Asian Scrap Market Analysis

Strategic Reconfiguration of the Asian Scrap and Secondary Materials Market: Decarbonisation Pathways, Regulatory Friction, and Geopolitical Supply Realignment (2025–2035)

Macro-Economic Sizing and Regional Domination

The global scrap metal recycling industry is undergoing a structural transition driven by global decarbonisation mandates, primary resource depletion, and a fundamental realignment of industrial manufacturing processes. In 2025, the global scrap metal recycling market was valued at approximately USD 435.50 billion to USD 436.11 billion. It is projected to expand to between USD 451.00 billion and USD 458.70 billion in 2026, ultimately reaching between USD 614.00 billion by 2034 and USD 722.65 billion by 2035. This represents a compound annual growth rate (CAGR) of 3.90% to 5.18% over the forecast horizon.

When evaluated through the broader lens of the global metal recycling market—which encompasses primary and secondary processing, refining, and recovery systems—the sector's valuation reached USD 951.14 billion in 2025 and is projected to scale to USD 1,342.10 billion by 2034, expanding at a CAGR of 3.90%.

The Asia-Pacific region maintains absolute dominance in the global recycling landscape, accounting for approximately 48% to 51.70% of the scrap metal recycling market share in 2025. This dominance is represented by a regional market valuation of USD 225.10 billion in 2025, which is projected to rise to USD 234.10 billion in 2026.

This concentration of market activity is primarily driven by the scale of industrial manufacturing, building, and infrastructure activities in China and India, alongside sustained automotive manufacturing in Japan. Within this regional framework, China's scrap recycling market alone is projected to reach USD 181.00 billion by 2026, followed by Japan at USD 13.10 billion and India at USD 12.00 billion.

Concurrently, the South East Asian metal recycling market is exhibiting the fastest growth rate in the region, rising from USD 10,201.20 million in 2025 to a projected USD 19,074.00 million by 2034, registering a CAGR of 6.98%.

By metal type, ferrous metals represent the largest segment, capturing approximately 75% of the market in 2025 and projected to reach 78.76% in 2026. This dominance is directly tied to the scale of global steel consumption in the building and construction sector, which held a 38% to 38.98% share of end-use consumption in 2025/2026.

However, non-ferrous metals represent the fastest-growing category, with a projected CAGR of 4.6% from 2026 to 2035. This is driven by their critical role in electric vehicle manufacturing, electrical infrastructure, and high-performance electronic components.

The primary feedstock for these markets continues to shift towards old scrap, which accounted for approximately 60% of the scrap source share in 2025. This reflects the maturing of post-consumer recovery networks relative to industrial or "new" scrap generation.

The Middle East & Africa region is also exhibiting notable growth, contributing approximately USD 34.10 billion to the global market in 2025 (accounting for a 7.80% share) and projected to reach USD 35.20 billion in 2026. This growth is credited to the region's increasing mass building and construction activities, which have led to a surge in the demand for scrap metal processing.

Ferrous Metallurgy and the Decarbonisation Imperative

The steel manufacturing sector faces a dual challenge: scaling production to support industrial growth across developing Asia while rapidly reducing emission intensity. In this context, ferrous scrap has transitioned from a basic waste product to a critical secondary raw material.

Traditional blast furnace-basic oxygen furnace (BF-BOF) steel production is highly emission-intensive, accounting for approximately 15% to 17% of China's total carbon emissions, second only to the power generation sector. Ferrous scrap serves as a direct substitute for primary ironmaking, allowing steelmakers to bypass the emission-heavy iron ore reduction phase.

In India, which consumes approximately 41 million tonnes of ferrous scrap annually, scrap accounts for just 23% of crude steel production. This is significantly below the global average of 32% and the 60% to 70% scrap utilisation rates observed in advanced economies.

