Global Scrap Industry Analysis - June 2026

Global Scrap Metal Dynamics: Protectionism, Decarbonisation, and Strategic Imperatives in the Secondary Materials Sector

The global metals recycling sector is undergoing an unprecedented structural transition. Long classified as low-value, post-industrial waste, scrap metal has emerged as a highly coveted strategic resource—the "new gold" of the emerging low-carbon economy. This dramatic shift is fueled by a global industrial pivot toward decarbonisation, with major economies striving to meet net-zero emissions targets by 2050. The primary mechanism of this change is the rapid transition from highly carbon-intensive blast furnace-basic oxygen furnace (BF-BOF) primary production to circular, scrap-reliant electric arc furnace (EAF) pathways. Traditional blast furnaces require substantial virgin iron ore and metallurgical coal inputs and can typically integrate only 15% to 30% scrap. In contrast, EAF operations run almost exclusively on recycled ferrous scrap, utilising up to 90% to 100% recycled feedstock as their primary input.

This industrial evolution has prompted a wave of regulatory protectionism as countries increasingly recognise that securing a reliable, high-quality domestic scrap supply is a prerequisite for competitive green metal manufacturing. The international scrap trade is consequently transforming from a free-market commodity model into a highly restricted, heavily regulated, and technically demanding landscape.

1. Regional Scrap Policies and Their Operational Implications

National and regional regulatory frameworks are fragmenting as governments employ contrasting policy mechanisms to retain secondary materials within their borders and enforce stringent environmental compliance.

The European Union and the Carbon Border Adjustment Mechanism

The European Union has historically functioned as the world's largest exporter of scrap metal, accounting for nearly 20% of global trade and exporting approximately 35.1 million tonnes of waste worth €18.5 billion in 2023. Ferrous scrap represents the largest share of this volume, reaching 19.5 million metric tonnes in 2021. However, this outbound flow is facing immense regulatory contraction.

The revised Waste Shipment Regulation (WSR), adopted in March 2024 and scheduled to enter into export force in May 2027, establishes substantial technical barriers to the movement of non-hazardous waste to non-OECD countries. Under these new rules, exports are prohibited unless importing non-OECD nations submit formal documentation demonstrating their capacity to manage the waste in an environmentally sound manner, achieving standards broadly equivalent to those of the EU. This is preceded by an outright ban on plastic waste exports to non-OECD countries effective 21 November 2026.

The EU Steel and Metal Action Plan, approved in March 2025, proposes evaluating additional trade barriers by the third quarter of 2025 to ensure domestic scrap availability. This legislative push aligns with the ambitions of the European Steel Association (Eurofer) to curb "scrap leakage," where high-paying foreign recyclers—often operating in subsidised markets with lower environmental overheads—buy up premium EU scrap, leaving domestic steelmakers short of the primary input needed to support a projected 60% increase in local EAF capacity. Recycling federations, including the Bureau of International Recycling (BIR) and the European Recycling Industries' Confederation (EuRIC), oppose these measures, warning that export barriers risk depressing regional prices, disrupting the global circular economy, and discouraging domestic collection.

Operational complexities are further magnified by the Carbon Border Adjustment Mechanism (CBAM), transitioning to its definitive phase in January 2026, and the upcoming "melt and pour" origin rule effective 1 July 2026, which mandates rigorous documentation tracking the country of initial melting for all imported steel products.

The United Kingdom and Post-Brexit Trade Friction

Since its departure from the European Union, the United Kingdom has operated an independent waste shipment regime overseen by the Environment Agency, though it remains broadly aligned with the Basel Convention and OECD guidelines. Post-Brexit, UK scrap metal exporters, who previously shipped approximately 7 million tonnes of secondary materials annually to the EU, have faced severe administrative and financial friction.

