SunSirs: Hainan's Customs Closure Brings New Opportunities for Metal Market Development

On December 18, 2025, Hainan Free Trade Port officially commenced island-wide customs closure operations. This historic moment marks a new phase in China's opening-up. Closure does not mean isolation; rather, it establishes Hainan Island as a special customs supervision zone, implementing liberalized and streamlined policies characterized by “relaxed controls at the first line, tightened controls at the second line, and freedom within the island.” For the metal market, the “zero-tariff” policy dividends, trade facilitation measures, and industrial clustering effects brought by the closure are reshaping the market landscape, presenting unprecedented development opportunities for the metal industry.

Zero Tariff

Cost Advantages Unleashed

Following Hainan's customs closure, metal raw material imports entered a zero-tariff era. On the first day, customs-regulated “first-line” imports of zero-tariff goods reached 360 million yuan in value, with bulk commodities accounting for a significant share. This policy benefit directly reduces enterprises' raw material procurement costs, delivering tangible advantages to the metal industry chain.

The processing value-added tax exemption policy has become a key driver for enterprises to reduce costs and enhance efficiency. According to Haikou Customs statistics, from July 2021 to October 2025, Hainan approved 129 pilot enterprises for processing value-added tax exemption. The value of domestically sold processed goods reached approximately 11.096 billion yuan, with exempted tariffs amounting to about 860 million yuan. Specifically, from January to October 2025, these enterprises achieved domestic sales valued at approximately 4.72 billion yuan, marking a 115.8% year-on-year increase. The amount of exempted tariffs reached about 327 million yuan, reflecting a 108.3% year-on-year growth. This policy spans multiple sectors, including high-performance new materials, with its coverage continuously expanding.

Taking the new energy industry as an example, if Hainan introduces lithium battery cathode material projects in the future, it can import lithium ore and nickel ore duty-free from countries like Australia and Indonesia. After processing these into high-value-added materials for sale to the mainland or export, the cost can be reduced by approximately 8% to 10% compared to mainland enterprises. This cost advantage will directly translate into market competitiveness, attracting upstream and downstream enterprises in the industrial chain to accelerate their convergence in Hainan.

High-end Manufacturing

Will Generate Industrial Agglomeration Effects

Following Hainan's customs closure, foreign enterprises accelerated their布局 of high-end manufacturing projects, demonstrating a “precision-driven release” of demand for metal materials. On the first day of Hainan's customs closure, Siemens Energy AG, a Fortune Global 500 company, announced that its gas turbine final assembly base and service center in Yangpu, Hainan, is scheduled for completion and operation by 2027, achieving localized production of gas turbines. As the “crown jewel of industry,” gas turbines require substantial quantities of specialized high-temperature resistant and corrosion-resistant metals—including special steels, nickel-based alloys, and titanium alloys—for core components such as turbine blades and combustion chambers. On the same day, Belgium's Puratos Gelatin Group (the world's leading gelatin producer) announced accelerated upgrades to its Hainan production lines, involving equipment renewal for reactors, pipelines, and storage tanks. Food-grade stainless steel and aluminum alloys, prized for their corrosion resistance and ease of cleaning, are the preferred—and often standard—materials for such equipment.

It is evident that Hainan Free Trade Port's closed-border policy offers foreign enterprises the policy dividend of “zero tariffs,” significantly reducing the cost of importing raw materials and equipment. Simultaneously, the “open first line, control second line” regulatory model establishes a two-way circulation channel connecting enterprises to both the mainland and global markets. This enhances the international competitiveness of projects in the high-end equipment manufacturing sector, fully demonstrating the closed-border policy's role in driving the transformation and upgrading of manufacturing. Foreign enterprises have responded positively with concrete actions.

