by JIANG Xi

China will reintroduce export licensing for selected steel products from Jan 1, 2026, marking its first major tightening of outbound steel controls since 2009, as record shipments, falling prices and rising trade frictions strain the world’s largest steel industry.

The move was announced on Dec 12 by the Ministry of Commerce and the General Administration of Customs, which said exporters will need licenses for certain steel products under Announcement No.79. The regime will cover about 300 customs tariff codes, spanning raw materials, semi-finished products and finished steel.

Steel stocks rose on the news, with the sector index (BK0479) up 1.39% on Dec 15, as investors bet tighter controls could curb low-margin exports and help stabilize prices.

The policy comes as China's steel exports continue to climb despite weakening prices. Customs data show exports totaled 108 million tonnes in the first 11 months of this year, up 6.7% year on year. XU Xiangchun, information director at industry consultancy Mysteel, expects full-year exports of steel to reach around 130 million tonnes, surpassing the previous peak in 2015.

Prices, however, have fallen sharply. The average steel export price in the first half was US$699.3 per tonne, down 10.3% from a year earlier, while export value slipped 2% to US$40.66 billion, customs data showed. Low value-added products have driven much of the increase, with steel billet exports rising sharply alongside a 15.3% drop in average prices.

"Large-scale exports of low value-added primary steel products do not support energy saving, carbon reduction or competitiveness," ZHAO Minge, chairman of the China Iron and Steel Association, said at an industry meeting.

Steelmaking accounts for about 15% of China's total carbon emissions, the highest share among its 31 manufacturing sectors. Xu said heavy exports effectively keep energy consumption and emissions at home, complicating Beijing's efforts to meet its climate targets.

Rising shipments have also fueled trade disputes. Data from China Trade Remedy Information show that since 2024, global authorities have launched 46 anti-dumping cases against Chinese steel products, accounting for 76.67% of all trade remedy actions involving the sector.

Industry groups have also cited persistent irregularities in outbound trade. Export licensing is expected to tighten controls at the customs clearance stage, giving regulators greater discretion to manage export volumes and product mix.

The impact is expected to vary across producers. Large steelmakers focused on higher-end, higher-margin products could benefit, while smaller firms reliant on low-end output may face tighter constraints. Nanjing Iron & Steel said its exports are compliant and mainly consist of higher-value products, totaling about 1.5 million tonnes last year, largely shipped to the Middle East. Fushun Special Steel said exports remain a small part of its business but are expanding, adding that it is still assessing the policy's impact.

Export controls form part of a broader policy package. In September 2025, the Ministry of Industry and Information Technology and four other ministries released a 2025–2026 plan calling for tighter control over steel capacity and output alongside a stronger focus on high-end products.

"Supply and demand are likely to move closer to balance as policy measures bite," Xu said, adding that prices are already near cyclical lows after four years of declines, increasing the chances of consolidation and intermittent rebounds next year.