Simplified internal market procedures have been replaced by comprehensive customs declarations, costing £25 to £50 per shipment, alongside extensive port delays at Dover and other major exit terminals. UK exporters must navigate complex commodity classifications under the Customs Declaration Service (CDS) and obtain mandatory Export Health Certificates for shipments of demolition scrap that may have theoretically contacted animal products (e.g., in food processing plants or abattoirs).

The industry faces additional challenges regarding "End-of-Waste" criteria. Material classified as a processed product in the UK is frequently challenged by EU port inspectors as waste, forcing exporters to undergo expensive notification and consent procedures. Navigating these notifications requires a fee of £97.03 for every subsequent operational amendment.

Domestic operations are strictly regulated by the Scrap Metal Dealers Act 2013, which mandates separate site and mobile collector licences, detailed record-keeping of supplier identities, and cashless transactions to prevent tax evasion and eradicate illegal "car breakers" who bypass official channels. Furthermore, end-of-life vehicles (ELVs) must undergo complete depollution at licensed Authorised Treatment Facilities (ATFs) before any scrap fractions can be legally exported.

The United States and the Battle Over High-Quality Feedstock

The United States represents a highly active, dual-natured scrap market, functioning simultaneously as a major global exporter and a highly competitive importer. The domestic industry has historically championed open trade, with the Recycled Materials Association (ReMA) pointing out that the sector exported nearly $27.7 billion in recycled materials in 2024. While the US Environmental Protection Agency (EPA) provides regulatory relief by excluding processed scrap metal from the definition of solid waste under the Resource Conservation and Recovery Act (RCRA) to encourage recycling, primary metal manufacturers are actively lobbying for protective export controls.

The US Aluminum Association has launched a targeted campaign outlined in its white paper, Scrap the Exports, Save U.S. Supply, urging federal authorities to implement an immediate ban on the export of Used Beverage Containers (UBC) outside of North America. The US currently faces an annual supply deficit of approximately 3.5 million metric tonnes in raw, unwrought aluminium, which is met through primary metal imports. The association argues that keeping UBCs—which consume only 5% of the energy needed for primary bauxite smelting—within domestic borders would help close 25% to 50% of this supply gap.

The domestic recycling industry currently processes 5 to 6 million metric tonnes of aluminium scrap annually while exporting over 2 million metric tonnes, creating a clear supply-chain vulnerability. Under these pressures, primary manufacturers are calling for updated USHTS and Schedule B trade codes to track and restrict high-value, mill-ready scrap. They are also pushing for the passage of the bipartisan CIRCLE Act to subsidise sorting infrastructure for lower-grade scrap like Zorba and Twitch.

In the steel sector, the Steel Manufacturers Association (SMA) estimates that EAF operations will expand to account for 90% of total US steel production by 2040, drawing heavily on the massive domestic "reservoir" of end-of-life steel accumulated through decades of importing steel-containing products.

The United Arab Emirates and the Shift from Bans to Tariffs

The United Arab Emirates has transitioned from an absolute protectionist stance to a structured tariff model. Between May 2020 and late 2023, the UAE maintained an outright ban on the export of ferrous scrap and other industrial waste to safeguard the raw material needs of its domestic steel mills. In a major policy shift, the government lifted this ban and replaced it with a schedule of export duties.

To export industrial waste, companies must register with the Ministry of Economy and pay targeted tariffs based on material type. Exporters must submit a trading licence, Bill of Lading, commercial invoice, and a specific permit from the Ministry of Climate Change and Environment (MoCCAE) when shipping hazardous materials, with an average application processing time of 3 working days.

To further formalise the domestic trade, the UAE implemented Cabinet Decision No. 153 of 2025, which introduced a domestic reverse charge mechanism (RCM) for VAT on scrap transactions starting 14 January 2026. By shifting the VAT reporting obligation from the seller to the purchasing business, the policy has successfully minimised tax evasion across complex intermediary trade chains, establishing a transparent framework that treats scrap as a key economic asset rather than a waste residue.

