The steel industry is currently undergoing a profound adjustment periodIn 2024, the total production of crude steel in China is projected to reach approximately 1.005 billion tonnes, marking a year-on-year decline of 1.7%. This outcome aligns with the anticipated decrease in output, yet the decline in steel consumption has proven to be even more significantThe market is exhibiting a robust supply amidst weak demand, placing considerable pressure on enterprises within the sector.

However, as Zhao Minge, the president of the China Iron and Steel Association and chairman of Shougang Group, pointed out, there remain opportunities for growth in the steel sectorCultivating new productive forces is seen as a pathway to breakthroughZhao emphasized that the fundamentals of the Chinese economy remain strong, with many advantages, resilience, and vast potentialThe long-term favorable conditions and basic trends haven't changed, especially with the nation's comprehensive policy to stimulate growthIndustries such as automotive, home appliances, shipbuilding, and renewable energy are expected to present structural opportunities for steel consumptionThe steel industry must adhere to principles of high-end development, efficiency, intelligence, and sustainability, leveraging technological innovation to lead industrial progress and accelerate the attainment of high-quality development.

As the market demand structure shifts, one notable advancement in innovation was the recent delivery of the world’s first commercially designed and manufactured 7,500 cubic meter liquefied carbon dioxide carrier, known as Vessel No. 1. This vessel is an essential piece of equipment for offshore carbon dioxide geological storage, featuring two full-pressure C-type storage tanks crafted from specialized materials that endure extremely low temperatures, down to minus 35 degrees Celsius.

The development of P690QL2 ultra-high-strength low-temperature steel by Ansteel represents a significant milestone, as it meets international standards for anti-cracking performance at these extreme temperatures, which were proposed for the first time

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The company has subsequently received the world's first certification for P690QL2 steel from a classification society for carbon dioxide liquefied transport vesselsIn the broader context, the shipbuilding industry relies heavily on steel materials, with Ansteel having already supplied over 24 million tonnes of high-strength steel for marine engineering, placing it among the leaders in the domestic market.

According to Zhang Hongliang, head of Ansteel's low-temperature steel team, the green development of the shipbuilding sector is pivotal for the current technological revolution and industrial transformation in global maritime industriesThe breakthrough in core technologies for low-temperature steels used in green vessels will enhance their competitive edge in the futureAnsteel’s advancements in low-temperature steel technology have already established international leading standards, with three national and industrial standards revised and 30 patents authorized.

In recent years, traditional steel consumption sectors, notably construction, have experienced a downturn, while the manufacturing sector's share of steel demand has risen from 42% in 2020 to 50% expected in 2024. This transformation indicates a gradual shift in the steel industry’s demand structure toward manufacturing.

In response to the changing market conditions, steel enterprises are doubling down on innovation, intensifying research and production of high-end and specialty steels, thereby better meeting the needs of downstream industries as they undergo transformation and upgradingShougang has introduced a new technology for self-bonding electrical steel, aiding the transition of electric vehicle motors toward higher efficiency and lower lossBaowu Steel has globally launched four top-grade oriented silicon steel products, while Taiyuan Iron and Steel has developed the world's highest strength wheel steel for automotive useMoreover, Henan Steel achieved significant breakthroughs in manufacturing wide and thick plate rolling mills.

For 2024, Hunan Steel has announced substantial adjustments to its product mix, targeting a 65% share of specialty steel in total production and sales for the year

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Chairman Li Jianyu stated that he aims to further increase the proportion of specialty steel to 67% in line with evolving market demands.

Industry projections signal continued growth in steel demand from the manufacturing sector through 2025. The "Two-New" initiatives, encouraging large-scale equipment upgrades and the replacement of old consumer products, are anticipated to sustain growth in the automotive and home appliance industriesThe increasing output of electric vehicles and household appliances is expected to drive the demand for high-grade silicon steel, with a focus on lightweight materials, decorative panels, and corrosion resistanceSimultaneously, the demand for shipbuilding steel is predicted to rise sharply, while sectors like construction machinery and mining will see a recovery in high-strength steel demandThere remains potential for growth in high-end pressure vessel steels, special alloys, and key components in smaller batches and diverse varieties.

Moving forward, the China Iron and Steel Association (CISA) will enhance monitoring and analysis of industry operations, guiding companies in adjusting their product structuresIt will establish mechanisms to deepen cooperation within key fields such as construction, shipping, and transportation, promoting alignment between supply and demand while actively exploring new markets and applications for steel products.

Empowerment through digital intelligence will play a crucial role in the green development of the steel industryAccelerating the transition to green and low-carbon operations, along with digital capabilities, represents a vital pathway for the steel sector to cultivate new productive forces.

As the largest carbon-emitting sector in manufacturing, the steel industry has been incorporated into the national carbon emissions trading market and has moved into practical operational phasesZhao Minge highlighted that participation in the national carbon market is an inevitable direction for carbon management in the steel sector

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By establishing incentive mechanisms that closely link carbon reduction with economic interests, the industry can further stimulate low-carbon technology innovation and application.

