The final data for 2025 has revealed a striking contradiction in China’s economic engine. On one hand, the nation is hitting all-time highs in energy production and refinery activity; on the other, its foundational steel industry has contracted to levels not seen in seven years. For commodity traders and analysts, these figures signal a permanent shift in how the world’s largest consumer of raw materials operates.
The Steel Contraction and the Export Pivot China’s crude steel output fell to 960.81 million metric tons in 2025, a 4.4% decline from 2024. This marks the first time since 2018 that production has slipped below the one billion ton threshold. The primary culprit remains the property market, which has failed to rebound and continues to weigh on domestic demand for construction materials.
However, the industry is adapting. Profitability actually rose last year as mills shifted away from construction rebar and toward flat steel products. By exporting a record 119 million tons of steel, China has effectively exported its overcapacity, maintaining refinery and mill activity even as domestic consumption profiles change.
Energy Transition: A Historic First Perhaps the most significant development is the 1% drop in China’s thermal power generation. This occurred despite total electricity consumption hitting a record 10 trillion kWh. The surge in renewable energy—led by hydro, nuclear, and massive solar installations—is finally beginning to outpace demand growth. While coal production still hit a record high, the structural decline in coal-fired power generation suggests that China’s carbon emissions may be nearing their peak.
The Oil Shuffle: Urals vs. Iranian Crude In the oil markets, the ripple effects of Western sanctions are creating a new price war in the East. As India pulls back from Russian Urals to protect its diesel export routes to Europe, China has stepped in to absorb the supply. Imports of Urals to China reached 405,000 barrels per day this month, the highest since mid-2023. With discounts reaching $12 per barrel against Brent, Russian crude is now frequently cheaper than Iranian oil, forcing a competitive pricing environment among sanctioned producers.
Strategic Diversification in Dry Freight Beijing’s long-term play for resource independence reached a milestone this week with the arrival of the first iron ore shipment from the Simandou mine in Guinea. By tapping into Guinea’s high-grade 65% iron ore, China is beginning to reduce its 80% reliance on Australia and Brazil. This move, combined with the centralization of buying through the China Mineral Resources Group, positions Beijing to exert more influence over global ore pricing in the years to come.