To bridge this gap, the Government of India has targeted a 50% scrap utilisation rate in steelmaking by 2047. The environmental and operational advantages of this transition are clear: substituting primary inputs with a single tonne of ferrous scrap prevents the extraction and consumption of approximately 1.4 tonnes of iron ore, 740 kg of metallurgical coal, and 120 kg of limestone.

This decarbonisation potential has created a severe supply-demand imbalance. India's domestic scrap demand is projected to exceed 200 million tonnes by 2050. Even under an optimistic domestic scrap generation compound growth rate of 8%, domestic availability is expected to fall short by 40 million to 50 million tonnes.

Historically, developing economies relied on imports to cover domestic deficits. However, global scrap markets are tightening rapidly. Over 60 countries have introduced stringent scrap export restrictions, and global trade volumes are projected to contract by 15% by 2030 as developed nations retain their own scrap to meet domestic net-zero targets.

In response, regional steel-producing giants are adjusting their production frameworks. China's Steel Industry Work Plan (2025–2026), released by five leading ministries, aims to address overcapacity and phase out legacy, emission-intensive blast furnaces in favour of modern electric-arc furnaces (EAFs), hydrogen metallurgy, and new green metal standards.

In 2024, EAF steel production in China accounted for only 10% of total crude steel output (from a total crude steel production of roughly 1 billion tonnes, or 54% of global output), falling short of the 15% national target set for 2025. The slow pace of this transition stems from tight domestic scrap supplies and high electricity costs, forcing Chinese authorities to provide preferential financing, including ultra-long-term special government bonds, to accelerate EAF upgrades and expand domestic scrap processing infrastructure.

Greater China Border Compliance and Supply Chain Friction

To secure a sustainable raw material supply while enforcing environmental compliance, China has updated its regulatory framework for secondary metals. The non-ferrous metals industry action plan (2025–2026), joint-issued by eight Chinese government bodies including the Ministry of Industry and Information Technology, targets an annual growth rate of approximately 5% in industrial added value and 1.5% in the output of ten major non-ferrous metals.

Crucially, the plan aims to scale secondary metal production to over 20 million tonnes per year, with a particular focus on expanding domestic copper and aluminium scrap recycling bases. This domestic drive is supported by the reclassification of premium, high-grade copper, brass, and aluminium scrap as "raw materials" rather than "waste," permitting unrestricted import access for materials that meet strict purity thresholds.

However, this open-door policy for premium raw materials is paired with highly rigorous regulatory compliance at China's borders. Under the implementation regulations of the Mineral Resources Law, announced by the State Council on 20 May 2026 and effective 1 July 2026, China has mandated strict compliance requirements for imported recycled metals, including scrap steel and nickel-cobalt-manganese alloys.

The regulations enforce two primary requirements:

• Mandatory full supply chain traceability: Importers must provide verified digital tracking documentation linking the imported metal back to its original collection point and processing facility, leaving no room for unverified trading intermediaries.
• Carbon footprint declarations: Shipments must include comprehensive greenhouse gas accounting covering the collection, processing, and shipping phases.

These regulations represent a significant shift for global scrap recycling networks. The sudden enforcement, which lacks a transition period, directly challenges international scrap metal traders.

To maintain access to the Chinese market, exporters are forced to invest in digital ledger technologies, such as blockchain, to verify the origin and carbon intensity of their materials. Electric-arc furnace operators in China must also audit their supply networks, potentially shifting procurement toward certified international partners or domestic suppliers.

Simultaneously, China's export control policies have created volatility in high-tech metal recycling markets. Under MOFCOM Notice 61, issued on 9 October 2025, China introduced a 0.1% de minimis rule for extraterritorial rare earth elements.

Any component or product manufactured outside China containing Chinese-origin rare earths valued at 0.1% or more of the component's total value requires an export licence from the Chinese government. The regulatory trigger applies at the component level (such as magnets inside cooling fans or hard disk drives) rather than the finished assembly (such as a high-value enterprise server).

