ASEAN Scrap Aluminum Market Amidst the Shifting Global Economy: Trends, Policies, and Long-Term Outlook

In the context of the global economy undergoing profound changes in trade structure, supply chains, and green transition, recycled materials in general, and aluminum scrap in particular, are becoming strategic elements for sustainable industrial development. The Southeast Asian (ASEAN) region, with its critical geographical position connecting two oceans, has emerged as a global hub for transshipment, processing, and trade of aluminum scrap. Countries like Thailand, Malaysia, and Vietnam have entered this value chain redistribution with increasingly distinct roles, creating a diverse recycling ecosystem based on geographical advantages, industrial capacity, and policy frameworks.

As the price of primary aluminum continues to be affected by factors such as bauxite-ore shortages, escalating energy costs, and mounting environmental pressure, recycled aluminum has become an energy-saving alternative, cutting CO₂ emissions by over 95% compared to primary aluminum production. This has placed the scrap aluminum market at the center of the global circular economy strategy, especially in the automotive, construction, household appliances, and electronics sectors.

The diversity in policy approaches among ASEAN countries presents opportunities while also creating significant differences in the role of each nation within the regional supply chain. Some countries broaden their scrap trade corridors to attract investment; others actively tighten import restrictions due to fears of becoming industrial waste dumping grounds. This polarization will directly impact the goal of moving toward a low-carbon aluminum supply chain.

ASEAN – The Bridge for Scrap Aluminum Trade Between East and West

The strategic location between the Indian and Pacific Oceans gives ASEAN a crucial role in goods transshipment, with aluminum scrap being one of the largest flow commodities. Scrap streams from the US, Japan, Canada, Australia, and Europe are routed to Southeast Asia for processing, refining, and export in the form of semi-finished products or standard ingots like ADC12. These nations serve as critical input suppliers for China, India, and South Korea—industries with massive demand.

Structural trade relationships are gradually forming here: the US provides abundant scrap sources, Japan and Europe supply high-purity scrap streams, while Southeast Asia plays the role of processing and recycling. ASEAN becomes an intermediary link as many developed nations increase restrictions on scrap exports to China, forcing trade flows to bypass through SEA for impurity removal.

Regional Scrap Aluminum Flows and Trade Dynamics

Market data for 2024 shows ASEAN imported $13.3$ million tons of aluminum scrap and exported $7.1$ million tons. Thailand leads in imports, thanks to favorable port systems, a vibrant casting and mechanical engineering sector, and superior ADC12 production capacity. Malaysia and Vietnam follow closely, while Indonesia has grown significantly due to infrastructure expansion.

The US is the largest source due to a nationwide scrap collection system, high aluminum can consumption, and relatively loose export control policies. Cambodia draws attention as most of its domestic aluminum scrap is shipped directly to Thailand, creating a dependent micro-supply chain.

Meanwhile, export data from Malaysia reveals a significant discrepancy between national statistics and partner customs figures, raising suspicions of declaration fraud and off-the-books flows. This issue once again highlights the lack of customs data harmonization among ASEAN members.

Thailand – The Region’s Leading Aluminum Recycling and Processing Hub

Thailand has stepped out of Malaysia’s shadow to become the largest recycling center in Southeast Asia. Its strategic location between the Malacca Strait and the South China Sea, deep-sea port system, material inspection capacity, and the involvement of many FDI enterprises give the country an edge in both transshipment and deep recycling.

Since the early 2020s, the Thai government implemented a series of measures to control imported scrap according to the Basel Convention, completely banning e-waste and increasing controls on hazardous waste. Under the Prime Minister’s term beginning in September 2025, there are no signs of further tightening, suggesting a relatively stable policy—a crucial condition for businesses’ long-term planning.

Thanks to its leading ADC12 production scale in ASEAN, Thailand is an important supplier to China, India, and Japan. The transition to low-carbon materials creates an added competitive advantage for the country, as manufacturers of household appliances, automobiles, and 3C look for certified carbon suppliers.

Vietnam – Emerging Recycling Hub and Progress in Low-Carbon Aluminum Export

Vietnam has emerged as a dynamic aluminum scrap recycling country, especially in the UBC (Used Beverage Can) and ADC12 segments. The industry’s growth stems from three factors: rapid urbanization, a developing supporting mechanics industry, and surging demand for auto/motorcycle component manufacturing.

Vietnam’s scrap management policy is trending toward gradual tightening, evidenced by regulations requiring an import deposit based on weight since 2015 and mandatory impurity limits since 2018. The decision to temporarily suspend the temporary import for re-export of aluminum scrap from 2025–2030 signals a direction to reduce environmental risks while encouraging the upgrade of domestic processing capacity.

As China tightened scrap imports from 2018, Vietnamese enterprises leveraged their advantage to export recycled finished products. Domestic producers now have the opportunity to expand by increasing refining purity, aiming for low-carbon certification, aligned with European standards.

Malaysia – From Key Recycling Center to Competitive Challenges

The position once held by Malaysia was established by advanced port infrastructure and low transport costs. However, recent policy changes, such as raising the export tax to $10\%$ for aluminum scrap and demanding extremely high purity standards, have significantly slowed scrap trade.

