The continued development of steel industries in southeast Asia is expected to provide much-needed support to regional scrap demand in 2026, given bearish indicators like a steel supply glut and an underwhelming real estate sector in other Asian markets.
Overall scrap demand in major Asian markets was weak in 2025, weighed down by an economic slowdown, tighter trade measures that constrained steel exports, and intensified competition from Chinese steel.
Traditional scrap-importing markets such as South Korea and Taiwan posted sharp declines in demand, given a sluggish property sector and slowing manufacturing activity. South Korea's scrap imports fell by 19pc on the year to 1.49mn t in January-October 2025, while Taiwan's receipts dropped by 36pc to 1.63mn t over the same period, data from Global Trade Tracker show. In November, Taiwan's receipts fell to 110,000t, the lowest level in two decades. A meaningful recovery in these markets is unlikely in the near term, market participants said.
A key concern for Asian steelmakers throughout the year was the influx of low-priced finished and semi-finished steel products from China. China exported 107.72mn t of steel in January-November 2025, up by 6.7pc on the year. Mills shifted towards exporting semi-finished products, with shipments more than doubling on the year to 11.75mn t in January-October 2025, given that trade barriers against Chinese finished steel increased.
When imported scrap prices trended higher, steelmakers would usually procure billets as an alternative feedstock. The active billet trades kept the spread between Argus billet cfr Asean and containerised HMS 1/2 80:20 scrap cfr Taiwan at around $150/t, further widening the divergence between Asian and Turkish scrap prices.
In contrast, imported scrap demand in developing economies across south and southeast Asia remained relatively resilient during 2025. In the first 11 months of 2025, Vietnam's scrap imports increased by 32pc on the year to 5.15mn t, Thailand's rose by 59pc to 1.68mn t, and Indonesia's imports grew by 26pc to 1.06mn t.
Demand in Southeast Asia to stay robust
Many market participants expect scrap imports into southeast Asia to rise further in 2026, supported by continued infrastructure investment, expanding construction activity and ongoing steelmaking capacity expansion.
Southeast Asian countries have also introduced or signalled additional trade protection measures to support their local steel industries, while China's newly implemented export licensing system may curb the flow of low-priced steel exports linked to tax evasion.
Steel demand in the region is projected to reach 80mn t in 2025 and record modest growth in 2026, according to the Southeast Asian Iron and Steel Institute.
Vietnam continues to lead regional economic growth, with GDP expanding by 7.9pc in the first nine months of 2025. The government set an ambitious GDP growth target of 10pc for 2026, underpinned by aggressive infrastructure and public housing investment, a recovery in private housing and strong foreign direct investment.
The outlook for Indonesia and the Philippines is also positive in 2026, driven by ongoing urbanisation and investments into new steel plants to reduce reliance on imports.
Intra-Asian scrap trade flow is expected to increase to fill the supply gap of deep-sea bulk scrap. US West Coast scrap exports are traditionally shipped to Asia, but exporters redirected more volumes to Turkey in the fourth quarter as the arbitrage window opened due to a premium in Turkish prices.
Short-sea scrap has become increasingly attractive to southeast Asian mills because of shorter lead times and greater flexibility in purchasing smaller lots. Deep-sea bulk shipments typically require cargoes of over 30,000t, compared with 4,000-5,000t for short-sea vessels. Japan and Singapore both increased scrap exports in 2025, and South Korea could expand exports further if its domestic market remains weak.