Although MOFCOM suspended this measure until 10 November 2026 under a temporary trade de-escalation agreement, the upcoming deadline has forced global electronics, automotive, and industrial equipment importers to conduct extensive supply chain audits. This policy has accelerated efforts to establish closed-loop recycling systems for permanent magnets and rare earths within North America, Europe, and non-aligned Asian economies.

Category 1 controls cover permanent magnet materials and sputtering targets, plus parts containing them. Category 2 controls cover five additional elements (holmium, erbium, thulium, europium, and ytterbium). Meanwhile, the April 2025 controls remain in force, requiring export licences for seven rare earth elements (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium).

India Vehicle Scrappage Policy and Formalisation Dynamics

Across India and Southeast Asia, the scrap recycling sector is transitioning from informal, unmonitored backyard operations to formal, capital-intensive industrial processes. Historically, the informal sector dominated scrap collection and processing. While highly agile, these operations lacked environmental controls, leading to heavy metal contamination, toxic runoff, and low material recovery rates.

The scale of this challenge is evident in India's vehicle scrappage ecosystem. In mid-2025, India's pool of end-of-life vehicles (ELVs) was estimated at approximately 12 million units, including 4.5 million medium and heavy commercial vehicles and 7.5 million light vehicles.

To systematically dismantle and recycle this fleet, the Indian government introduced the Vehicle Scrappage Policy, establishing Registered Vehicle Scrapping Facilities (RVSFs) and Automated Testing Stations (ATSs) linked directly to the national Vahan database. Under this policy, commercial vehicles older than 15 years and private vehicles older than 20 years must pass mandatory emissions and roadworthiness tests or face de-registration and mandatory scrapping.

Despite these structural efforts, the policy faces a significant execution gap. As of 30 January 2026, 129 RVSFs were operational across 21 states and union territories, processing a cumulative total of 430,306 scrapped vehicles. This represents less than 4% of the eligible vehicle fleet, highlighting the persistence of informal dismantling networks.

To accelerate formalisation, the Ministry of Finance, under the Special Assistance to States for Capital Investment (SASCI) 2025-26 guidelines, allocated Rs. 2,000 crore to incentivize vehicle scrapping. This includes state-level grants linked to the volume of commercial and government vehicles dismantled at authorised RVSFs.

Furthermore, original equipment manufacturers (OEMs) have begun offering discounts ranging from 1.5% to 3.0% on new vehicle purchases upon presentation of an official Certificate of Deposit from an authorised RVSF, alongside state-level road tax concessions and registration fee waivers.

Under the policy, the scrap value paid directly to the owner by the RVSF is computed based on the recoverable material weight, typically ranging between 4% and 6% of the vehicle's original ex-showroom price. In addition, the operational environment is supported by safety-linked frameworks, such as the cashless treatment of road accident victims notified under the Motor Vehicles Act 1988.

A parallel formalisation trend is occurring in the electronic waste (e-waste) sector. In India, the implementation of licensed recycling frameworks to secure critical minerals is shifting volumes away from traditional, informal hubs like Delhi’s Seelampur district. While formalisation is necessary for environmental protection and efficient mineral recovery, it also displaces thousands of informal livelihoods. This highlights the need for transitional policies that integrate informal waste pickers into formal collection networks.

Southeast Asian Logistics, Regulations, and Sourcing Dynamics

Southeast Asia is facing significant logistics and regulatory challenges as it becomes a major destination for international scrap flows. Following China’s historic import bans, scrap metal and plastic shipments to South East Asia increased, outstripping the region’s regulatory capacity and leading to severe port congestion and customs interventions.

In early 2026, shipping lines faced a major logistics disruption. Effective 16 February 2026, major ocean carriers, including Hapag-Lloyd, mandated a completed Letter of Indemnity (LOI) for all plastic and metal scrap bookings destined for Southeast Asian ports, including Singapore, Malaysia, Indonesia, Thailand, Vietnam, the Philippines, Cambodia, Myanmar, Laos, and Brunei.

