April 21, 2026 – Amy SteelInsights
China‘s finished steel exports totalled 24.72 million tonnes in the first quarter of 2026, down 9.9% year-on-year, according to data from the General Administration of Customs. [7†L3-L5] For March alone, exports stood at 9.14 million tonnes, down 12.6% on year. [7†L6-L8] While still a sizable volume – over 9 million tonnes per month is considered “good” by market sources given logistical challenges [9†L19-L20] – the decline marks the first quarterly contraction in five years, a sharp contrast to the 30.7% surge seen in Q1 2024. [8†L4-L5]
Below is a breakdown of what is behind this shift and what it means for procurement managers and export sales teams worldwide.
1. Aggregate and Structural Changes
Exports in January and February were pressured by the new licensing system, while March showed a partial recovery: March exports rose 16.6% month-on-month from a low February base. [9†L15-L16] Overall, China‘s steel export trajectory for 2026 is expected to fall back to approximately 100 million tonnes for the full year, down over 10% from 2025’s record 119 million tonnes. [16†L9-L10][8†L7-L8]
By product category:
- Plate exports (HRC, galvanised steel, etc.): fell 16.3% year-on-year in Q1 2026. Trade barriers such as Vietnam‘s anti‑circumvention duty have hit flat products the hardest. [6†L30-L30]
- Bar exports (rebar, etc.): remained relatively stable, up slightly YoY, supported by steady construction demand in emerging markets.
- Billet exports: surged 28.99% year-on-year to 3.30 million tonnes in Q1 2026, with March alone hitting a single-month record of 1.53 million tonnes (+48.37% YoY). [14†L4-L7]
On the import side, China‘s finished steel imports totalled just 1.34 million tonnes in Q1 2026, down 14.1% year-on-year – a contraction even steeper than the export decline, reflecting persistently weak domestic demand. [7†L36-L38]
2. Why Exports Are Falling – The Core Drivers
2.1 Domestic Policy: The New Export Licensing System
Effective January 1, 2026, China reintroduced an export licensing system for steel products covering 300 customs HS codes, after a 16-year absence. [1†L10-L11] Exporters must now apply for licenses using a valid export contract and a manufacturer-issued quality inspection certificate – a measure designed to raise the compliance bar for low-value, tax‑evading exports and push the industry toward higher-quality shipments. [1†L6-L7][1†L13-L14]
In practice, the new rules extended customs clearance times and caused temporary port backlogs, which depressed January‑February export volumes. [6†L5-L6] The additional compliance costs have particularly affected small‑ and medium‑sized exporters, leading some to abandon low-margin orders. [16†L38-L41] Meanwhile, export prices have begun to rise: the average February export price was RMB 4,160/t, up 5.73% month-on-month and 5.82% year-on-year, signalling an initial improvement in export mix. [6†L6-L8]
2.2 Escalating Trade Barriers Abroad
Vietnam – China‘s largest HRC buyer – imposed a 27.83% provisional anti‑circumvention duty on wide-width HRC (1,880‑2,300mm) effective April 17, 2026. This follows an existing anti‑dumping duty of 23.10‑27.83% on narrower HRC (≤1,880mm). [2†L5-L8][10†L4-L11] Vietnam imported nearly 650,000 tonnes of wide-width HRC from China in the first half of 2025 – approximately 15 times higher than the same period the previous year – before the duty closed the loophole. [10†L30-L33]
The European Union has reached a provisional agreement to cut tariff‑free steel import quotas by 47% to 18.3 million tonnes per year (from 34 million tonnes in 2024) and double out‑of‑quota tariffs to 50%, effective July 1, 2026. [12†L8-L11] The EU has also expanded its CBAM to include downstream steel‑intensive products such as machinery, automotive parts and household appliances from 2028. [13†L10-L11] Combined with CBAM carbon costs (first certificate price at €75.36/tCO₂e), the cost of exporting steel to Europe is rising sharply.
India, Indonesia and Malaysia have also extended or imposed new anti‑dumping duties on Chinese steel products, while Brazil imposed definitive AD duties on Chinese galvanised steel and cold‑rolled coil in early 2026. [7†L24-L29]
2.3 Softening Global Demand and Structural Shifts
Global manufacturing PMIs remain in contractionary territory in many major economies. Domestic steel demand in China is also weak: crude steel output fell in early 2026 and steel inventories have been accumulating, confirming that end‑user demand has not recovered as expected.
