The Yarlung Zangbo Hydropower Project (YZHP) will be the largest hydropower complex in the world. CRU estimates that this project will generate 4–7 Mt of steel demand over 10–15 years, and that most steel usage will occur between 2029 and 2034.
Steel intensity at YZHP will exceed that of the Three Gorges Dam
The YZHP, launched in July 2025 with an investment of RMB1.2 tn, will be the largest hydropower complex in the world, with an estimated capacity of around 60 GW. This project will generate 4–7 Mt of steel demand over the next ten to 15 years. CRU expects that most steel usage will occur between 2029 and 2034.
The Three Gorges Dam project (TGD), in the Yangtze River region is the world’s largest hydropower complex in operation today, with an installed capacity of 22.5 GW. We expect that YZHP’s scale and unique characteristics will drive higher steel consumption compared with TGD. While TGD is known as a dam-mass-centric giant, YZHP – due to its geographic complexity – has many long-pressure waterways, and extensive underground works.
We expect the YZHP to have higher steel intensity compared to TGD due to various factors, including：
- Extensive underground construction – the project is in the Himalayan region, at elevations exceeding 3,000 m. It will require large-diameter tunnels to be bored through the mountain body (see diagram). This penstock- and tunnel-centric engineering, along with substantial underground works, will require high steel intensity in reinforcement and support. Furthermore, compared with TGD, while steel requirements per meter of tunnel/penstock are higher, the need to manage ground risk also requires a larger contingency envelope, broadening the range of steel demand the project must plan for.
- Seismic vulnerability – the project is located in one of the world’s most seismically active regions. Therefore, the whole structure of this project will require a significantly higher ratio of steel reinforcement to ensure the ductility and structural integrity, which will further elevate the steel intensity.
- Long-distance evacuation and transmission infrastructure – the aggregate tonnage of steel usage in this project will be further enhanced by the need for long-distance power evacuation, possibly using ultra-high-voltage direct current transmission lines. Substantial steel infrastructure, including lattice towers and substation structures, will be required. This off-site pull will increase the project’s total steel intensity, exceeding historical benchmarks for a typical hydro project.
Yarlung Zangbo Hydropower Project will generate 4–7 Mt of additional steel demand
According to the official announcement, the estimated total investment in the YZHP to build five cascade hydropower stations amounts RMB 1.2 tn. Although there is no official statement on the project’s completion date, estimates suggest that the first station could be finished as early as 2030, with the entire project completed by 2035. By comparison, the Three Gorges Dam construction took 15 years to be completed. Given YZHP’s challenging geography, construction and engineering testing will be more complex, and the completion timeline could be extended further to 2040.
Official documents indicate that the TGD costs amounted RMB207.276 billion and consumed 593 kt of steel in total. Based on historical steel prices during its construction (1993–2009), we assume that just under 30% of total investment was allocated to steel‑intensive sectors, and roughly half of that portion went to direct steel procurement.
Using these parameters and our forecast for steel prices in China, we estimate that YZHP will require approximately 4–7 Mt of additional steel over the construction period (i.e., less than 1 Mt/y on average).
In practice, demand will not be evenly distributed across the construction period. As no specific official data exists for YZHP, a plausible consumption profile can be modelled based on industrial standards for this large-scale infrastructure projects and the TGD experience. CRU expects that most steel usage will occur between 2029–2034, with minimal steel needed in the project’s early stages (see below table).
Unlike the mix of steel products used in TGD, we expect the steel usage in YZHP will shift towards flat products given its unique characteristics. This project is expected to require medium and heavy plate considering its intensive underground work, including the penstocks and tunnels.
Another point worth noting is that higher‑grade steel will also be required in this construction due to the high-altitude and low‑temperatures in the region. According to China Special Steel Enterprise Association (SSEA), special steel could account for 30%–50% of the requirements for the project, including high‑strength, corrosion‑bearing, temperature‑resistant and stainless steels.
Limited upside for steel market in the short run
Shortly after YZHP construction was officially announced in mid-July, market confidence in China improved on expectations of a large-scale infrastructure investment. This, along with rumours on potential steel production controls, significantly fuelled speculative steel purchasing and drove a sharp rise in steel prices from July to August.
However, our view is that additional steel demand from YZHP will provide only limited support to Chinese annual steel consumption (less than 1 Mt/y on average), even during the peak construction period. Additionally, as the early project stages involve minimal steel procurement, the near-term upside for the steel market is likely to be negligible.
If you are keen to understand further policy developments in China, or hear more about our views on Chinese steel industry, please contact our analysts:
Zhenzhen Jiang zhenzhen.jiang@crugroup.com
Kai (Kevin) Bai kevin.bai@crugroup.com
