Export Licenses Drive Strategic Shift for Steel Traders

By the end of 2025, an official announcement reshaped the regulatory framework for China’s steel export sector. The Ministry of Commerce (MOFCOM) and the General Administration of Customs (GAC) jointly issued Announcement No. 79, stipulating that as of January 1, 2026, export license regulation shall be implemented for 300 tariff-line steel products spanning the entire industrial chain. This marks the re-entry of China’s steel industry into a "license-based export" era after a 16-year interval.

The introduction of the new policy stems from the deep-seated predicaments confronting the industry that demand urgent resolution. On one hand, China’s steel exports reached 107.7 million tons in the first 11 months of 2025, and are projected to surpass the historical peak of 115 million tons, creating a superficial "boom" scenario. On the other hand, the average export price declined by over 10% year-on-year, trapping the sector in a "volume growth amid price downturn" dilemma. More critically, the export volume of low-value-added steel billets surged to three times that of the same period last year, while their prices dropped by 15.3%. This extensive "volume-for-price" model not only depletes domestic energy resources and imposes environmental costs but also triggers intensive international trade frictions—since 2024, there have been more than 50 anti-dumping cases targeting Chinese steel products. Major markets such as Vietnam and South Korea have successively imposed high anti-dumping duties, with some rates reaching as high as 38.02%, leading to the constriction of traditional market channels.

The reintroduction of export license regulation is by no means a mere administrative constraint, but rather a precise macroeconomic regulation measure and a profound value reconfiguration initiative. Its core lies in designating the "product quality inspection certificate issued by the manufacturer" as a precondition for application, thereby shifting quality control to the source and making it explicit. This targeted policy intervention aims to eliminate cut-throat competition, forcing the entire industrial chain to transition from a "tonnage-oriented" model to a "quality-driven" one, and from engaging in "price competition" to pursuing "value competition". For the majority of steel trading enterprises, this not only constitutes a compliance threshold that must be overcome in the short term but also represents a strategic opportunity that must be seized to achieve high-quality development in the medium and long term. Those who respond passively may be overwhelmed by the tide of the times, while those who proactively adapt to changes can carve out new prospects.

In the face of this systemic transformation, Steel Trading Enterprises need to adopt a holistic perspective to upgrade their strategies and rebuild their capabilities across the following five key dimensions:

I. Fortifying the Compliance Lifeline: Establishing a Full-Process Quality Traceability and Risk Control System

The new export license policy designates the "quality compliance certificate" as a prerequisite for customs clearance, necessitating enterprises to upgrade their compliance management from superficial "documentary compliance" to end-to-end compliance that integrates procurement, quality inspection, logistics, and customs clearance.

1. Deepening Supply Chain Quality Synergy

Enterprises must re-evaluate and strengthen collaborative ties with upstream manufacturers. Priority should be given to steel mills with robust quality management systems (QMS) and favorable brand reputations as core suppliers, with whom deep-seated quality information sharing mechanisms are to be established. In procurement contracts, explicit clauses must stipulate the producer’s responsibilities, timelines, and standards for issuing the Product Quality Inspection Certificate in compliance with regulatory requirements—ensuring that each batch of exported goods is accompanied by valid certificates, thereby eliminating compliance risks.

2. Building an Internal Digital Compliance Platform

Manual management of massive volumes of contracts, inspection reports, and licenses is no longer viable. Enterprises should allocate resources to develop a digital export business management system, enabling end-to-end online and visualized tracking of processes from order receipt, manufacturer inspection report acquisition, license application, to customs declaration and shipment. This not only drastically enhances operational efficiency but also facilitates proactive compliance risk early warning through data analytics.

3. Precision Research to Mitigate Trade Barriers

In the context of globalization, compliance has expanded beyond domestic regulations to encompass international rules. Enterprises must establish a dynamic monitoring mechanism for trade policies in target markets. For example, in response to high anti-dumping duties imposed in Vietnam, South Korea, and other regions, enterprises need to accurately verify whether their exported products fall within the scope of taxation and conduct rigorous assessments of compliance and commercial risks associated with third-country transshipment. Proactively avoiding high-friction markets embodies the essence of compliance wisdom in the new era.

II. Forging Value Growth Engines: Strategic Transformation from "Commodity Steel" to "High-end, Precision, Specialized, and Innovative (HPSI) Products"

By elevating compliance costs and implicit costs for low-end products, the new policy explicitly signals the state’s intent to guide industrial upgrading. Steel Trading Enterprises must fundamentally overhaul their business philosophy, with product structure optimization emerging as the core imperative for survival and sustainable development.

1. Focus on High-end and Differentiated Product Portfolio

Enterprises should reduce dependence on "commodity steel" such as conventional construction steel and bulk hot-rolled coils, and proactively extend into high-value-added downstream segments. These include:

High-quality special steel for advanced manufacturing (e.g., automotive steel, bearing steel, gear steel);

New energy-oriented steel (e.g., wind power steel, photovoltaic bracket steel);

Green construction-compliant steel (e.g., high-strength, corrosion-resistant building materials).

A case in point: One enterprise successfully transformed its product mix from rebar-dominated to HPSI steel. Its export volume of grinding ball steel—a specialized steel product—surge from 3,000 tons to over 100,000 tons within several years, establishing itself as the largest supplier to international clients.

