Vietnam looks to court recyclers, but investors and suppliers stay wary: CMRA Hanoi

Key takeaways:

• Trade shifts are accelerating supply chain fragmentation: Tariffs, export controls and tighter port checks are forcing Chinese buyers to diversify sourcing and rethink transhipment routes.
• Vietnam offers policy support but faces structural limits: Incentives are strong, but informal collection systems, strict import rules and high capex remain major barriers.
• Demand uncertainty caps near-term investment: Weak downstream consumption in China, Japan and Vietnam raises questions over how much new recycling capacity can be absorbed.

Trade disruption reshapes scrap flows

With the US-China trade war that saw tariffs on all US goods into China surge to as high as 125% in April 2025, Chinese importers of recycled material — especially copper and aluminium scrap — have increasingly been rerouting cargoes through transhipment hubs in Southeast Asia and Japan.

Concurrently, Chinese buyers have sought to diversify their supply chains, ramping up intake from Europe, the UK and the Middle East.

But with potential export levies on EU aluminium scrap exports coming in the second quarter of 2026, supply disruptions from the Middle East and increasingly stringent port checks at Thai, Malaysian and Japanese ports, many Chinese buyers were left asking: where from next?

Vietnam seeks to boost role in battery and nonferrous scrap processing

Vietnam is seeking to draw fresh investment into its recycling industry as a part of a broader drive to meet its 2050 net-zero emissions targets, Vietnamese ministry representatives said during their presentations at CMRA 2026.

As part of Vietnam’s revised law on Corporate Income Tax (CIT), which was revised in 2025, recyclers and waste treatment facilities have a preferential CIT rate of 10% for 15 years, while energy-saving product manufacturers have a preferential CIT rate of 17% for 10 years, and all other investment projects are subject to the standard 20% rate.

Under Decision 21/2025/QĐ TTg, battery recyclers can apply for up to three support packages per year, each of up to 20 billion Vietnamese Dong ($800,000) — a move aimed at reducing early-stage investment risks.

Announced in April 2026, Vietnam will also overhaul its Extended Producer Responsibility (EPR) scheme with Decree No. 110/2026/ NĐ-CP, which replaces the 2024 standard. The amendments will take effect on May 25, 2026.

The new framework outlined mandatory recycling rates by product. 

Products with aluminium packaging would need to meet a minimum 22% recycling rate; steel and other metal packaging a minimum 20% recycling rate; rechargeable batteries a minimum 8-12% recycling rate; and all other electrical and electronic equipment a minimum 3-15% recycling rate. 

Manufacturers can either meet the processing requirements or contribute to the Vietnam Environment Protection Fund.

Despite the fiscal incentives, many market participants highlighted major hurdles deterring more investment in scrap processing.

Domestic scrap collection still largely informal

Scrap collection in Vietnam is currently unable to sustain secondary production, keeping secondary smelters and mills heavily reliant on imports.

Most of the domestic scrap comes from over 4,000 “craft villages,” small-scale hubs where waste is processed, often without proper handling, exposing workers to dangerous emissions and hazardous materials, Thong Nguyen, a representative from Vietnam’s Ministry of Agriculture and Environment, said during his CMRA  presentation on May 10.

In contrast, there are only about 35-54 formally recognized recycling companies.

Over 70% of critical steelmaking raw materials — namely iron ore, coking coal and steel scrap — come from imports, according to 2025 data from the Vietnam Steel Association (VSA)..

Fastmarkets’ latest price assessment for deep-sea bulk cargoes of steel scrap, HMS 1&2 (80:20), cfr Vietnam stood at $395-405 per tonne on May 8, unchanged from the week prior.

High barriers of entry for scrap imports

Though domestic scrap collection rates remain lackluster, the Vietnamese government has clamped down on imports of low-grade scrap and hazardous material.

In 2022, the Ministry of Agriculture and Environment formalized Decree No. 08/2022/ NĐ-CP, which determined that most scrap imports need to be processed into higher value-added goods, with only a few conditional licenses allowing temporary import for re-export.

Import licenses also come with a long list of environmental assessment requirements and high capital expenditure. Steep investment costs for production aside, one smelter source said the company even had to build the road leading up to the site.

Moreover, Vietnam maintains an extremely narrow whitelist of grades available for import, creating a highly competitive market for permitted material such as extrusion. In the past year, Vietnamese bids for extrusion with 5% attachments surpassed even bids from Thailand, which has a much larger processing capacity in comparison.

Even for non-permitted material — such as baled used beverage cans (UBC) — traders and scrap suppliers Fastmarkets spoke to still often hear requests for and stories of illegal importers shipping chopped UBC via jumbo bags.

Fastmarkets’ weekly price assessment for aluminium scrap, 95/5 Extrusions (Tata), cif Southeast Asia was $3,100-3,150 per tonne on Tuesday, up by $1,000-1,050 per tonne from $2,050-2,150 per tonne on May 13, 2025.

The corresponding weekly price assessment for aluminium scrap, used beverage cans (Taldon), cif Southeast Asia was $2,500-2,550 per tonne on Tuesday, up by $600-650 from $1,850-1,950 per tonne on May 13, 2025.

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Is there downstream demand to absorb new capacity?

