Abstract: Under the background of international division of labor,it is both the starting point and the goal of resolving the excess capacity to enhance the status of industrial value chain and to solve the dilemma of low-end lock. Based on the domestic manufacturing industry value chain,the global value chain and the trade structure of the industry,this paper explores the formation of overcapacity under the low-end lock of China's iron and steel industry and focuses on the domestic large steel enterprises to find out the microcosmic reasons for excess industry overcapacity. The study found that:the iron and steel industry is near the bottom of China's manufacturing value chain;although the overall value-added capacity has been enhanced, and the industrial chain continues to extend, there is still a big gap between China and developed countries;the manufacturing chain in China's steel industry. The existence of the "smile curve" in the value chain of the manufacturing industry and the steel industry shows that the profit margin of China's steel industry has been squeezed at home and abroad, and the pressure of industrial upgrading is large. The poor domestic bargaining and profitability, the lack of downstream business linkage and the lack of competitive advantage are the key reasons for large domestic steel enterprises' staying at the low-end key chain. At present, there is an obvious trend that the steel industry's overcapacity and low-end lock chain strengthen each other.