Goods subject to strict inspection through the SIRIM system have led to congestion at ports. The situation is exacerbated by maritime security crises in the Red Sea disrupting shipping schedules. Consequently, many importers have shifted to Thailand.

In the future, if Malaysia restores the balance between environmental control and trade fluidity, its transshipment position could recover due to the geographical advantage of lying directly on the India-China shipping route.

Indonesia, Singapore, and the Philippines – Development Potential within Natural Limits

Indonesia implemented pre-shipment inspection (PSI) since 2021 and has ramped up scrap sorting. An incident involving Cesium-137 radioactive contamination led the country to shift toward extremely stringent radiation safety control. However, the rapidly developing upstream aluminum metallurgy industry will help Indonesia quickly become a notable secondary aluminum producer in the medium term.

Singapore, with its limited area, restricts recycling capacity and primarily serves as a logistics transshipment hub. The adoption of the PIC system for e-waste in 2025 will indirectly affect the aluminum scrap chain, as data interoperability is enhanced.

The Philippines is limited by processing infrastructure. Although radiation control regulations are implemented, the lack of industrial-scale recycling facilities hinders the sector’s development.

Peripheral Countries and Overlooked Potential

Myanmar, Laos, Cambodia, Brunei, and Timor-Leste have not yet developed systematic aluminum scrap recycling industries. Cambodia stands out the most due to high domestic UBC production, supplying material to Thailand. With appropriate infrastructure investment, Cambodia could become a medium-scale processing center.

Laos has the advantage of proximity to China but faces logistical obstacles due to being landlocked. If cross-border rail transport is developed, the country could follow Vietnam’s model.

Conversely, Myanmar faces political instability, which increases investment risk. Brunei and Timor-Leste focus on foundational development challenges, so the recycled aluminum industry is not expected to be a priority.

Informal Economy and the Problem of Scrap Aluminum Smuggling

Policy differences among ASEAN members inadvertently create loopholes for scrap smuggling. Discrepancies in taxes, inconsistent radiation inspection, difficult-to-control waters, and non-harmonized import procedures become ideal conditions for the underground economy.

Mass arrests in Malaysia and Thailand reveal the sophistication of these networks. Smuggling creates risks: lost tax revenue, contamination hazards, abnormal market price fluctuations, and diminished national credibility.

A regional traceability mechanism—similar to the Container Security Initiative inspection system—is seen as a viable option to reduce cross-border vulnerabilities.

Global Trends Fueling the ASEAN Scrap Aluminum Market

Three major factors are consolidating ASEAN’s role:

• (1) The critical minerals agreement with the US promoting investment in recycling.
• (2) Trade negotiations with Canada opening up the North American low-carbon market.
• (3) The ACFTA 3.0 upgrade with China enabling more transparent traceability standards.

Concurrently, the automotive, construction, and electronics sectors are committing to emission reductions under ESG standards, rapidly increasing demand for carbon-certified recycled aluminum. This opens up the opportunity to become a global-scale low-carbon material supply center.

However, LME aluminum price volatility since October has squeezed many businesses’ profit margins. Sellers hoard, buyers delay, and the market becomes illiquid. If prolonged, the supply chain could be disrupted—especially in export-dependent nations.

Structural Challenges

Alongside opportunities, ASEAN must confront a series of issues:

• Lack of unified impurity standards.
• Uneven inspection and testing capacity.
• Small enterprises constitute a large proportion but use outdated technology.
• Slow investment in recycling furnaces using renewable energy.
• Risk of secondary emissions and wastewater pollution.

If countries do not standardize processes—from collection and sorting to refining—the global trend toward green materials could leave ASEAN in a passive position.

Future Strategy: Digitization, Harmonization, and Carbon Certification

To maintain a competitive position, ASEAN needs three core strategies:

• First, implement digital traceability for cross-border scrap, based on blockchain technology and standardized coding systems. This helps combat smuggling, reduce material fraud, and transparently track the carbon footprint.
• Second, encourage investment in recycling furnaces using clean energy. A large portion of CO₂ emissions comes from traditional fossil fuels, so switching to solar power or biomass gasification will create a competitive edge.
• Third, advance AI-powered scrap sorting. Countries that lead in sorting technology will control the flow of high-quality raw materials.

Overall Outlook

Overall, ASEAN faces a rare opportunity to become a global low-carbon material hub. If countries harmonize import standards, adopt modern recycling technologies, and upgrade inspection infrastructure—the recycled aluminum ecosystem will accelerate dramatically.

Conversely, policy fragmentation, lack of customs transparency, and raw material price volatility will negatively impact the region, leading to a cycle of material shortages, overcapacity, and environmental risks.

The ASEAN scrap aluminum ecosystem stands at a strategic crossroads: either becoming an international-standard clean aluminum recycling center or continuing to be fragmented by non-harmonized policies. Success will depend on collective action, including regional policy planning, investment in digital traceability, technology upgrades for sorting, and support for small enterprises in the low-carbon transition.

Recycled aluminum is no longer an industrial by-product but a core material for the circular economy strategy. If ASEAN seizes this golden opportunity, the region can shift from being a supplier of cheap raw materials to a producer of carbon-certified recycled aluminum products, positioning itself in the global value chain of the next generation of green industries.

According to: metal.com and compiled from the internet.