Japan Iron and Steel Federation Chairman Tadashi Imai said on Thursday that China's planned export-licence requirement would not be effective in curbing steel export volumes or support a recovery in prices.

The world's largest steel producer, China, plans to roll out a licence system from 2026 to regulate exports of the metal, as robust shipments have fuelled a growing protectionist backlash worldwide.

"Our understanding is that this measure is intended to curb exports of substandard steel products, and we don't believe it will be an effective countermeasure for current issues such as suppressing export volumes or influencing market prices," Imai told a press conference, adding that the permits were aimed at controlling product quality.

Ballooning exports by Chinese steelmakers have become an international concern, with Japan among countries criticising Chinese firms for receiving government subsidies that encourage overproduction and low-priced exports, worsening global market conditions.

The federation forecast Japan's domestic steel demand from the construction and manufacturing sectors would remain flat in the fiscal year starting in April, with crude steel output expected to be unchanged from the current year.

The Japanese trade and industry ministry predicted this week that Japan's crude steel output for the current year would fall 3.2% to 80.33 million metric tons, the lowest since fiscal 1968.

Asked about the impact from U.S. tariffs, including a 50% levy on steel and a 15% tariff on Japanese goods, Imai, who is also president of Nippon Steel, said the tariffs would cut about 20 billion yen ($130 million) from his company's profit this fiscal year, with exports to the U.S. halving from a year earlier.

"But the overall impact, including indirect effects from the 15% tariff on automobiles, was smaller than we had anticipated," he said.

($1 = 155.8400 yen)

-Yuka Obayashi/Reuters