China and the Recycled Raw Materials Classification

Following its historic "National Sword" policy in 2018, which banned unsorted solid waste imports, China has systematically updated its trade rules to permit high-quality secondary metals. Under standardisation guidelines enacted by the Ministry of Ecology and Environment (MEE) effective 15 November 2024, qualifying recycled copper and aluminium are no longer classified as solid waste and can be imported freely without quota restrictions.

To qualify under this standard, materials must align with specific customs codes and satisfy strict chemical purity thresholds. China's quality criteria remain exceptionally high: No. 1 and No. 2 copper scrap require a minimum 97% copper content, copper nodules must achieve at least 98% purity, and recycled aluminium must hold at least 91% physical aluminium content, with non-metallic inclusions strictly capped at 0.8% across all categories.

Because these standards exceed the 95% copper purity accepted elsewhere in Asia, Chinese buyers pay a substantial premium (averaging 94% to 95% of LME prices compared to 90% to 92% in other Asian regions). This has led to high import costs, exacerbated by unfavorable arbitrage conditions where second-quarter 2024 copper and aluminium import arbitrage recorded losses of $244.57 and $260.76 per tonne, respectively.

Transactions with European exporters are typically structured under Cost and Freight (CFR) terms to major Chinese ports (such as Shanghai, Ningbo, and Qingdao) with payment terms of 30% Telegraphic Transfer (TT) advance and 70% Letter of Credit (LC) at sight. The most sought-after grades include Taint/Tabor (6061 alloy), Used Beverage Cans (UBC), high-purity aluminium wire scrap, and 6063 extrusion profiles.

Australia and the Campaign Against Unprocessed Waste Exports

Australia regulates its waste recovery through the Recycling and Waste Reduction Act, which has successfully banned the export of unprocessed municipal waste streams such as glass, plastics, paper, and tyres. However, unprocessed metal scrap remains outside these absolute bans, prompting a significant campaign by domestic steel manufacturers like InfraBuild, the Australian Steel Institute (ASI), and the National Waste and Recycling Industry Council (NWRIC) to secure a national prohibition on the export of unprocessed ferrous scrap.

Australia currently exports approximately 1.1 million tonnes of unprocessed ferrous scrap annually, primarily in the form of baled end-of-life vehicles and white goods to developing nations including India, Indonesia, and Vietnam (accounting for 50% to 60%) and Bangladesh, Taiwan, Thailand, and Malaysia (accounting for 35% to 40%). Economic modeling shows that these unprocessed scrap exports contain 25% to 30% (approximately 268,000 to 321,000 tonnes) of attached non-metallic contaminants, including hazardous plastics, glass, textiles, and tyres.

By shipping these complex mixtures, exporters effectively bypass the domestic waste export bans, shifting the burden of contaminated residue disposal to developing nations that often rely on open landfills. ASI argues that processing this material locally would support the domestic transition to low-carbon EAF steelmaking, reduce transport-related emissions by over 81,000 tonnes of $CO_2e$, and save 1.2 million tonnes of greenhouse gases compared to processing virgin iron ore.

Additionally, operators handling specialized metals must navigate strict environmental controls: hydrofluorocarbon (HFC) refrigerants must be recovered from scrap cooling equipment by licensed technicians, with wholesalers receiving a $3/kg rebate for returned scheduled gases, and whole or densely packed tyres remain illegal to export without specific processing licences.

2. Comparative Analysis of Leading Scrap Policies

To understand how national policies shape the global flow of secondary materials, the following matrix compares the key regulatory and operational mechanisms across these jurisdictions.

3. Pre-processing Hubs and Developing Market Interventions

As traditional direct trade routes from Western generators to Chinese smelters face mounting regulatory and quality barriers, a network of intermediary pre-processing hubs has emerged across Asia.

