Abstract:Circular economy turns out to be the only solution to sustainable development of iron and steel industry.Circular economy quality is the ultimate measure to sustainable development of iron and steel industry. According to the quality evaluation index system, this paper firstly evaluated circular economy quality of the iron and steel industry in China. Secondly, analyzed the technical factors and level of circular economy on China's steel industry. At last, calculated technology innovation capacity of circular economy with the panel data model. The result showed the enterprise technology can prompt circular economy. Scale can more effectively promote circular economy from the short term, but from long time the sustainable development of circular economy mainly depends on the technological innovation capability.