China’s Ministry of Commerce (Mofcom) recently reintroduced the steel export licence management system for a wide range of steel products, effective from 1 January 2026. This aligns with the previous announcement of Steel Industry Growth Stabilisation Work Plan released in September, addressing the management of steel exports. Under the new rule, steel exporters must acquire an export licence issued by Mofcom or its delegated bodies for the specific steel products
Export licence is required for almost all steel products in 2026
The export licence management system is an administrative measure implemented by the Chinese government to monitor export flows, control commodity quantity and quality, and ensure domestic industrial stability and balance of payments. The steel export licence management system requires steel exporters to acquire the licence for every batch of export. Steel exporters must also obtain a product quality inspection certificate to get the licence.
The steel export licence management system was firstly and implemented from May 2007, for more than a year before eventually being halted on 1 January 2009. The regulation targeted carbon finished steel products, leading to a decline of 4.8% (2.5 Mt) y/y for carbon finished steel exports in 2008.
The new regulation for 2026 includes a wider range of steel products as well as raw materials compared with the 2007 version. As per CRU’s definitions, the 2007 version included 66 carbon steel products. Meanwhile, the 2026 version mentions 245 steel products, covering carbon steel, stainless steel, pig iron and scrap. Almost all ferrous products will be affected.
Volume control – Chinese steel exports will fall with tax-evasion export crackdown
We expect to see a jump in steel exports in December 2025 as exporters will actively destock, bringing forward shipments ahead of the policy implementation. Market contacts told CRU that the licence application has, allowing companies to arrange their shipments before the policy. Moving into 2026, the licence system will reduce steel exports.
China cancelled the steel export tax rebate in 2021, and exporters have adopted the tax-evading export approach since 2022, wherein steel is exported without paying the Value Added Tax (VAT). This allows exporters to sell at a discount compared with the VAT-paid steel exports. It firstly started with major products, including wire rod, hot-rolled coil in 2022, and gradually spread across all steel product categories in 2023–2025. The additional price competitiveness contributed to the increase in Chinese exports in recent years. It raised global concerns and triggered more trade cases against Chinese steel in the same period.
The licence system is regarded to close the policy loopholes for VAT tax-evading exports by licensing steel exports . According to our export analysis framework, with the removal of this additional price advantage, Chinese export competitiveness will fall y/y, .
However, no sharp collapse is expected for Chinese steel exports, as this downward pressure will also be partially offset by higher domestic supply pressure and Chinese cost competitiveness. Under this new regulation, the compliance burden and inspections.
Smaller-sized and higher-cost exporters will be negatively impacted, given their limited access to credit and lower cost competitiveness after no more prices buffer from tax-evasion. The volume will be redirected to the domestic market, adding domestic supply pressure and further squeezing domestic margins. Therefore
Additionally, as highlighted in a previous insight, the cost curve shows Chinese mills largely sit at a lower cost position compared with global producers, despite the recent trade barriers having reduced the delivered Chinese cost competitiveness.
It is also worth noting that this policy introduces a mandatory licensing step but does not constitute an immediate ban or an explicit export quota. The primary intent is viewed as increasing government guidance, promoting high-end product export and curbing tax evasion. As compliant exporters will continue their businesses, this suggests the policy is not aimed at imposing aggressive volume reduction.
Structure optimisation – longs exports to decline the most, followed by flats, while no decline for stainless in 2026
The impact of the export licence in 2026 will also vary by steel categories. For carbon finished steel products, before the licence release, CRU has expected Chinese finished steel exports to fall in 2026, considering the persisting trade barriers and demand growth slowdown outside China. The licence will impose additional downside pressure in our current forecast.
For flats, the existing trade cases have resulted in a 7% y/y drop in exports from January to October in 2025. With less frontloading amid ongoing trade barriers in 2025, we expect the decline in 2026 will be of a lower intensity than in 2025. With the licence system to crackdown on tax-evading exports in 2026, some exports can still be diverted to compliant mills to continue exporting, to partially cushion the decline and prevent a collapse. More decline in longs export is anticipated than flats as most of steel longs are regarded as lower value-added products and heavily affected by tax-evading activities.
As for stainless steel exports, the direct impact from the licence will be limited, along with some short-term volatility in 2026 H1. This is mainly due to minimal tax-evading exports for stainless steel. This will fully offset the negative impact from the trade barriers, even though import restrictions outside China have resulted in a decline for stainless steel exports since 2025 Q2 . We forecast stainless flats exports to slightly grow y/y, accounting for a steady 9% share of 2026 Chinese stainless steel production, close to the 2025 level.
The system echoes the high-quality steel development aims
We expect the new system will accelerate the industry transformation towards higher value-added products in the future by differentiating the licence allocation. Stronger R&D capabilities for large enterprises will have a more competitive edge against smaller mills, which will indirectly push more capacity optimisation and industry consolidation. In addition, the new licensing system will also prompt steel mills to establish comprehensive quality management and improve product quality standards. All of these are in line with the overarching high-quality steel development aims.
We will continue to track the implementation of this licence system closely in January 2026 and update in our reports.
If you are keen to understand further policy developments in China, or hear more about our views on Chinese steel industry, please get in touch.
