China tightens steel capacity replacement ratios and restricts cross-company transfers

According to MIIT, the revised Implementation Measures for Capacity Replacement in the Steel Industry were dated April 29, 2026 and published on May 18. Cross-company capacity replacement receives a two-year transition period, after which capacity may be transferred only through substantive mergers and restructurings. Replacement plans are valid for 24 months.

• Minimum nationwide replacement ratio: 1.5:1 for both ironmaking and steelmaking capacity, according to MIIT.
• Minimum ratio for capacity replacement through mergers and restructurings: 1.25:1.
• Direct replacement between different companies has a two-year transition period; afterward, transfers require substantive merger or restructuring.
• Capacity replacement plans have a 24-month validity period.
• MIIT allows differentiated replacement ratios for specified hydrogen-metallurgy, electric-furnace and specialty-steel projects.
• Provincial industry authorities must verify implementation and conduct annual self-assessments and reporting.
• Capacity belonging to long-idled “zombie enterprises” cannot be used for replacement.

Watch for provincial implementation guidance, treatment of projects already in the approval pipeline and the practical eligibility standards for differentiated green or specialty-steel projects. The notice says the measures apply upon issuance, but the supplied material does not separately clarify whether the operative issuance date is the April 29 document date or another date; this affects calculation of the two-year transition and 24-month validity periods.