Although the 1.6% year-on-year drop is not at a historical high, combined with the cumulative downward trend for three consecutive quarters, this signal clearly indicates that the global steel industry is gradually transitioning from the previous phase of incremental expansion to stock optimization. This transformation will have a series of knock-on effects on the upstream and downstream industrial chains of steel.
As the most direct reflection of the industry's supply and demand dynamics, the change in crude steel output has become a key reference for market participants such as steel mills, traders, and downstream manufacturers. Industry insiders point out that the global crude steel production has entered a "peak adjustment period," and the annual output is expected to maintain a gentle downward trend in the next 5-10 years, with no possibility of large-scale capacity expansion.
Global crude steel production in September 2025 showed obvious regional differentiation, with Asia underperforming while emerging markets maintained strong growth momentum.
As the world's largest crude steel producer, China's output in September was 73.5 million tons, a year-on-year decrease of 4.6%. The cumulative output in the first three quarters was 746 million tons, a year-on-year decrease of 2.9%.
This change is mainly driven by two core factors:
- Policy Constraints: Under the "dual carbon" goals, steel capacity optimization has been strengthened. After the Ministry of Industry and Information Technology suspended capacity replacement, there is almost no room for incremental supply.
- Demand Adjustment: The slowdown in real estate and infrastructure sectors has forced steel mills to actively reduce production to avoid inventory backlogs.
Industry forecasts show that China's crude steel output has reached its peak and will enter a slow downward channel, with annual output expected to drop to 800-900 million tons by 2035.
India's crude steel output in September was 13.6 million tons, a substantial year-on-year increase of 13.2%, with cumulative growth of 10.5% in the first three quarters—ranking first among major steel-producing countries.
This achievement benefits from:
- Dual driving forces of domestic manufacturing expansion and accelerated infrastructure investment.
- Sustained domestic demand growth brought by demographic dividends.
- Policy support for the manufacturing industry and foreign investment inflows.
The industry expects India's crude steel output to maintain an average annual growth rate of over 5% in the next few years, further narrowing the gap with China.
- U.S.: Output reached 6.9 million tons (+6.7% YoY), supported by manufacturing reshoring and recovery in auto/machinery demand.
- EU: Overall weak performance; Germany's output was 3 million tons (-0.6% YoY), with a cumulative decline of 10.7% in the first three quarters, affected by high energy costs and sluggish industrial recovery.
- Turkey: Output reached 3.2 million tons (+3.3% YoY), supported by domestic market recovery and export rebound.
Major economies are strengthening regulation on the steel industry. China and the EU have incorporated steel into carbon emission trading systems, and differentiated production reduction policies have forced high-energy-consuming capacity to withdraw. Meanwhile, the escalation of trade protectionism (e.g., anti-dumping investigations by the EU and South Africa) has led export-oriented steel mills to adjust capacity structures, indirectly reducing output.
The global real estate industry is in deep adjustment, with new construction areas declining in China, the EU, and other regions. Construction steel (rebar, wire rod) accounts for over 40% of crude steel output, and demand contraction has directly impacted production. Although emerging fields like new energy vehicles bring structural growth, they are not enough to offset the decline in traditional demand.
International energy prices (natural gas, coal) remain at historical highs, pushing up blast furnace steelmaking costs—especially for European and Russian steel mills. Volatile iron ore prices have compressed profit margins for small and medium-sized steel mills, leading to periodic production cuts.
Historical data shows a significant negative correlation between crude steel output growth and steel prices. When output declines by 1%-3% YoY, mainstream finished steel prices (rebar, hot-rolled coil) tend to get bottom support. Currently, the main rebar futures contract has recovered from around 3,000 yuan/ton to 3,071 yuan/ton. It is expected that global spot prices will show a narrow oscillating upward trend in the next 1-2 quarters, with further differentiation between construction and industrial steel.
- Upstream: Demand for iron ore and coke will shrink moderately, limiting price increases and maintaining range-bound fluctuations.
- Downstream: Tight supply of high-end steel (automotive steel, special alloy steel) may force downstream industries to accelerate inventory stocking.
- Trade Pattern: China's output decline may restructure global steel trade flows, with India and Turkey increasing export shares, while the EU and North America may strengthen trade protection.
The global steel industry has entered a mature stage. Referring to the experience of developed countries, when per capita crude steel output exceeds 600 kg, the industry enters a stock optimization phase—characterized by capacity decline, increased concentration, and higher special steel proportion. In the future, small and medium-sized capacity will withdraw, and leading enterprises will focus on high-end and green steel R&D, shifting competition from "scale" to "quality."
