n° 160 – April/May 2019

At the time of writing, there is still no resolution to Brexit or to the US/China trade conflict. Meanwhile, the exact details of China’s new recycled metals import policy and procedures from July 1 are still clouded, with many unanswered questions. All of these factors will have profound effects on our global metal markets.

While China’s economy is expected to slow to 6.3% growth this year and 6.1% in 2020, it is now being reported that the main South East Asian countries of Malaysia, Indonesia, the Philippines, Thailand and Vietnam are seen as broadly stable, with 5.1% GDP growth anticipated for this year rising to 5.2% in 2020. This stable growth is the result of multi-national corporations diversifying their manufacturing bases away from China. Despite confidence that a US/China trade deal will be reached, establishing new manufacturing hubs should allow these companies to reduce their supply chain risk if future trade disputes arise.

The well-publicised ban on plastic scrap imports in Asian countries such as Malaysia, Thailand, Vietnam and India has spotlighted the unlicensed, illegal processors operating in these regions. It has been reported that some 150 unlicensed processors have been shut down within the last 10 months. These actions have clearly also brought attention to the metal scrap industry and legitimate, licensed processors. Such attention has not detracted from the scores of new metal scrap processors emerging within the region; this unprecedented surge in new scrap processing facilities, particularly in Malaysia, has created a quite sizeable marketplace.

While there was uncertainty about the amount of scrap that could be diverted from China to South East Asia and in which country the scrap would find its new home, it is clear Malaysia has risen to the top of the region’s scrap metal industry.

As mentioned above, many questions remain unanswered concerning China’s new recycled metal policy from July 1. As a result, we have seen most recently a slowing of the aggressive buying of copper-based items and widening of discounts, this being a response to the uncertainty over which forms of scrap will be allowed into China after July 1. It has been rumoured that even copper granules may be in question. The next 30-60 days should give us all some clarity as to what the balance of 2019 will bring.

Darrell Wong - Darrell Wong (South East Asia)

Darrell Wong

Liberty Iron & Metal, Inc. (USA), Board Member of the BIR Non-Ferrous Metals Division

South East Asia
n° 160 – April/May 2019