The Stainless Steel Industry Embraces New Opportunities for Order Restructuring
“While promoting the orderly exit of backward production capacity, we must also ensure the steady replacement of new high-quality capacity.” This statement by the spokesperson of the General Office of the Central Financial and Economic Affairs Commission on December 17 has pointed out the development direction for key industries including acero inoxidable.
In response to the prominent issue of current “involution-driven” competition, the Central Financial and Economic Affairs Commission has clearly proposed to accelerate the improvement of the capacity regulation mechanism for key industries, strengthen dynamic monitoring and early warning, and strive to standardize the market competition order. This will fundamentally change the competition rules and survival environment of the stainless steel and other industries.
When interpreting this policy, the responsible comrades of the Central Financial and Economic Affairs Commission pointed out that China boasts the advantage of an ultra-large-scale market, but there are still some phenomena in real economic activities that distort market mechanisms and hinder fair competition. At the government level, it is necessary to continuously regulate the economic promotion behaviors of local governments. In view of the irregular provision of preferential treatments such as tax incentives, land concessions and electricity price discounts by some localities in investment promotion, it is imperative to speed up the introduction of lists of encouraged and prohibited items for local investment promotion.
For enterprises, it is essential to accelerate the improvement of the capacity regulation mechanism for key industries and strengthen dynamic monitoring and early warning. These policy signals have released a clear message of optimizing the competition order and stabilizing market expectations.
In the first 3Q of 2025, China’s crude stainless steel output reached 30.4618 million tons, a year-on-year increase of 4.77% compared with the same period in 2024. The annual crude stainless steel output of China is expected to exceed 40 million tons in 2025, with a year-on-year growth rate of approximately 3.0%–5.0%. However, capacity expansion has not brought corresponding profit growth. From January to September 2025, against the backdrop of overall profit pressure and low average profit margins in China’s stainless steel industry, the trend of structural differentiation continued to intensify.
The high-level operation of raw material prices dominated by nickel and chromium, coupled with the continued sluggishness of stainless steel product prices, has put most enterprises under the dual pressure of high costs and fierce market competition, generally hovering on the verge of meager profits or break-even. The industry has recognized the seriousness of the problem. In the 2025 Annual Work Report, Zhou Zhuoli, Rotating Chairman of the Stainless Steel Branch of the China Iron and Steel Industry Association, pointed out that the entire industry is focusing closely on the core tasks of “combating involution, promoting coordinated development and stabilizing growth”, and actively responding to multiple pressures such as raw material price fluctuations, slowing demand growth and international trade frictions.
“Involution-driven” competition manifests itself in various forms in the stainless steel industry. On one hand, China already has 50 million tons of stainless steel production capacity, with several million tons of smelting capacity still under construction. Overcapacity has led enterprises to engage in fierce competition within limited market space, often resorting to price reductions to secure orders, thus forming a vicious cycle.
Some local governments have irregularly offered preferential policies such as tax breaks, land incentives and electricity price discounts in investment promotion, and even incurred debts to provide subsidies, which have further exacerbated unfair market competition. Insufficient industry self-discipline is also an important contributing factor. The Acero inoxidable Branch of the China Iron and Steel Industry Association has already recognized this problem, emphasizing that enterprises should conduct rational investment, prevent the blind expansion of production capacity scale, and strictly follow the self-regulatory production method based on the principle of “meeting user demand and balancing supply and demand”.
Faced with “involution-driven” competition, the stainless steel industry has begun to take various countermeasures. In terms of capacity regulation, the industry has called for the establishment of a new capacity governance mechanism to jointly maintain the stable and orderly development of the acero inoxidable industry. Enterprises need to keep a tight rein on capacity governance and be vigilant against the market impact that may be brought by new capacity additions.
Demand growth in sectors such as architectural decoration has slowed down. In terms of product mix, the output of 300-series stainless steel increased by 6.27% year-on-year, accounting for 51.28%. Stainless steel high-end products saw a year-on-year output growth of 14.72%, driven by the increasing demand from high-end equipment fields including marine engineering, nuclear power projects and chemical tankers, achieving a strong market performance. Industry’s transformation has been clearly defined, shifting from scale expansion to quality improvement, from cost competition to technology and service competition, and from single-product focus to diversified high-end product offerings.
Only when price wars are no longer the sole option, and technological innovation and product quality become the core competitiveness, can the industry truly achieve high-quality development.