The introduction of this mandate followed the detention of over 1,500 containers by regional customs authorities. These detentions were driven by three main factors:

• Cargo mis-declarations: Exporters frequently mis-labelled shipments, often concealing hazardous e-waste within lower-grade plastic or metal scrap consignments.
• Enhanced destination inspections: Customs authorities across the ASEAN region implemented highly rigorous physical and radiological scanning protocols at major import terminals.
• Contamination limits: Consignments regularly exceeded permissible limits for non-recyclable materials and hazardous substances, leading to immediate holds.

The mandatory LOI shifts legal and financial liability for cargo extraction, return shipping, and regulatory fines directly to the exporter. This has slowed transaction times and raised compliance costs, limiting the flow of secondary materials into the region.

This shipping bottleneck coincides with a wave of national technical regulations designed to restrict low-grade waste imports. In Vietnam, the Ministry of Natural Resources and Environment issued national technical regulations (effective July 2025) governing imported scrap materials used as industrial feedstock.

These regulations include:

• QCVN 31:2024/BTNMT: Environmental and impurity standards for imported iron, steel, and cast iron scrap.
• QCVN 66:2024/BTNMT: Impurity thresholds and classification protocols for non-ferrous metal scrap.
• QCVN 32:2024/BTNMT and QCVN 33:2024/BTNMT: Environmental limits for imported plastic and paper scrap.

Similarly, Thailand implemented Ministry of Commerce Notification BE 2567 (2024), culminating in a complete ban on plastic scrap imports.

To mitigate the resulting raw material deficits, Southeast Asian nations are accelerating the implementation of domestic Extended Producer Responsibility (EPR) frameworks. Indonesia, Malaysia, and the Philippines have launched EPR programmes requiring consumer brands to fund and manage post-consumer packaging collection and recycling systems.

These regulatory policies are reshaping regional business models, transforming Southeast Asia into a major hub for high-quality eco-packaging production. The region’s packaging market now represents 38.9% of the global eco-packaging market, supported by rapid demand growth and infrastructure investments in Vietnam, Thailand, and Indonesia. Vietnam's packaging sector alone counts more than 14,000 enterprises, growing at 15% to 20% annually.

At the same time, the recovered paper sector is adapting to changing supply patterns. While old corrugated containers (OCC) remain the industry benchmark, the supply of high-grade recovered paper is tightening. This is driven by ongoing digitalisation, which has reduced the generation of office paper and coated book stock.

The resulting raw material deficit has forced paper mills in Southeast Asia to secure alternative high-quality fiber sources, even as global paper shipments remain constrained. For instance, US paper shipments in January 2026 fell by 1% year-on-year, with packaging paper shipments matching this minor contraction, reflecting a broader plateau in Western paper recycling volumes.

Geopolitical Trade Realignment and Asian Scrap Sourcing

The global scrap trade is being reshaped by a regulatory squeeze from major Western economies. Under the revised European Union Waste Shipment Regulation (Regulation (EU) 2024/1157), which entered into force in May 2024, the EU is implementing strict limits on its waste exports to prevent the externalisation of environmental burdens and retain secondary resources within the European single market.

Key milestones under the EU framework include:

• E-Waste (WEEE) Export Controls (1 January 2025): Complete prohibition of e-waste exports to non-OECD countries, with exports to OECD destinations subject to Prior Informed Consent (PIC) procedures.
• Centralised Digitalisation (May 2026): Transition of all EU waste notifications and tracking documents to a central electronic platform, standardising tracking.
• PIC Requirement for Plastic Waste (May 2026): All plastic waste exports from the EU to third countries require PIC approval.
• Non-OECD Plastic Export Ban (21 November 2026): A complete ban on plastic waste exports to non-OECD nations for a minimum of 2.5 years. Non-OECD countries can request a derogation only after May 2029, provided they demonstrate the capacity to manage the waste under environmentally sound conditions.

