[SMM Hot Topic] 2021 vs. 2025—What Are the New Changes in the Revised "Measures for Capacity Replacement in the Steel Industry"?

To implement the arrangements of the National Conference on Advancing New Industrialization, accelerate the reduction, quality improvement, structural optimization, and transformation and upgrading of existing capacity, promote market supply-demand balance, and drive high-quality development in the industry, in accordance with relevant national laws, regulations, and industrial policies, the Ministry of Industry and Information Technology (MIIT) recently revised the "Measures for Capacity Replacement in the Steel Industry" (MIIT Document No. 46, 2021) and formulated the draft "Measures for Capacity Replacement in the Steel Industry (Draft for Comments)".

So, what are the differences between the old and new implementation measures for capacity replacement in the steel industry?

(I) The scope of replacement ratios has been expanded, and requirements have become stricter.
In the newly revised version of 2025, it stipulates that the capacity replacement ratio for ironmaking and steelmaking in all provinces (autonomous regions and municipalities) shall not be lower than 1.5:1. For compliant capacity newly obtained through mergers and reorganizations after June 1, 2021, and used for project construction, the capacity replacement ratio for ironmaking and steelmaking in all provinces (autonomous regions and municipalities) shall not be lower than 1.25:1.

In the 2021 version, the replacement ratio in key regions for air pollution prevention and control is stipulated to be no less than 1.5:1, while in other regions, it should be no less than 1.25:1.
To encourage enterprise mergers and reorganizations and enhance industrial concentration, when compliant capacity obtained after substantive mergers and reorganizations (achieving actual control and completing industrial and commercial changes such as legal person or legal person affiliation, equity relationships, and articles of association) is used for project construction, the replacement ratio in key regions for air pollution prevention and control may be no less than 1.25:1, and in other regions, it may be no less than 1.1:1.

(II) Cross-Regional Capacity Replacement, Encouraging Enterprises to Implement Cross-Regional Capacity Replacement
In the newly revised 2025 version, regarding cross-regional capacity replacement, the plan encourages enterprises (groups) to implement capacity replacement across regions (provinces, cities, counties, etc.), and relevant regions must not impose restrictions in any form.
In contrast, the 2017 and 2021 versions did not explicitly address this matter, which may facilitate further optimization and management of capacity among enterprises under large steel groups.

(III) Regional Requirements: Strict Prohibition of Transferring Steel Capacity Between Different Key Regions
In the newly revised 2025 version, in addition to the regulation prohibiting the construction or expansion of steel smelting projects outside compliant industrial parks in the Yangtze River Economic Belt, it also emphasizes that key regions are strictly prohibited from increasing total steel capacity, transferring steel capacity from non-key regions to key regions, and transferring steel capacity between different key regions. Provinces and cities with clearly defined national targets for total steel capacity control are not allowed to accept transferred steel capacity from other regions. The requirements for capacity control in the steel industry are stringent.