Iron Ore Declines After China Moves To License Steel Exports

Iron ore futures declined, after top buyer China announced it would introduce a licensing system on the export of certain steel products from next year.

The steelmaking ingredient fell as much as 1.6%, after the Ministry of Commerce said Friday that exporters must seek permission from Jan. 1 to ship a broad range of products, including steel used in construction, cars and consumer goods.

The ministry did not give a reason for the new regulations, but the move comes as China's steel exports are on track for a record in 2025. Shipments exceeded 100 million tons in the year through November, according to the most recent trade data, despite rising trade barriers.

China is pushing for its steel to move up the value chain by reducing the proportion of low value-added products in its export mix, industry consultancy Mysteel said in a note. "China's steel industry is facing an unprecedented pressure for transition," it said, adding that the new policy aligns with Beijing's carbon-emission goals.

Producers of low value-added products may shift a proportion of their exports to the domestic market in the short term, Mysteel said, while shipments to markets in Africa and Latin America might also increase. The share of high-end "green" steel products in the export mix would increase gradually, the consultancy said.

Meanwhile, China's crude steel production fell for a sixth straight month. The country produced a little under 70 million tons in November, down 11% from a year earlier, China's statistics bureau said on Monday. That left the year-to-date figure 4% behind last year's.

Iron ore futures fell 1.3% to $100.70 a ton in Singapore as of 11:00 a.m. local time, following a 1.4% drop last week. Yuan-priced futures in Dalian declined 1.3%. Steel futures in Shanghai edged higher.

Source: Bloomberg Europe