China Reinstates Steel Export Licensing After 16 Years, Forcing Industry Shift from Volume to Value

1. The Core Directive: A Return to Managed Trade

On December 9, 2025, Chinese authorities issued Announcement No. 2025-79, mandating export licenses for a wide range of steel products. From January 1, 2026, foreign trade operators must secure a license for shipments of listed goods by submitting an export contract and a manufacturer-issued product quality inspection certificate. The licensing authority is delegated to provincial and specific municipal commerce departments. This marks a pivotal return to export controls, ending a 16-year period of relative liberalization and signaling a new era of state-guided export strategy.

2. Comprehensive Scope: Targeting the Full Supply Chain

The policy casts a wide net, covering over 300 Harmonized System codes to regulate exports across the entire production chain. The controlled items strategically focus on energy-intensive primary and low-value-added products:

• Primary & Raw Materials: All categories of pig iron, spiegeleisen, and direct reduced iron.

• Ferrous Scrap: Virtually all types of steel and iron scrap and waste, aimed at managing critical raw material flows.

• Semi-Finished Products: Key steel ingots and slabs (billets).

• Key Finished Products: Select categories of hot-rolled and cold-rolled coils and wide strip, which have been frequent targets of international anti-dumping measures.

3. The Driving Forces: Volume, Value, and Volatility

The policy is a direct response to pressing market distortions. In 2025, China's steel export volume surged, with annual exports projected to hit a record 115 million tons. However, this growth concealed a critical weakness: declining value. The first half of 2025 saw the export price per ton fall by 10.3% year-on-year. A stark example is the export of steel billets, which tripled in volume while their price dropped by 15.3%. This "replacing price with volume" model exacerbated domestic energy consumption and carbon emissions while increasing vulnerability to international trade remedies. In 2024 alone, the Chinese steel industry faced over 50 anti-dumping cases.

4. Immediate Impact: Reshaping Export Economics and Competition

The licensing requirement introduces a new layer of compliance cost and administrative oversight for exporters. It is designed to make the export of low-margin, bulk commodities like slabs and standard hot-rolled coil less attractive or feasible. Industry analysts predict a sharp decline in low-value-added exports once the rule takes effect. Consequently, market competitiveness will increasingly depend on technological prowess. Companies are now pressured to bypass low-end competition by innovating and exporting higher-grade products such as high-performance bearing steel, gear steel, and advanced alloys.

5. Strategic Evolution: From Global Supplier to Value Leader

The long-term strategic shift is clear: transitioning from being the world's workshop for basic steel to a leader in specialized, high-performance materials. The policy encourages diversifying export markets away from regions with high trade barriers (e.g., Southeast Asia) and toward emerging markets in Africa and Latin America. Furthermore, it accelerates the premiumization of the export mix. Leading companies are already pioneering the export of "Green Steel," certified with Environmental Product Declarations (EPDs) that verify significantly lower carbon footprints—a powerful new value proposition in a carbon-conscious global market.

Conclusion: The New Calculus for Global Steel Trade

China's reinstatement of steel export licensing is not a simple trade barrier but a calculated industrial policy lever. It fundamentally alters the calculus for global steel traders and competitors by deliberately constraining the flow of low-end products and incentivizing a structural upgrade within China's own industry. For international buyers, this means a gradual reduction in the availability of cheap, basic Chinese steel and a growing opportunity to source higher-value, specialized, and greener steel products. The policy solidifies China's intent to dominate not just the volume but the value and future-facing segments of the global steel market, turning regulatory compliance into a competitive advantage for its most advanced manufacturers. The race for quality and sustainability has been officially mandated.