China’s reintroduction of an export licensing system for steel products has entered its first month, with the market undergoing a short-term adjustment period. 

Years of weak domestic demand, driven by a prolonged property downturn, pushed steelmakers to expand exports, leading to falling prices, rising trade surpluses, and escalating trade frictions. The new policy, effective from January 1, 2026, raises export entry barriers and strengthens product traceability, aiming to shift exports from volume-driven growth toward higher value-added development.

Market participants estimate that China’s steel exports in the first quarter of 2026 could fall by 15% to 20%, reflecting initial disruptions from longer procedures and tighter controls. 

However, the licensing system is expected to improve market discipline, reduce anti-dumping risks, and support industry consolidation. Longer-term impacts will depend on policy flexibility and overseas demand trends.