n° 168 – September/October 2020

Just as nearly all South East Asian countries are attempting to ease their COVID-19 restrictions, several are experiencing a concerning second wave of cases: Indonesia, the Philippines and Myanmar have all reported recent upsurges, most likely as a result of the premature easing of restrictions.

While GDP in this area as a whole was projected to increase by 1-1.5% prior to the COVID pandemic, the economies of many developing nations in the South East Asia/Pacific region are now expected to register a decline of 3.5-4% this year. Despite such a dire forecast, some countries are expected to finish off 2020 by escaping negative GDP growth. According to a report from the Asian Development Bank, Vietnam and China are both expected to record GDP growth of 1.8% in 2020. Countries relying heavily on tourism have proved to be the most vulnerable to this economic downturn, and yet Vietnam has profited from replacing the void created by declining Chinese exports early in the year. The country’s manufacturing sector had been taking over certain market segments even before the crisis as the Chinese economy was transitioning to a higher value-added, service-oriented model.

Many scrap recycling businesses within the region are operating at quite high production levels owing to a localized labour force and strong demand from neighbouring China. Copper-bearing scrap and secondary aluminium grades such as Zorba and Twitch are in quite high demand. The majority of these copper and aluminium units will ultimately be destined for China which, even before the pandemic, was South East Asia’s largest trading partner and the main source of foreign investment.

One factor which may slow demand from the South East Asian region in the short term is China’s reclassification of high-grade copper, brass and aluminium scrap as raw material with no import quota restrictions. The new standards were scheduled to be released on July 1 but, at the time of writing, have yet to be finalized. This requires all imports to fall under the very limited import quota system, which has likely already been fulfilled for the remainder of 2020.