Malaysia: The Quality Filtering Corridor

Following China’s import restrictions, Malaysia emerged as a primary destination for importing lower-grade global scrap, sorting and processing it domestically, and exporting the refined, high-purity metal to China. To prevent environmental degradation from residues, the Malaysian inspection authority, SIRIM, implemented strict Certificate of Approval (COA) requirements on 31 December 2021.

Under these rules, only approved manufacturers with licensed domestic processing facilities can import scrap metal. Furthermore, SIRIM enforces strict limits on non-target metals, plastic contamination, and electrical waste, while completely banning the import of mixed paper under HS Code 4707.90.

Vietnam: Preferential Tax Incentives and Infrastructure Challenges

Vietnam is actively seeking to position itself as a key destination for copper, aluminium, and battery recycling as part of its broader campaign to achieve net-zero emissions by 2050. Under its revised Corporate Income Tax (CIT) law of 2025, recyclers and waste-treatment facilities are eligible for a preferential 10% tax rate for 15 years, while battery recyclers can access up to three government support packages per year, worth up to VND 20 billion ($800,000 USD) each.

The government also overhauled its Extended Producer Responsibility (EPR) system under Decree No. 110/2026/NĐ-CP, mandating minimum recycling rates by product, including 22% for aluminium packaging and 20% for steel packaging.

Despite these fiscal incentives, investors face significant structural hurdles. Over 70% of Vietnam's key steelmaking raw materials (including coking coal, iron ore, and scrap) are imported, leaving the local industry exposed to international supply shocks. Domestic scrap collection remains largely informal, concentrated in more than 4,000 "craft villages" that operate without modern environmental controls.

Additionally, import licences require long, expensive environmental impact assessments, and international buyers face high capital expenditure requirements, sometimes even having to construct the public road infrastructure leading to their smelter sites.

India: The Vehicle Scrappage Policy and the Informal Market Barrier

India is working to formalise its recycling sector through the Steel Scrap Recycling Policy and the Voluntary Vehicle-Fleet Modernisation Programme (Vehicle Scrappage Policy). The scrappage policy targets commercial vehicles older than 15 years and personal vehicles older than 20 years, requiring mandatory fitness testing at Automated Testing Stations (ATS). Failing vehicles are designated as End-of-Life Vehicles (ELVs) and must be dismantled at Registered Vehicle Scrapping Facilities (RVSFs).

To encourage compliance, the policy offers vehicle owners a scrap value payout (ranging from 4% to 6% of the new vehicle's ex-showroom price), a 25% state motor vehicle tax rebate on new personal cars (15% on commercial vehicles), and a complete registration fee waiver. ATS and RVSF establishments are managed through a single-window clearance system, with approvals deemed granted if state agencies delay registration beyond 60 days.

However, data from the government advisory body NITI Aayog shows that the policy has struggled to align with market realities. Between 2022 and 2025, an estimated 12 million vehicles were categorised as ELVs, but only 350,000 units (approximately 3%) were formally processed at registered facilities.

The program has faltered because informal, unregulated scrap yards—operating with zero compliance, environmental, or tax liabilities—can consistently offer vehicle owners immediate cash payouts that exceed the financial incentives offered by the formal, RVSF-approved system. With India's total ELV stock projected to rise from 23 million in 2025 to nearly 50 million by 2030, formalising this value chain remains a major challenge.

4. Strategic Interventions to Overcome Trade and Policy Barriers

To remain competitive as protectionist export limits and technical import barriers multiply, global scrap metal companies must move beyond traditional trading models and adopt more sophisticated operational strategies.

Deployment of Advanced Sensor-Based Sorting Arrays

Scrap yards must transition from manual sorting and basic magnetic separation to integrated, automated sorting lines capable of producing high-purity, single-alloy fractions.

