China Implements Export Licensing for 300 Steel Products Sparking Cautious Optimism in Asian Markets
China's recent announcement to enforce export licensing on approximately 300 steel products starting January 1, 2026, marks a pivotal shift in Asian ferrous markets, particularly impacting B2B steel trade dynamics across the region. This policy, detailed in Announcement No. 79-2025 by the Ministry of Commerce, targets non-value-added tax (non-VAT) exports, which have historically undercut regional prices by $15-$20/mt, especially for hot-rolled coils. Regional mill operators and traders report immediate caution, with buyers in Thailand, Vietnam, and India reevaluating procurement strategies amid subdued year-end demand.
The measure aims to curb aggressive low-price exports that have burdened non-Chinese steel producers. A Northern China mill source indicates that volumes previously directed to non-VAT exports may redirect to domestic sales, potentially stabilizing local supply but pressuring internal pricing. In Thailand, Zinc-Aluminum-Magnesium (ZAM) coated steel offers from China have surged by $30/mt to $565/mt CFR for February shipments, signaling short-term upward momentum in coated steel segments. This development levels the playing field for Asian mills, as noted by a Vietnam-based source, who welcomes the removal of ultra-competitive Chinese offers that plagued regional pricing.
For Korean steelmakers, the policy fosters cautious optimism amid a prolonged slump. Analysts from NICE Investors Service predict eased downward price pressure due to anticipated lower Chinese steel production and stronger trade barriers on products like thick plates and hot-rolled coils. Korea has already imposed antidumping tariffs on Chinese imports and is reviewing precoated and galvanized sheets. However, skepticism persists; Korea Investors Service highlights China's lukewarm approach to oversupply, suggesting limited short-term relief. Chinese producers may pivot to higher-end markets, intensifying competition in value-added segments like automotive steel.
Raw material markets feel ripple effects. Singapore-based coking coal traders see support for non-China steel markets, potentially bolstering prices as plants in Chile and Mexico benefit from reduced Chinese dumping. Yet, iron ore traders in Beijing and Shanghai view impacts as short-lived, citing domestic cost advantages and seasonal factors like snowfall and maintenance outages capping demand. Port inventories at 162mn t underscore building stockpiles amid slowing steel output, which dipped 11% to 69.9mn t in November.
Strategic implications extend to supply chains and compliance. The policy aligns with global pressures, including EU CBAM carbon tariffs effective January 1, 2026, covering 180 downstream products. Chinese steelmakers face incentives for low-carbon transformation, targeting 80% ultra-low emission capacity by 2028. This could enhance competitiveness in high-value chains like auto parts and machinery. POSCO Group's potential discussions during Chairman Chang In-hwa's Beijing visit with President Lee Jae Myung from January 4-7 may seek further export curbs to Korea, amid POSCO's shift to India post its China stainless plant divestment.
India views opportunities for greater competitiveness in key markets, easing domestic oversupply. Traders anticipate a rush to export before implementation, though the short timeline may hinder adjustments. Long-term, sustained export reductions could weigh on raw material demand if followed by output cuts, though immediate effects favor regional balance. Mill operators should monitor licensing enforcement, as quotas may track taxes more effectively, altering billet and slab flows to Turkey and India, where scrap-fed furnaces compete directly.
Equipment suppliers in **Automation and Control Systems** and **Inspection Technology** stand to gain, as regional steelmakers upgrade to counter Chinese shifts. **Environment, Recycle and Water Management** initiatives may accelerate with CBAM compliance. Overall, this policy heralds a rebalanced Asian steel landscape, urging strategic adaptations in **Steelmaking**, **Rolling**, and **Secondary Metallurgy** for sustained B2B resilience.