This regulatory cascade represents a major supply challenge for Southeast Asian recyclers. For facilities built around the processing of European low-density polyethylene (LDPE) films, polyethylene terephthalate (PET) bottles, and mixed rigid polyolefins, this policy represents the scheduled closure of their primary raw material supply line.

This Western export squeeze is occurring alongside a widening divergence within the Asian scrap market. In 2025, traditional North Asian scrap-importing markets, such as South Korea and Taiwan, recorded steep contractions in scrap imports. South Korea’s scrap imports fell by 19% year-on-year to 1.49 million tonnes during the first ten months of 2025, while Taiwan’s imports dropped by 36% to 1.63 million tonnes over the same period, with November imports hitting a two-decade low of 110,000 tonnes.

This downturn was driven by a prolonged real estate slump, sluggish domestic manufacturing, and intense competition from low-priced steel exports from China. Chinese steel exports reached 107.72 million tonnes in the first eleven months of 2025. To bypass international anti-dumping duties, Chinese mills shifted toward exporting semi-finished products (billets), which doubled to 11.75 million tonnes during the first ten months of 2025. When imported scrap prices rose, North Asian mills regularly substituted scrap with cheap Chinese billets.

In contrast, scrap demand in developing South and Southeast Asian economies remained highly resilient throughout 2025. Vietnam's scrap imports rose by 32% year-on-year to 5.15 million tonnes, Thailand’s increased by 59% to 1.68 million tonnes, and Indonesia’s rose by 26% to 1.06 million tonnes.

This resilience was supported by sustained infrastructure spending, expanding construction activity, and national steelmaking capacity expansions. Vietnam led this economic expansion, recording 7.9% GDP growth in the first nine months of 2025, with an ambitious 10% growth target set for 2026.

Furthermore, shorter transport distances and smaller transaction volumes have made short-sea scrap shipments from Japan and Singapore increasingly attractive to Southeast Asian electric arc furnace operators, offering greater procurement flexibility compared to large deep-sea bulk shipments.

Strategic Recommendations and Regional Outlook

The convergence of global carbon policies, strict trade controls, and regional supply deficits is transforming the Asian scrap market. High-quality scrap is no longer treated as waste; it has become a strategic secondary raw material critical to industrial competitiveness. As carbon border adjustment mechanisms and emissions-linked trade policies take effect, the ability of Asian steelmakers, electronics manufacturers, and packaging firms to access international markets will depend directly on the carbon intensity of their feedstocks.

To navigate this landscape, market participants and regional policymakers must address several strategic priorities:

The geographical concentration of scrap consumption—heavily clustered in industrial hubs such as Punjab, Jalna, and Chennai in India—demands the establishment of integrated regional processing hubs. These facilities must be equipped with modern sorting, shredding, and testing systems to improve material quality and reduce the logistics costs associated with fragmented scrap supply chains.

Furthermore, industrial players should pursue vertical integration strategies to protect themselves from supply uncertainty and price volatility. This involves investing directly in collection, dismantling, and processing infrastructure, alongside forming strategic partnerships with municipal and industrial waste generators.

To overcome the low scrap recovery rates observed in formal systems—such as the underperforming vehicle scrappage channels—stronger enforcement and better integration of informal waste pickers into formal networks are necessary.

Finally, long-term national planning must combine improved scrap circularity with the development of clean energy technologies. While scrap utilisation provides an immediate and cost-effective pathway for emissions reduction, deeper industrial decarbonisation will require scaling green hydrogen-based direct reduced iron (DRI) steelmaking alongside secondary raw material loops.

By aligning regulatory standards, investing in digital tracking systems, and expanding domestic recycling infrastructure, Asian economies can build a resilient, competitive, and low-carbon industrial future.

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