• Near-Infrared (NIR) Spectroscopy: This technology is deployed to scan shredded conveyor flows, identifying and isolating non-metallic contaminants like plastics, rubber, and wood to ensure compliance with strict import tolerances.
• X-ray Fluorescence (XRF) and X-ray Transmission (XRT): These systems analyze atomic density and elemental composition, separating heavy non-ferrous fractions (such as copper, zinc, and brass) from bulk shredded aluminium.
• Laser-Induced Breakdown Spectroscopy (LIBS): Representing the state of the art in non-ferrous recovery, LIBS systems utilize high-speed lasers to determine the chemical composition of individual alloy fragments in milliseconds. This allows operators to separate visually identical alloy series, such as isolating 5000-series (magnesium-rich) from 6000-series (silicon-magnesium) aluminium alloys from automotive shredder scrap.

By producing certified, single-alloy streams, recyclers can bypass "waste" classifications altogether, shipping their output under "recycled raw material" codes that are exempt from trade bans. Furthermore, integrating specialized compliance software—such as the AMCS Grading and Quality modules—allows exporters to document and verify material quality prior to shipping, minimizing the risk of costly port rejections in highly regulated jurisdictions like Malaysia.

Corporate Consolidation and Vertical Integration

To insulate themselves from volatile spot pricing and secure a consistent raw material supply, primary metal manufacturers are rapidly acquiring upstream scrap metal processors. Independent recyclers must evaluate strategic partnerships or joint ventures with these major integrated producers to survive.

In the US market, this trend is highly visible. Cleveland-Cliffs acquired Ferrous Processing and Trading Company (FPT)—which processes approximately 15% of the US merchant prime scrap market—for $775 million, establishing a direct pipeline to buy back high-purity industrial scrap from its major automotive stamping clients. Cleveland-Cliffs expanded this integrated footprint by acquiring Stelco for $2.5 billion in 2024, securing low-cost integrated steelmaking sites in Canada.

Similarly, companies like BlueScope, Steel Dynamics, Nucor, and Gerdau have built extensive captive recycling networks, shifting pricing influence away from independent metal brokers.

5. Macroeconomic Analysis: Is Scrap the New Gold?

The assertion that scrap metal is the "new gold" is supported by both global supply-demand imbalances and the physical realities of energy and carbon accounting.

The Thermodynamics of Carbon and Resource Savings

Recycled metals function as a concentrated form of "stored energy," bypassing the carbon-intensive extraction, transport, and chemical reduction steps required to refine primary ores. The resource and energy savings achieved by recycling secondary metals are significant:

1 Tonne Recycled Steel ⟹ Saves 1,134 kg Iron Ore + 635 kg Coal + 54 kg Limestone

1 t Carbon Steel Scrap ⟹ Saves 1.5 t CO₂ emissions

1 t Stainless Steel Scrap ⟹ Saves 5.0 t CO₂ emissions

For aluminium, the thermodynamic advantage is even larger: recycling post-consumer scrap requires only 5% of the energy needed for primary bauxite smelting. If the US recycled all of the aluminium scrap it currently exports, it would save an estimated 31 billion kWh of electricity, which is equivalent to the annual energy consumption of approximately 3 million homes.

The Impending Structural Deficit (2025–2030)

Global steel scrap demand is projected to grow at a compound annual growth rate (CAGR) of 3.3% through 2030, while supply is expected to grow at a slower rate of 3.0% CAGR.

This mismatch is projected to shift the global scrap market from a 9 million metric tonne surplus in 2023 to an absolute deficit of 15 million metric tonnes by 2030.

  Global Ferrous Scrap Balance Projection (2023 vs 2030)  Metric Tonnes   20,000,000

The deficit is driven by the global transition toward EAF steelmaking, which is projected to expand from 29% of global steelmaking capacity in 2024 to over 41% by 2030. The shortage is expected to be most acute in high-quality prime scrap, where the global deficit could approach 30 million metric tonnes by 2030.

This is compounded by historical manufacturing trends: because post-consumer scrap relies on vehicles and appliances manufactured 15 to 40 years ago, the sharp decline in manufacturing during the 2008 global financial crisis and the 2020 pandemic has limited the volume of obsolete scrap entering the recycling stream today.

