China aluminum output at record, steel below 1 billion tons

Chinese aluminum output rose to an all-time high last year, climbing above the country’s capacity limit, while steel fell to a seven-year low, underscoring dramatically different prospects for the two most widely used metals.

Aluminum production increased 2.4% to to 45.02 million tons, having risen every year this decade, according to the statistics bureau on Monday. The figure for December was a record 3.87 million tons. Annual steel output declined 4.4% to 961 million tons, falling below the 1 billion mark for the first time since 2019, with December at a two-year low of 68.2 million tons.

The energy transition that China leads relies heavily on aluminum, the lightweight metal used in renewables, power lines and electric car chassis. Steel is the backbone of construction, an industry dogged by the country’s yearslong property crisis. China is the world’s biggest producer of both metals, and both have been subject to output controls to varying degrees.

For aluminum, that’s taken the form of a 45-million-ton capacity cap, imposed by the government in 2017 to limit structural oversupply, carbon emissions and electricity demand in the notoriously power-hungry sector. Steel hasn’t been given formal targets, but policymakers have put the industry on notice that chronic overproduction needed to be addressed.

Aluminum prices are broadly set to benefit from the mismatch between rising demand and constraints on supply, although the picture is muddied by how much self-control the industry is able to exert. Goldman Sachs Group Inc. said in a note last week that discipline around the cap has mostly held, but “it is not a hard stop.”

The bank forecasts capacity will still rise by 900,000 tons through 2028. “This could result in a larger global aluminum surplus than expected, resulting in lower prices than forecast over the coming years,” it said.

Although the steel industry is paring output, it faces harder choices given the persistent shortfall in domestic demand. The government has pledged tougher rules on adding new capacity, but so far has stopped short of ordering the swingeing supply cuts necessary to correcting the imbalance.

According to the latest survey from the China Iron & Steel Association, members raised daily production to nearly 2 million tons in the first part of January from the previous period, although the figure is still 3.3% behind last year’s pace.

Other annual output data

Chinese miners churned out a record amount of coal for an eighth successive year, as energy security concerns trumped tepid demand. But government scrutiny on safety and overmining slowed the expansion, while the green transition is likely to have a bigger impact on output in coming years.

In that vein, thermal power output fell for the first time in a decade. Solar and wind capacity has already surpassed that of coal, and the role of China’s suite of clean energy sources, including hydro and nuclear, will only grow.

Production of cleaner-burning natural gas continued to forge all-time highs. Deep water and shale extraction should keep the uptrend intact for another decade or so. Crude oil output also rose, finally topping the previous peak set in 2015, as China’s oil and gas drillers focus on cutting the country’s import bills for energy.

Chinese oil refining, another industry in the government’s crosshairs because of overcapacity, saw volumes recover to hit a record level in 2025 after lower oil prices improved margins. Weak demand for fuels should flatten output growth in 2026.

Meat output, meanwhile, topped 100 million tons for the first time. That included a 4.1% increase in pork production to over 59 million tons, despite the government’s efforts to curb capacity, support farm incomes and alleviate food deflation.

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