China’s steel exports are expected to face a sharp contraction in the first quarter of this year the newly reinstated export licensing system takes effect. Based on the 27.42 million tons shipped in the first quarter last year, market forecasts predict a 15% to 20% decline during this initial transition period.

The policy, active since January 1, 2026, ends 16 years of market-led trade by requiring electronic keys and one license per batch approval. These rules effectively curb buying others' export licenses, forcing firms to prove their trade credentials and provide quality certificates. The added application window caused port congestion during the first half of January.

By managing the volume and pace of permits, authorities are transitioning the industry from scale expansion to value growth. This regulatory intervention aims to curb low-end outflows while the market copes with the short-term pain of stricter compliance.