Market participants also expressed doubt about downstream appetite, given Vietnam’s nascent domestic industry and waning demand from major importing nations.

While Chinese imports of aluminium scrap under harmonized system (HS) code 7602 have been on the rise, imports of cast aluminium alloys under HS code 7601.20 have been falling.

Inbound shipments of cast aluminium alloys were a little over a million tonnes in 2025, down by 16.8% year on year from 1.2 million tonnes in 2024, according to Chinese customs data.

Market participants have attributed this decline to the proliferation of domestic ADC12 producers in China in recent years, which has reduced demand for imported alloys.

With electric vehicles (EVs) being de-prioritized in China’s 15th Five-Year Plan and the current glut of local ADC12 material, market participants generally expect import demand to slide further.

Fastmarkets’ weekly price assessment for aluminium ingot ADC12, exw dp China was 22,800-23,100 yuan ($3,338-3,382) per tonne on Wednesday May 13, down by 100-200 yuan per tonne from 23,000-23,200 yuan per tonne the week before, marking a sixth consecutive week of declines.

The Japanese ADC12 import market has likewise been muted in the past year. Despite supply disruptions out of the Middle East and spot prices reaching an all-time high in late April, weak automotive sales have kept import activity on a hand-to-mouth basis.

Japanese import volumes of cast aluminium alloys under HS code 7601.20 plunged to just under 250,000 tonnes in the first quarter of 2026, the lowest level for a first quarter since 2013, Japanese customs data showed.

Vietnam’s nonferrous scrap domestic market remains underdeveloped

As for the Vietnamese domestic market, nonferrous scrap production remains fragmented and there is no centralized database from the government or an industry association.

Vietnam’s aluminium scrap processing capacity is about 700,000 tonnes per year, a representative from the Vietnam Metal Recycling Forum (VMRF) told Fastmarkets.

Downstream, market participant estimates of Vietnam’s ADC12 consumption sits at around 120,000 tonnes per year, with domestic production able to cover about 60,000 tonnes. Many Chinese exporters have been moving aggressively to capture the remaining 60,000-tonne market share, seeking to offset slow demand at home.

Regional suppliers in Thailand and Malaysia have also been looking to get a slice of the pie, quoting as high as $3,380 per tonne CIF Vietnam in the past week, capitalizing on proximity and shorter delivery times for leverage.

For comparison, Fastmarkets’ weekly price assessment for aluminium ingot ADC 12 spot (MJP), cfr Japan was stable at $3,300-3,350 per tonne on Wednesday May 13.

With a slew of vehicle trade-in schemes introduced this year, and a restructuring of Vietnam’s provinces announced last April, policymakers are hoping to stimulate automotive and construction demand and bolster investor confidence in the country’s potential.

“The aluminium recycling sector has been expanding rapidly, especially in the northern provinces of Bac Ninh, Hung Yen and Nam Dinh, and in the southern industrial zones around Ho Chi Minh city, namely in Dong Nai, Long An and Ba Ria-Vung Tau,” the VMRF representative said.

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Secondary copper lags aluminium recycling growth

In contrast, secondary copper smelting capacity continues to trail the rapid gains made in aluminium recycling, according to the VMRF representative.

“Copper scrap consumption is mainly concentrated among medium-sized secondary copper rod and ingot producers serving the electrical and construction sectors. The scrap is also often domestically sourced due to tighter import licensing requirements for copper scrap,” they told Fastmarkets.

Despite an increase from 1,548 short tons in 2024 to 9,767 short tons in 2025, Vietnam still received less than 1% of US copper scrap exports under HS code 7404 in 2025, data from the US Commerce Department showed.

In contrast, exports to Thailand accounted for the largest share, nearly doubling from 105,616 short tons in 2024 to 201,422 short tons in 2025.

Fastmarkets’ weekly assessment of No2 copper wire material, RCu-1C, 2B (birch/cliff), cif China, LME discount was 30-36 cents per lb on May 11, widening by 6-12 cents from 18-30 cents per lb on May 5.

If not Vietnam, where?

While market participants remain largely skeptical of a near-term migration of nonferrous scrap processing to Vietnam, opinion was split on where operations could move to next.

Confidence in Thailand remained resilient. Despite fears that the country could introduce stricter import curbs similar to those in Malaysia, market participants continued to favor Thailand’s advanced secondary metal sector.

“The Thai metal recycling market is way more advanced than it ever was in Malaysia. There’s less corruption in Thailand and way more global automakers and other metal manufacturing companies setting up in Thailand that will need raw material,” a major scrap supplier said.

The Middle East also remains an important node.

“The Middle East is going to be the next big transshipment hub in the next 10 years, connecting the East and West. It’s not waiting for demand, it’s making it,” said Muzzammil Haji Amin Gadawala, vice president and executive board member of the Bureau of Middle East Recycling (BMR), citing major investments in port upgrading and scrap processing across the region, especially in the United Arab Emirates (UAE) and Saudi Arabia.

Other Chinese traders and suppliers were still exploring more unconventional routes, such as transshipment through Bangladesh and Pakistan.

However, ongoing cashflow issues and concerns about whether the South Asian ports could logistically handle higher trade flows meant that these routes remain on the fringes of mainstream trade.

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