Do you know that China will implement an export license system for steel products in 2026?

China has officially implemented an export license management system for selected steel products on January 1, 2026, marking a significant shift in the country's steel export governance after a 17-year hiatus. In December 2025, during the height of trade protectionism, the policy was jointly announced by the Ministry of Commerce and the General Administration of Customs and is designed to oversee export order, optimize product structure as well as to conform with global sustainability goals.

Policy Background and justification

The move to reinstate export licenses comes amid a growth in China's steel exports. China exported more than 1.15 billion tons of steel products in 2025, much more than in 2015 when it exported 1.12 billion tons. But that growth masked structural problems: low-value added products have been a key component of China’s exports: steel billet shipments tripled y/y in H1 2025 and average export prices dropped 15.3%. This “quantity-over-quality” model also inflamed energy use, carbon emissions and trade tensions, driving countries like Vietnam, India and South Korea to impose anti-dumping duties of as much as 38.02 percent on Chinese steel.

The policy is consistent with China’s larger industrial strategy. The five ministries' Steel Industry Stabilization and Growth Plan (2025-2026), released in September 2025, focused on the structuring of exports and increasing international competitiveness. China, therefore, aims to encourage domestic demand, lessen dependence on price-sensitive markets, and encourage high-end manufacturing by imposing licenses.

Scope and Coverage

The policy targets 300 categories of steel products from the raw (e.g., iron ore-based product type) to finished (e.g., hot-rolled coils and coated steels) sectors of the supply chain. Significantly, ferroalloys and some specialty steels are excluded, to show concern over commoditized segments leading overcapacity.

Batch licenses for general trade require one permit per shipment.

Starting on January 1, 2026, Customs clearance shall strictly verify the validity of licenses, and fines up to 30% of cargo value for non-compliance can be imposed.

Implications for the industry and strategic relevance

Short-Term Challenges

Costs of Compliance: Smaller mills have to contend with more administrative costs that could hasten consolidation in the fragmented steel market.

Adaptation to the Market: Lower-margin exports (e.g., billets) would likely fall quickly, as seen from preliminary data with a drop of 40% in terms of billet inquiries on the days when the policy was announced.

Trade Risks: The tighter controls limit the number of loopholes in the compliance process that allow goods to be misclassified to avoid paying duties, resulting in less “gray-channel” exports.

Long-term advantages

Firms are incentivized to focus on high-value sectors such as high-strength alloy steel for new-energy vehicles and environmentally friendly steel, which have 50% lower carbon footprints via EPD (Environmental Product Declaration) certifications.

Global Context and Reactions

The response to the policy has been equivocal. The World Steel Association acknowledged China’s steps to align supply and demand, but other exporting countries raised concerns about potential shortages at home. Environmental groups praised it as part of a move to decarbonize global steel trade.

Within China, industrialists such as the Baowu Group and HBIS Group have welcomed the policy as a means to widen their high-end product range with the government’s efforts. The China Iron and Steel Association said that the system is not a blanket embargo but a mechanism to “guide orderly exports and strengthen global supply chain resilience.”