In recent statistics, 60 different low-carbon technologies are being researched in 22 steel enterprises across China, leading to several significant milestonesBaowu's hydrogen-rich carbon cycling oxygen blast furnace commercial demonstration project was awarded the "Low Carbon Production Excellence Achievement" at the 15th Steelie Awards by the World Steel Association in 2024. Hegang has initiated the world's first hydrogen-based vertical furnace project and a nearly zero-carbon electric arc furnace short process, while a pure hydrogen vertical furnace demonstration line has been established, positioning China's steel industry at the forefront of low-carbon metallurgical technology innovation globally.

Moreover, achieving low emissions and reduced pollution in the steel industry requires coordinated effortsBy the end of 2024, a total of 171 steel companies, including one pellet company, will have completed or partially completed low emission transformations and assessmentsOf these, 126 companies have fully accomplished their ultra-low emission amendments, affecting a crude steel capacity of around 553 million tonnes, with an average investment of approximately 475 yuan for low emission modifications per tonne of steel, and an average operational cost of about 224 yuan per tonne for environmental managementAdditionally, 45 companies have partially completed low emission reforms, covering a crude steel capacity of roughly 168 million tonnes.

According to plans, the steel industry's ultra-low emission transformation process is expected to be finalized by the end of 2025. Zhang Haolong, deputy director of the Atmospheric Department at the Ministry of Ecology and Environment, emphasized during CISA's sixth member conference that by the end of the year, 80% of steel production capacity must meet ultra-low emission standards, highlighting the commitment to maintain strict targets and standards

Strategies are being initiated to revise pollutant discharge standards in the steel sector, which will involve tightening regulations and inter-departmental cooperation to enhance overall pollution control levels or gradually phase out non-compliant capacities.

The pursuit of digital transformation stands out as a defining characteristic of new industrialization and is identified as an important engine for accelerating high-quality development in the steel sectorStatistics from CISA show that the application density of robotics in key enterprises has reached 65 sets per 10,000 employees, with 95% of enterprises integrating digital transformation strategies into their overall development plans, and 80% have established intelligent centralized control centersFurthermore, 81% of companies are exploring the application of big data modeling in their operationsInnovations in energy management, safety supervision, logistics, warehousing, and production optimization scenarios within steel enterprises have significantly seen an uptick in application.

The "Implementation Guidelines for Digital Transformation in the Steel Industry" stated that by 2026, the overall level of digitalization in the steel industry will have significantly improved, achieving a deep integration of new information technology with steel production, resulting in a continuously evolving digital ecosystem for the industry, transitioning from isolated breakthroughs and localized applications to a comprehensive and systemic approach to digital development.

Guided by the Ministry of Industry and Information Technology, CISA has launched a digital transformation promotion center, engaging steel enterprises, research institutes, and technology service organizations to further this initiativeAdditionally, an action plan for digital transformation in the steel industry will be actively advanced over the next three years.

As the steel industry faces considerable challenges in its transition and upgrade journey, marked by imbalances in supply and demand, low steel prices, and high costs of raw materials, the industry’s profitability has witnessed a significant decline

The apparent consumption of crude steel in China has plummeted consistently from a peak of 1.048 billion tonnes in 2020, down to an estimated 892 million tonnes in 2024, representing a reduction of approximately 156 million tonnesProjections for 2025 suggest further declines in downstream steel demand, albeit at a potentially reduced rate.

Despite the immediate hurdles, CISA representatives reaffirm that China will continue to uphold its status as the world’s largest steel manufacturing and consumption hub well into the foreseeable futureSteel enterprises possess solid foundations for development, and since late last year, marked improvements in industry performance have become increasingly evident, with numerous economic indicators showing a consistent return to positive trends.

Industry consensus suggests that the fundamental discrepancies in current operations stem from an excess in overall production capacity along with weakened demand intensityA new dynamic equilibrium model has yet to emerge; and some companies cling to outdated mindsets of prioritizing volume production at low costs, indicating a need for increased industry self-regulation.

The overarching theme for the future of the steel industry is optimization and qualitative improvement, as articulated by Zhang Haiden, the senior inspector from the Department of Raw Material at the Ministry of Industry and Information TechnologyHe urged a departure from traditional reliance on scale expansion for industry and enterprise developmentThe focus should pivot towards enhancing operational efficiency and quality, as well as optimizing structures to drive improvements in both industry and corporate outcomes.

This year, the steel industry will emphasize self-regulation while striving for improved operational quality and effectivenessIn particular, the Metallurgical Industry Association of Hebei province has set a target of achieving “a steady increase in product value without expanding output” for its steel sector, aiming to address the challenges posed by overcrowded market competition and homogenized products.

The push for high-quality development will require a multidimensional approach, ensuring the industry’s steady and healthy operation

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