China Reinstates Steel Export Licenses After 17 Years. A New Wave of Adjustment and Multidimensional Impacts on Vietnam

After a 17-year hiatus, China’s official reinstatement of its steel export licensing mechanism is drawing significant attention from international analysts and the regional business community. In the eyes of many experts, this is not merely an administrative measure but a clear signal that Beijing is repositioning the steel industry’s role within its long-term industrial strategy, carrying substantial implications for countries in the supply chain, including Vietnam.

Expert Insights

Analysts from SMM, Fastmarkets, and several Asian research institutions suggest this move reflects China’s efforts to better control export flows, particularly for low-value-added, commodity steel products. According to Colin Richardson, Head of Metals at CRU Group, the licensing mechanism helps China “filter” its export capacity, prioritizing enterprises that possess advanced technology, comply with environmental regulations, and meet increasingly stringent trade standards. This aligns with the long-term goal of reducing overcapacity, limiting price-based competition, and shifting toward exporting higher-quality steel products.

From a regional market perspective, international experts believe the reintroduction of licenses could slow the pace of Chinese steel exports in the medium term, thereby easing the pressure of cheap steel flooding Southeast Asia. Tomas Gutierrez, a steel market analyst at a European commodity trading firm, estimates that major importing countries like Vietnam, Indonesia, and Thailand will see more stable price levels. However, he does not rule out the possibility of “policy-front-running” export surges in the short term, which could cause localized fluctuations in price and supply.

In Vietnam, the reaction from professionals is generally cautious but positive. An expert from the Vietnam Steel Association (VSA) noted that for years, low-priced Chinese steel has put significant pressure on domestic manufacturers, especially in the construction steel and hot-rolled coil (HRC) segments. China tightening exports through licensing could help mitigate unfair competition, providing “breathing room” for Vietnamese enterprises to consolidate their domestic market share.

However, domestic experts also emphasize that opportunities will only truly materialize for companies ready to transform. According to Mr. Nguyen Viet Thang, a longtime expert in the steel and metals industry, China’s new policy will inevitably raise competition standards across the regional supply chain. “When China uses export licenses as a screening tool, requirements for traceability, emissions, environmental impact, and quality consistency will ripple through neighboring markets. Vietnamese enterprises cannot rely on price alone; they must invest more systematically in management and technology,” Mr. Thang observed.

Indirect Impacts on the Raw Materials Market, Particularly Metal Scrap

Another aspect highlighted by both international and Vietnamese experts is the indirect impact on the raw materials market, especially metal scrap. As China reduces exports of commodity steel to focus on high-tech products, demand for high-quality, environmentally compliant raw materials is projected to rise. According to a scrap trading expert in Singapore, this could shift regional scrap flows, opening opportunities for countries like Vietnam to develop deeper sorting, processing, and recycling operations.

Domestically, some major steel corporations believe that with proper investment in logistics infrastructure, warehousing, and processing technology, Vietnam could evolve from a mere consumer market into a vital intermediary link in the regional raw material supply chain. Nevertheless, experts warn that this requires a clear legal framework, strict environmental controls, and a long-term vision to avoid risks related to pollution and trade fraud.

Looking at the broader picture, many argue that reinstating export licenses shows China is driving a structural shift: moving from competition based on volume and low prices to competition based on compliance, quality, and sustainable development. Marcus Garvey, a metals supply chain consultant in London, believes this trend will spread across Asia, forcing regional countries to reposition their steel industry strategies if they wish to maintain their standing in the global value chain.

A Test of Adaptability for Vietnamese Enterprises

For Vietnam, this is not viewed as a systemic shock but rather a test of the industry’s adaptability. In the short term, the market may face certain fluctuations in price and supply. However, in the medium and long term, most experts agree that this is an opportunity for the Vietnamese steel industry to reduce its dependence on low-price competition, gradually upgrade quality, standardize management, and align more closely with international standards.

As one domestic expert noted, “China is changing the rules of the game, and that forces all participants to play at a higher level. Vietnamese businesses that view compliance and sustainability as a competitive advantage, rather than a cost, will be the long-term beneficiaries of this shift.”

Source: SMM and various internet sources.