Against the backdrop of profound changes in the global industrial system, the crude steel industry is experiencing unprecedented transformation pains. As the cornerstone material of modern industry, the fluctuations in crude steel production, technological iterations and changes in the trade pattern not only reflect the transformation trajectory of the global manufacturing industry, but also become an important window for observing industrial changes in the era of carbon neutrality.
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Capacity regulation: policies force the industry to slim down and strengthen its body
The "14th Five-Year Plan for Raw Materials Industry Development" jointly issued by the Ministry of Industry and Information Technology of China and other three departments clearly stated that by 2025, crude steel production capacity will only decrease and not increase. This policy orientation is reshaping the global steel industry pattern. The National Development and Reform Commission's simultaneous promotion of crude steel production regulation and scrap steel utilization plans requires that scrap steel utilization reach 300 million tons by the end of 2025, and the proportion of electric furnace steel production will increase to 15%. Under this "dual control" mechanism, China's crude steel production is expected to drop from 1.006 billion tons in 2024 to 986 million tons, continuing the downward trend in recent years.
This regulation is not unique to China. The EU has built a green barrier to steel trade through the connection between the carbon emissions trading system (ETS) and the UK carbon market. 75% of the UK's steel products are exported to the EU, with an annual transaction volume of nearly 30 billion pounds. The interconnection of carbon markets not only eliminates double carbon tariffs, but also forces British steel companies to accelerate decarbonization transformation. This institutional cooperation is reshaping global steel trade rules and forcing traditional export-oriented countries to adjust their production models.
Technological Revolution: Hydrogen Metallurgy Opens the Zero-Carbon Era
In Zhangxuan Science and Technology Park in Hebei, the world's first 1.2 million tons of hydrogen metallurgy demonstration project has been operating stably for two years. This disruptive technology reduces direct carbon emissions per ton of steel by 15% through the combination of coke oven gas purification, carbon dioxide capture and hydrogen-based vertical furnace technology. What is more noteworthy is its supporting CCUS device, which converts captured carbon dioxide into marketable products, creating a commercial closed loop of "negative carbon" production. This technological breakthrough marks the official entry of the steel industry into a new era of "replacing coal with hydrogen".
Globally, the electric arc furnace short process is rapidly popularizing. Compared with the traditional blast furnace-converter process, electric furnace steel uses scrap steel as raw material, reduces energy consumption by 30% and reduces carbon emissions by 60%. In the European and American markets, the proportion of electric furnace steel production has exceeded 40%, while the proportion of electric furnace steel in China in 2024 will be only 10%. This process substitution is not only about the choice of technical route, but also the reconstruction of the resource recycling system.
Demand changes: high-end steel supports a new growth pole
The market demand structure is undergoing a fundamental change. The demand for traditional construction steel continues to shrink. In 2024, China's real estate steel consumption will drop by 16.6% year-on-year, but the demand in the high-end manufacturing field will grow against the trend: the demand for non-oriented silicon steel for new energy vehicle drive motors has surged, and the market share of high-strength automotive plates has exceeded 35%; the Xiongan New Area Science and Technology Innovation Center uses Q690 high-strength steel, achieving a 20% structural weight reduction while reducing carbon emissions by 18%; the Zangmu Yarlung Zangbo River Bridge uses paint-free weathering steel, which shows excellent weather resistance in the extreme environment of 3,350 meters above sea level.
This structural change drives companies to transform into "material solution providers." The ultra-low temperature non-magnetic stainless steel developed by Baowu Group has been successfully applied to the International Thermonuclear Experimental Reactor (ITER), overcoming the world's difficult problem of material strength and toughness matching under -269℃ environment; relying on the hydrogen metallurgical base, Hesteel Group has launched more than 60 high-end special materials products and entered strategic fields such as aerospace and nuclear power.
Trade Reconstruction: Carbon Tariffs Give Birth to a New Global Order
The implementation of the EU Carbon Border Adjustment Mechanism (CBAM) is reshaping the global steel trade landscape. In 2024, the EU's steel imports reached 38.9 million tons, of which Chinese products accounted for 9.3%. As CBAM enters the transition period, exporting companies need to disclose the carbon footprint of their products, which directly forces Chinese steel companies to establish a carbon accounting system. At present, China's steel industry has been included in the national carbon market, and more than 130 companies have completed direct reporting of carbon data, but there is still a gap with the traceability transparency required by the EU.
Global steel trade presents the coexistence of "regional concentration" and "diversified dispersion". The connection between the UK and the EU's carbon market provides institutional guarantees for UK steel exports, but third-country exports face the challenge of "smelting site rules". As the world's second largest crude steel producer, India's output reached 13.5 million tons in May 2025, a year-on-year increase of 9.7%, but its export products encountered compliance difficulties in the EU market due to the lack of a carbon accounting system. This institutional difference is giving rise to a new global industrial division of labor.
Standing at the time node of 2025, the crude steel industry has entered the deep waters of transformation. The capacity regulation policy and the carbon trading mechanism form a policy synergy, hydrogen metallurgy and electric furnace technology promote technological revolution, high-end manufacturing demand drives product upgrades, and carbon tariffs reshape trade rules. This change is not only about the survival of enterprises, but also a microcosm of the transformation of global industrial civilization to green and low-carbon. When the flames of traditional blast furnaces gradually go out, the blue flames jumping in the hydrogen-based vertical furnace may be heralding a new dawn for the steel industry.