2. Embrace the Green and Low-carbon Track

The "dual carbon" (carbon peaking and carbon neutrality) goals are not merely constraints but also enormous business opportunities. In 2025, the steel industry was integrated into China’s national carbon market; in 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) will be fully operational. Demand for "green steel" in both domestic and international markets is poised for explosive growth.

Trading Enterprises should adopt a forward-looking layout by deepening partnerships with green steel mills that have completed ultra-low emission retrofits and possess carbon footprint accounting capabilities. Promoting low-carbon steel products with Environmental Product Declarations (EPDs) not only meets the requirements of downstream green supply chains (e.g., Benxi Steel Group’s low-carbon automotive steel, which achieves a carbon reduction of over 30%) but also enables early locking of price premiums, thereby building long-term competitive advantages.

III. Pioneering New Overseas Channels: Market Diversification and In-depth Practice of "Building Ships to Sail Overseas"

Against the backdrop of escalating barriers in traditional markets, exploring new markets and models has become an inevitable strategy to mitigate risks.

1. Deepening Penetration into Emerging Markets Along the Belt and Road Initiative (BRI)

Enterprises should reduce reliance on single markets and shift focus to BRI partner countries with robust infrastructure demand, such as those in Africa, Latin America, the Middle East, and Southeast Asia. Case evidence from the aforementioned enterprises indicates that their steel exports to BRI countries account for up to 45% of total exports, with products widely applied in major projects including the Guyana Bridge, Cambodian Expressway, and Saudi Metro—achieving simultaneous expansion of market share and brand influence.

2. Innovating the "Technology + Service" Overseas Expansion Model

Pure goods trade is highly susceptible to policy and market volatility. Enterprises should draw lessons from leading peers and strive to upgrade to higher-value forms of international engagement, such as technology export, management export, and capital cooperation. For example, a Chinese group’s investment in an integrated stainless steel smelting project in Indonesia integrates Chinese technology, market access, and local resources. This project has not only driven cumulative import and export volumes exceeding $20 billion but also enabled deep integration into the global industrial chain, significantly enhancing risk resilience.

3. Transitioning from "Product Export" to "Brand Globalization"

Establishing overseas branches and advancing localized brand operations are critical to building stable distribution channels and enhancing customer stickiness. One enterprise exemplifies this by setting up overseas subsidiaries, adopting a "dual-track approach" to provide proximity-based customer services. It even customizes pre-processed high-quality special steel products to meet the specific needs of European clients, thereby gaining market share through in-depth service differentiation.

IV. Unleashing Synergistic Cohesion: Constructing a Symbiotic and Win-Win Industrial Chain Ecosystem

In the evolving regulatory and market landscape, individual efforts are insufficient to achieve sustainable success—synergy across upstream and downstream segments of the industrial chain will unlock substantial value.

1. Building a Value Community with Steel Mills

Trading Enterprises should leverage their proximity to markets and insights into customer demands to transition from passive "logistics intermediaries" to active "value translators." They must promptly feedback real-time information on international market demand shifts and product technical standard updates to partner steel mills, collaborate on R&D for market-aligned new products, and upgrade the traditional "transactional relationship" to a "co-innovation community."

2. Leading Cross-Border Supply Chain Integration

For resource-rich leading enterprises, assuming the role of "supply chain orchestrator" enables the integration of domestic and international resources. A paradigmatic example is the collaboration between China National Resources & Environment Group, China Road and Bridge Corporation (CRBC), and Xinxing Ductile Iron Pipes (Xinxing Cast Pipe): they established a cross-border supply chain that recycles scrap steel from Equatorial Guinea (West Africa), transports it via green channels to Egypt (North Africa) for circular remanufacturing, and developed a "Chinese solution" for resource circularity. This case illustrates that Trading Enterprises can integrate products from multiple domestic steel mills around large-scale international infrastructure projects, offering one-stop, full-category steel solutions.

V. Strengthening Internal Management Capabilities: Navigating Business Cycles through Digitalization and Precision Management

The drastic shifts in the external environment ultimately challenge the efficiency of enterprises’ internal management systems.

1. Comprehensive Advancement of Digital Transformation

Enterprises should leverage technologies including the Internet, big data, the Internet of Things (IoT), and artificial intelligence (AI) to construct an intelligent supply chain platform integrating procurement, inventory, logistics, sales, and finance. This platform not only enables global inventory visualization and intelligent scheduling (reducing capital occupation) but also predicts market trends through data analytics, guiding precision procurement and sales strategies.

2. Deepening Lean Management and Risk Hedging

Against the backdrop of compressed profit margins, enterprises must derive value from management optimization. This involves:

Precisely calculating the end-to-end cost and risk exposure of each business transaction;

Utilizing financial instruments such as futures to scientifically hedge against price fluctuations of raw materials and finished products, locking in operating profits and mitigating cyclical market risks.

The reintroduction of export license management serves as a mirror, reflecting the unsustainability of the traditional development model in China’s steel industry. More importantly, it acts as a clarion call, marking the official dawn of a new competitive era centered on quality, green development, and value creation. While short-term growing pains is inevitable, hope is embedded in transformation.

For Steel Trading Enterprises, the greatest risk is not the policy itself, but the persistence of outdated mindsets and operational models. Only by proactively internalizing the requirements of license management as:

A catalyst for quality upgrading,

A guiding framework for structural optimization,

A navigation tool for global layout can enterprises survive this profound industry restructuring, undergo metamorphosis, and emerge as the backbone driving China’s transition from a "major steel exporter" to a "powerful steel exporter."