand and curb vicious price competition.

CISA officials stated that the new capacity replacement policy is vital for the steel industry to realize carbon peaking and carbon neutrality goals. The association will supervise policy enforcement, guide steel enterprises to conduct standardized capacity restructuring and technological upgrading, and boost industrial concentration. Efforts will be made to coordinate capacity regulation, stable market supply and low-carbon transition, driving the industry to shift from scale-oriented expansion to efficiency-driven development.

Industry analysts forecast that the policy will accelerate industrial restructuring. Small and medium-sized backward producers will gradually withdraw from the market, while leading steel firms with green, intelligent and high-end production advantages will strengthen global competitiveness. In the long run, structural optimization and low-carbon technological innovation will lay a solid foundation for the high-end, green and intelligent development of China’s steel industry.

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