Exports are the driving force behind the growth of China’s processing industry

China’s manufacturing sector remains the main driver of growth in domestic steel demand, driven primarily by strong export figures against the backdrop of a prolonged downturn in the property and infrastructure sectors. Steel consumption in the manufacturing sector is expected to grow by 3.3% year-on-year this year.

At the same time, the tightening of trade barriers and the weakening of domestic demand pose risks to this trend, as the expansion of production is unable to fully offset the decline in steel consumption in the construction sector.

According to the analytical agency S&P Global Energy CERA, demand for steel from the manufacturing sector — including mechanical engineering, automotive manufacturing, household appliance production, the energy sector and shipbuilding — is forecast to reach 344 million tonnes in 2026. This represents a 3.3% year-on-year increase on last year’s figure, following growth of 4.7% year-on-year in 2025.

CERA analysts note that the manufacturing sector’s share of total structured steel consumption in China will rise to 52% in 2026, compared with 46% in 2023. This underscores the sector’s key role in shaping the country’s domestic steel market.

China will take measures to tackle overcapacity in the steel, oil refining and other heavy industries. The National Development and Reform Commission has also announced capacity controls in the copper smelting, alumina and coal chemical sectors.

The current five-year plan also sets a target to reduce carbon emissions per unit of GDP by 3.8% this year.