Abstract: By analyzing the domestic steel demand and export trends,we tried to calculate the reasonable scale of steel production capacity of China.Eight industrialized countries have kept stable on the total and per capita consumption of crude steel since 1980,indicating that a country’s crude steel demand will experience a long-term stable term after a slow decline,referred to herein as the after-plateau.China’s crude steel demand has entered the peak area which is between 530~540 kg,and the total consumption is about 7.5million~7.6million tons.And in the after-plateau,the average per capita consumption of crude steel is of 500 kg per person around,as well as total crude steel consumption of 7.2million~7.3million tons .With the expanding of the steel products export, the paper argues that China’s reasonable steel production capacity is about 9million~9.5million tons.Therefore,there’ s a over-capacity of 1million~1.5million tons to be cut under the premise of zero- increase.