The new energy industry has become a key driver of demand for strategic metals. Hainan aims to establish itself as a “clean energy island.” By November 2025, clean energy accounted for 87.1% of the province's installed capacity and 73.03% of its electricity generation, placing Hainan at the forefront of China's energy transition. Energy storage facilities (such as the 100MW/200MWh project in Sanya Yazhou Bay) have significantly boosted demand for lithium iron phosphate and ternary lithium batteries, driving consumption of metals like lithium, cobalt, and nickel. Future establishment of electric vehicle assembly plants would further stimulate demand for battery-grade metal raw materials. Additionally, the first batch of 30,000 tons of lithium concentrate from Hainan Mining Co., Ltd.'s Boukonyi lithium mine in Africa departed from Port-au-Prince, Côte d'Ivoire in November 2025. It is scheduled to arrive at Yangpu Port, Hainan in early to mid-January 2026, supplying core raw materials for the company's lithium salt processing project. This shipment qualifies for the Free Trade Port's “zero-tariff” policy on imported raw and auxiliary materials. Upon arrival in Yangpu, Hainan, the lithium concentrate will ensure stable raw material supply for the continuous production of the lithium hydroxide project at the company's subsidiary, Hainan Star Sea New Materials Co., Ltd. This marks the formal establishment of the enterprise's integrated new energy industrial chain. Leveraging its own high-quality mines, advanced processing lines, and the policy advantages of the Hainan Free Trade Port, the competitiveness of its products in the market will undoubtedly be significantly enhanced.

The application of specialty metal materials will become more extensive. Hainan is developing industries such as aerospace (Wenchang International Space City) and marine engineering (Sanya Deep Sea Technology City). Rocket engine nozzles require titanium alloys, while deep-sea drilling platforms demand high-performance materials like corrosion-resistant steel and nickel-based alloys. Leveraging the zero-tariff policy, the processing and application of these high-end metal materials will become more convenient, driving Hainan's metal industry toward high-end, precision, and cutting-edge upgrades.

Two-Way Flow

Accelerated Market Integration Reshapes Trade Landscape

Following Hainan's customs closure, the “first-line liberalization” policy allows unrestricted movement of foreign goods, while “second-line control” ensures orderly integration with mainland markets. This unique “domestic yet customs-free” status creates “two-way flow” opportunities for the metal industry.

On the import side, the “zero tariff” dividend for metal raw materials will continue to unfold. Post-closure, Hainan implements a “zero tariff” list management system for certain metal raw materials (such as lithium spodumene, cobalt concentrate, nickel-iron alloys, and other new energy metal raw materials). In the first 11 months of 2025, Hainan imported metal raw materials worth 40.65 billion yuan, a 23% year-on-year increase, accounting for 26.1% of the province's total imports during the same period. These figures demonstrate Hainan's strengthened position as a hub for metal raw material imports, with promising future development prospects.

On the export side, metal products are poised to reach global markets via Hainan. Hainan's geographical advantages (proximity to Southeast Asia and connectivity to mainland China) position it as a “transit hub” for metal product exports. For instance, aluminum profiles from Guangxi and stainless steel products from Guangdong can utilize Hainan's Yangpu Port for “bonded warehousing + distribution,” enabling exports to Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) member countries under the “Made in Hainan” designation to benefit from preferential tariffs. On December 19, 2025, two Hainan Free Trade Zone concept stocks—Hainan Automobile Group (logistics) and China Duty Free Group (duty-free trade)—hit the daily limit up, reflecting market optimism toward the “metal trade + logistics” chain.

Hainan's trading partners exhibit a diversified structure. According to official data released by the Hainan Provincial People's Government and Haikou Customs, the province's total import and export volume reached 256.84 billion yuan in the first 11 months of 2025. Among these, trade with ASEAN countries amounted to 53.57 billion yuan, accounting for 20.9% of the province's total foreign trade. Trade with Australia reached 31.15 billion yuan, representing 12.1% of the total. ASEAN continues to hold its position as Hainan's largest trading partner. In the future, further optimization of this trade pattern will provide more choices and possibilities for the metal industry to expand into international markets.

Overall, the launch of Hainan's closed-border operation will bring opportunities for structural transformation to the metal market. Moving forward, as the closed-border policy is fully implemented, Hainan's metal industry will undergo a transformation from a “policy haven” to an “industrial hub.” This will provide a new fulcrum for China's metal industry to “go global” and “attract foreign investment,” driving the industrial chain toward high-end, intelligent, and green development.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.