28.08.202504:58:58UTC+00China Plans Steel Output Cuts for 2025/26 to Curb Overcapacity

China is set to implement measures aimed at reducing steel production between 2025 and 2026, as indicated in an official document reviewed by Reuters. Despite pledging to reform its sprawling steel industry back in March, the specifics regarding the extent and timing of these reductions had not been disclosed. Recent official data indicates a 3.1% decline in crude steel output during the first seven months of the year, reaching 594.47 million tonnes compared to the previous year. These planned reductions are in line with Beijing's objective of achieving peak carbon emissions by 2030 and addressing the persistent issue of overcapacity, which has historically affected global markets. Previous attempts to enforce production cuts have often been unsuccessful due to local governments prioritizing economic growth. Furthermore, declining demand from China’s property sector has already led to decreased consumption, casting doubt on whether the reductions are driven by policy or diminished demand. Nonetheless, more stringent supply conditions in China could potentially support global steel prices, as infrastructure-led demand grows in regions such as India and Southeast Asia.