Consequently, global scrap trade is projected to contract by 15% as major producing nations restrict exports to meet domestic industrial demand.

Global Raw Material and Pricing Trend Outlook (2025–2028)

To understand how scrap prices interact with traditional raw materials under these structural pressures, the following matrix outlines the medium-term price projections for key steelmaking inputs.

These trends show that while virgin ores and coal are projected to face downward price pressure due to global steel overcapacity and declining demand, scrap metal prices are expected to remain more resilient, rangebound under steady EAF demand.

Stephen Mikkelsen, CEO of global metals recycler Sims Metal, notes that industrial excess in China will continue to dampen global steel and ferrous scrap prices outside the United States.

Additionally, new greenfield EAF projects face significant capital expenditure hurdles, with capital costs representing 12% to 21% of total EAF steel production costs in 2026, which may delay some planned capacity additions.

The Geopolitics of the "Greenium" (Green Steel Premium)

The valuation of scrap metal is also influenced by the "Greenium"—the price premium buyers pay for verified, low-carbon steel produced via scrap-reliant EAF or hydrogen-based DRI processes. However, this premium is highly dependent on regional climate policies, illustrating that the value of scrap is tied to localized regulatory support.

In Europe, where CBAM and the EU ETS impose real financial penalties on carbon emissions, the green steel flat-rolled premium differential against the hot-rolled coil (HRC) index stabilized at €100 to €170 per tonne in early 2026, down from its late-2023 peak of €200. For long-term certified supply contracts, European automakers paid premiums of €200 to €350 per tonne for steel with verified emissions below 1 tonne of $CO_2$ per tonne of metal.

Conversely, in the United States—where EAF capacity is highly mature and carbon compliance is voluntary—a recognized green premium has yet to emerge, with the US green flat steel differential sitting at zero since mid-2024. In China, buyer willingness to pay is capped at approximately $20 per tonne, even though local low-carbon EAF steel production costs are roughly $140 per tonne higher than conventional BF-BOF routes.

This regional divergence suggests that while scrap metal is a highly valuable resource, its full premium value is unlocked only in markets with active, enforceable carbon pricing mechanisms.

6. Conclusions and Actionable Strategic Recommendations

The transition of scrap metal from a cheap waste product to a strategic industrial asset has permanently reshaped the global recycling industry. To remain profitable and navigate this protectionist landscape, scrap operators and metal manufacturers should focus on several key strategic objectives:

1. Invest in Sensor-Based Purification: Processors must deploy automated, sensor-based sorting lines—integrating NIR, XRF, and high-frequency LIBS systems—to refine mixed scrap into certified, single-alloy fractions. This allows exporters to meet strict purity standards, such as China's 0.8% inclusion limit, and bypass waste classifications by shipping materials as high-purity raw products.
2. Form Integrated, Closed-Loop Partnerships: Independent recycling yards should pursue joint ventures or long-term supply agreements with major domestic EAF mills. By establishing direct buy-back programs with industrial consumers (such as automotive stampers), recyclers can secure a reliable source of high-purity prime scrap, reduce exposure to volatile spot prices, and protect their business from market consolidation.
3. Establish Multi-Hub Intermediary Facilities: To navigate strict unilateral export limits like the EU’s Waste Shipment Regulation, exporters should set up pre-processing operations in transitional hubs with favorable trade policies and local processing incentives (such as Malaysia or Vietnam). Refining lower-grade scrap into premium alloys in these intermediary countries allows companies to legally export the processed materials as industrial products rather than restricted waste.
4. Adopt Digital Origin and Emissions Tracking: Scrap companies must implement digital tracking systems, including machine vision loggers and blockchain-enabled ledger systems, to document the exact origin, grade, and carbon footprint of their materials. Under upcoming regulations like CBAM and the EU’s "melt and pour" requirements, providing verified, auditable emissions data is essential for recyclers to capture a share of the European "greenium".