Malaysian ports are hugely congested, with authorities in the country busy cracking down on illegal import shipments of electronic scrap (e-scrap).
Raids were carried out by Malaysian authorities in Penang, Perak and Johor late last week to combat illegal e-scrap recycling operations, leading to arrests and the seizure of e-waste, machinery and even ammunition, local media reported on Sunday March 9.
The activity follows a raft of confiscated containers of both e-scrap and black mass into Malaysian ports in June and July.
Secondary non-ferrous metal smelters have gradually been leaving Malaysia and re-settling in countries like Thailand in recent years, following Malaysia’s introduction of strict purity limits on aluminium scrap imports since 2021.
Malaysian imports of aluminium scrap under HS code 7602 were 286,798 tonnes in 2024, up by 18.5% from 241,982 tonnes in 2023, according to Malaysian customs data.
But some buyers in the country also import using scrap code code 7603 for aluminium flake, used to skirt the tough scrap impurity rules, according to major market participants. Imports under this code were 364,540 tonnes in 2024, down by 25% from 486,366 tonnes one year before.
In comparison, Thai imports of aluminium scrap under HS code 7602 were 790,058 tonnes in 2024, up by a whopping 60.7% year on year from 491,768 tonnes in 2023, according to Thai customs data.
Thai restrictions coming?
Cargoes of aluminium and copper scrap originally destined for Malaysia are being redirected this week to alternative destinations such as Thailand, Hong Kong and Vietnam, Fastmarkets heard, but traffic at ports in those areas is also becoming increasingly strained.
In Thailand, market chatter has gathered pace over aluminium scrap imports possibly being restricted by authorities in the country, although no official announcements have been made as of the time of publication.
One stipulation expected by market participants is that Thai authorities may demand imports be limited to end-users based in the country only.
This measure would be to crack down on illegal Chinese traders who are importing off-grade material, but would be unlikely to affect most buyers since deals already require consignees in the country to be enacted, Fastmarkets heard.
Both a Thai and a Singaporean trading source said this measure was most likely intended to control who imports material, and less so to control the quality of imports.
Unconfirmed reports that Thai authorities will also crack down on imports of electronic motor scrap and cable scrap were also circulating in the market. Both scrap types are generally consumed to extract volumes of copper.
Two Thai trading sources and a Japanese scrap supplier told Fastmarkets that they’d been hearing about a ban on motor scrap since the end of 2024, although nothing has been formally confirmed.
A major Indian secondary smelter source said on Tuesday March 11 that they were watching developments carefully in Southeast Asia — a key rival for the purchase of aluminium scrap.
“Malaysia is congested and in Thailand, [authorities] are pushing for more scrutiny in customs checks,” they said, but added that the current effect on market dynamics was limited because prices to India for aluminium scrap have continued to rise this week.
“If Malaysia and Thailand cut down their buying, then the price would come down to the Indian [workable] market level,” the smelter source said.
Fastmarkets’ weekly price assessment for aluminium scrap, mixed aluminium castings (Tense), 3-5% attachments, cif India was $1,970-2,030 per tonne on Wednesday March 12, up from $1,930-1,970 per tonne on March 5.
Despite the rise in India, Southeast Asian market participants have not been hearing any significant increase in scrap import prices thus far.
“Any increase in price is more likely to be driven by bullish sentiment that demand for Southeast Asia’s scrap processing will grow amid strained US-China tensions,” a second Singapore-based trader said.
Some sources also expressed reservations about the ban’s enforceability. In the words of the Japanese scrap supplier, “Chinese traders would not be smuggling per se, but they will still try and study how to import such materials as before.”
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