Vietnam is positioning itself as a future hub for scrap metal recycling and nonferrous processing, but structural supply shortages, strict import rules, and uncertain downstream demand continue to limit investor confidence. The shift comes as global scrap flows are being reshaped by US-China trade tensions, tighter environmental rules, and emerging Southeast Asian transshipment routes for copper scrap, aluminium scrap, and secondary metals.
Global Trade Disruption Redirects Scrap Metal Flows
Rising tariffs and trade friction between the US and China have significantly altered global scrap metal trade routes. Chinese importers of recycled materials, particularly copper scrap and aluminium scrap, have increasingly rerouted cargoes through Southeast Asian hubs such as Vietnam, Thailand, Malaysia, and Japan.
At the same time, China has diversified sourcing from Europe, the UK, and the Middle East. However, tightening port inspections and the prospect of future export levies on EU aluminium scrap are adding new layers of uncertainty to global scrap logistics.
These disruptions have created short-term arbitrage opportunities but also increased volatility in pricing and availability across key nonferrous scrap corridors.
Vietnam’s Recycling Incentives and Policy Push
Vietnam is expanding its recycling and waste treatment sector. This is part of its 2050 net-zero emissions strategy. The government has introduced tax incentives. Recycling projects benefit from a 10% corporate income tax rate. Energy-efficient manufacturing is taxed at 17%.
Additional support comes from Decision 21/2025. Battery recyclers can access annual funding packages under this policy. Vietnam has also updated its Extended Producer Responsibility (EPR) framework. It sets mandatory recycling targets for aluminium packaging, steel packaging, batteries, and electronic waste.
Despite these measures, major constraints remain. Infrastructure gaps continue to limit sector growth. Most scrap collection is still informal. It relies on fragmented “craft village” operations. Only a small number of formal recycling companies operate at scale.
Structural Barriers in Scrap Supply and Import Dependence
Vietnam’s domestic scrap supply is insufficient to support large-scale secondary metal production, forcing heavy reliance on imports. More than 70% of critical steelmaking inputs, including scrap metal, are sourced externally.
Regulatory restrictions also limit import flexibility. Strict licensing rules, environmental compliance requirements, and narrow approved scrap grade lists have created bottlenecks for both aluminium scrap and copper scrap inflows.
Despite strong import demand for select grades such as aluminium extrusions, market participants report rising competition and logistical constraints. Meanwhile, concerns persist over downstream demand absorption, particularly as China’s aluminium alloy market weakens and ADC12 demand slows.
Regional Competition and Shifting Scrap Trade Hubs
While Vietnam aims to expand its recycling footprint, market participants remain cautious about its near-term ability to scale. Domestic aluminium scrap capacity is growing, but still far below potential consumption needs.
In contrast, Thailand continues to strengthen its position as a regional processing hub due to more established industrial infrastructure. The Middle East is also emerging as a long-term competitor, with significant investment in port infrastructure and recycling capacity in the UAE and Saudi Arabia.
Secondary copper processing in Vietnam remains particularly underdeveloped compared to aluminium, with most copper scrap consumption concentrated among small and mid-sized producers serving electrical and construction sectors.
Market Impact
○ Impacted Metals: Aluminium scrap (95/5 extrusions), aluminium scrap (used beverage cans), copper scrap No.2 wire (birch/cliff), ADC12 aluminium alloy, HMS 1&2 steel scrap
○ Direction: Mixed
○ Time Horizon: Medium-term to 2027
○ Affected Industries: Recycling, aluminium smelting, copper refining, steelmaking, automotive, electronics manufacturing, construction
○ Related Price Reports: Aluminium Weekly Price Report, Copper Weekly Price Report, Steel Scrap Weekly Price Report
○ Watch Item: Monitor whether Vietnam relaxes scrap import licensing rules or expands approved scrap grades in 2026 to attract large-scale recycling investment.
SuperMetalPrice Commentary:
Vietnam’s recycling strategy highlights the gap between policy ambition and physical scrap availability. Incentives are improving investor sentiment, but structural dependence on imported scrap remains the key constraint.
In the near term, regional competition from Thailand and emerging Middle Eastern hubs will likely determine how scrap flows are redistributed across Asia.
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