A structural shift is also under way: China‘s share of global steel exports – which peaked at 30.7% in 2024 – is gradually being replaced by “regional self-sufficiency” as other countries expand their own production capacity. [8†L11-L12]
2.4 Middle East Conflict and Logistics Disruption
The US naval blockade of Iranian ports and the closure of the Strait of Hormuz have effectively halted Chinese steel shipments to Gulf countries – a market that accounted for 11.7% of China’s total steel exports in 2025. [7†L13-L17] Many Chinese exporters have suspended offers to the region due to spikes in freight rates, war risk insurance premiums and vessel diversion costs. [7†L17-L19]
Notably, China has redirected export volumes to Southeast Asia: over 70% of billet orders from Chinese mills are now concentrated on Indonesia, the Philippines and other ASEAN countries, with some mills‘ order books filled through July. [14†L12-L13] The combined cost of freight (+15‑20%), war risk insurance (+$10‑15/t) and geopolitical risk premiums (5‑8%) has pushed up total landed costs by 18‑22% for affected trade routes. [14†L13-L14]
3. What This Means for Global and Chinese Steel Markets
3.1 For Chinese Exporters
Policy-driven restructuring is working. The export licensing system has already begun to raise average export prices and filter out low‑value shipments, guiding the industry away from “volume at any price” towards quality and value. [6†L6-L8]
Market focus is shifting. As traditional markets in Europe and Vietnam become harder to access, Chinese mills are accelerating their pivot to Belt and Road countries, particularly Indonesia, the Philippines and Thailand. This rebalancing is both a passive response to trade barriers and a strategic choice in global supply chain repositioning. [13†L17-L23]
High-value products are the new growth engine. With CBAM carbon costs and quota cuts squeezing margins on commodity-grade steel, advanced high-end plate, specialty steel and green steel products are becoming the only viable long-term pathways to European and high‑end Asian markets. China‘s exports of high‑quality special steel rose significantly in 2025, and this trend is accelerating.
Billet exports present a window. Iran’s steel capacity loss of 13‑15 million tonnes per year has created a regional supply vacuum for semi‑finished steel. Billet is less constrained by trade barriers than finished products, and Q1 billet exports surged 28.99% YoY. [14†L4-L5] Chinese billet CFR Southeast Asia prices rose from $410‑420/t in early March to $480‑490/t in April, reflecting strong demand for duty‑free semi‑finished material. [14†L18-L19]
3.2 For Procurement Managers (Buyers)
Challenge: EU CBAM is real. Chinese steel and aluminium exporters face estimated annual CBAM payments of RMB 3.2‑3.5 billion. By 2034, when free allowances are eliminated, the CBAM cost per tonne of Chinese steel exported to the EU could reach €140‑160 per tonne, rendering some products “export‑at‑a‑loss”. [13†L12-L14] Default carbon values used by the EU are often higher than China‘s actual emissions, potentially increasing tariff costs by 30‑50% for exporters who cannot provide verified emissions data. [13†L14-L16] For European buyers, this means Chinese steel will become significantly more expensive, while for Asian buyers, Chinese steel remains competitively priced, though freight and insurance costs have risen.
Opportunity: China is shifting focus to Southeast Asia and Belt and Road markets. Buyers in Indonesia, the Philippines and Thailand can expect competitive CFR offers from Chinese mills that are reorienting their export strategies. Billet shipments in particular offer a duty‑free sourcing option.
New variables to watch. Domestic Chinese inventories remain high, which may lead some mills to offer flexible pricing to clear stock. At the same time, buyers should incorporate carbon costs into their procurement models when sourcing Chinese steel for European end‑markets.
3.3 For Export Sales Managers (Sellers)
Transition from volume to value is the new normal. Low‑value commodity steel exports to traditional markets are facing terminal decline. High-end flat products, specialty steel and certified low‑carbon steel are the only products with sustainable export margins.
Billet is the bright spot. The combination of the Iranian supply gap and lower trade barriers makes billet the most accessible route for Chinese semi‑finished steel exports to Southeast Asia and other emerging markets. However, the price rally seen in March has slowed as the first wave of restocking ended in mid‑April. [14†L17-L19]
Prepare for more trade defence measures. With trade remedy investigations reaching their peak ruling period in 2026, Chinese exporters must diversify destination markets, invest in EPD certification for CBAM compliance, and build flexible supply chains that can reroute shipments quickly in response to sudden trade barriers. [16†L42-L47]
4. Key Takeaway
The 9.9% decline in China‘s Q1 steel exports is not an isolated event but the result of three converging forces: policy intervention (the new licensing system), rising trade barriers (Vietnam, EU, Brazil, etc.), and weak global demand. For procurement managers, this means carbon costs and trade barriers are becoming new variables in landed‑cost calculations. Diversifying supply sources, monitoring China‘s export mix and embedding carbon costs into procurement models will be essential. For export sales managers, the message is clear: the era of “volume at any cost” is over. Value‑added products, emerging markets (especially ASEAN) and semi‑finished steel (billet) are the new strategic priorities.
The shift away from China’s historic “quantity‑driven” export model has begun. The winners in the new global steel order will be those who adapt fastest.
📧 amy@amyinsights.com
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