[SMM Steel] Japan exported 2.35 million mt of ferrous scrap in January-April 2026, down 9.9% year on year, while April exports fell 10.1% YoY to 667,678 mt. Vietnam remained the largest importer of Japanese scrap during the period, importing 1.02 million mt, down 10.1% YoY. Bangladesh imported 516,219 mt, up 22.3%, while South Korea imported 350,019 mt, down 17.9% YoY. Meanwhile, Japanese scrap exports to Thailand more than doubled to 173,869 mt during the four-month period.

The global copper scrap market is entering a period of structural tightening as geopolitical tensions and industrial policy increasingly reshape trade flows. The relationship between the United States and China sits at the center of this transition, particularly as Washington considers restricting exports of high-quality copper scrap in 2027 while China remains heavily dependent on imported secondary copper feedstock. China’s copper scrap imports remained strong in 2024 at 441,080 MT, underscoring continued demand from secondary refiners serving the EV, renewable energy, power grid, and manufacturing sectors. However, imports have collapsed in 2025 to 143,271 MT, with current projections for 2026 falling further to just 5,305 MT. The sharp decline signals a rapid deterioration in China’s direct access to imported scrap feedstock amid rising geopolitical friction and tariffs. China’s existing 10% tariff on US-origin scrap has already reduced the competitiveness of direct shipments, although clean high-grade material has continued to move because of favorable processing economics. Trade flows indicate that copper scrap is increasingly being rerouted through Southeast Asia rather than moving directly from the United States into China. US copper scrap exports to ASEAN rose from 170,687 tonnes in 2024 to 222,993 tonnes in 2025, while Chinese imports of copper scrap from ASEAN increased from 434,176 tonnes to 529,345 tonnes over the same period. The correlation strongly suggests ASEAN is emerging as a critical intermediary hub for scrap aggregation, processing, blending, and re-export into China. This shift reflects a broader restructuring of the global scrap trade as market participants adapt to tariffs, geopolitical risk, and the growing probability of tighter controls on high-quality US scrap exports. Countries such as Malaysia, Thailand, and Vietnam are increasingly functioning as alternative routing channels within the global secondary copper supply chain. The timing is significant because the United States continues to export around 1 million tonnes of copper scrap globally in 2025 while domestic secondary refinery production remains limited at approximately 50kt. This imbalance is becoming central to the policy debate in Washington. As US demand for copper accelerates through grid modernization, electrification, AI-driven data center expansion, and defense manufacturing, policymakers are increasingly questioning whether high-grade recyclable copper should continue flowing overseas while the US remains dependent on imported refined copper. Current policy discussions focus on retaining a larger share of premium copper scrap within the domestic market beginning as early as 2027. Although proposals currently stop short of a full export ban, any retention mechanism would still materially reduce export availability for high-quality grades such as bare bright copper and No.1 copper scrap. For China, tighter access to premium scrap has important implications beyond the secondary market. High-quality scrap directly competes with refined copper cathode because it offers high recovery rates with lower processing intensity than primary smelting. If imported scrap availability continues to tighten, Chinese refiners will likely need to increase refined copper purchases to maintain output levels. This dynamic could become increasingly supportive for refined copper markets globally. The primary copper market is already facing structural constraints from weak mine supply growth, declining ore grades, permitting delays, and years of underinvestment in new projects. A simultaneous tightening in high-grade scrap availability would amplify pressure on refined copper balances precisely as demand linked to electrification continues to strengthen. As a result, the market could see narrower scrap discounts relative to cathode, firmer copper premiums in Asia, and increased volatility across both COMEX and LME pricing. The secondary copper market is therefore becoming an increasingly important variable in the broader refined copper outlook. Ultimately, the copper scrap market is no longer operating purely on economic arbitrage. Strategic resource security is becoming a defining driver of trade flows and policy decisions. The rapid growth in ASEAN intermediary trade, combined with collapsing direct Chinese scrap imports and growing US policy intervention, signals that the global copper supply chain is entering a new phase of fragmentation — one that is likely to tighten both scrap and refined copper markets into 2026 and beyond. Author: Shairaz Ahmed, Principal Market Analyst For more information or to discuss market dynamics, you can contact me on shairazahmed@smm.cn

[Copper Scrap Exports from Core Supplying Countries Pulled Back in April] Thailand and Japan, the top two supplying countries, both saw their exports to China decline MoM in April, with Thailand down 14.22% MoM and Japan down 17.60% MoM. Although their combined share still exceeded 30%, the MoM growth disappeared, weakening their support for overall imports.

At the hosted by SMM, Ouyang Yichang, SMM secondary copper industry research analyst, shared insights on the topic of "Analysis of Japan's Secondary Copper Market." He noted that, according to SMM, Japan's copper scrap market is gradually transitioning toward a fiercely competitive "seller ecosystem." Trade models that rely solely on spot cargo procurement are increasingly exposed to the risk of supply disruptions. To secure long-term resource supply, ex-China purchasing enterprises need to move beyond the traditional spot trading mindset and establish structural partnerships through deep-binding approaches such as signing long-term contracts and equity cooperation, in order to adapt to the persistently tight market landscape. Global Positioning of Japan's Copper Scrap Market Global Positioning of Japan's Copper Scrap Market Key Drivers Behind Japan's Leading Position in Asia 1 Precision Sorting: Exceptional classification accuracy ensures high-quality scrap output. 2 Well-Established Infrastructure: A mature "urban mine" system and advanced logistics provide a highly reliable supply foundation. 3 Strategic Geographical Advantage: Proximity to China (accelerating capital turnover), while serving as a key trans-Pacific logistics hub connecting the Americas and Asia. 4 Favorable Trade and Tax Policies: Zero export tariffs and transparent regulations ensure seamless global operations. 5 Commercial Reliability: High standards of packaging and business ethics minimize quality claims. Japan's Average Unit Price of Copper Scrap Significantly Leads the Top Five Global Exporters In 2025, Japan and Thailand each accounted for approximately 7% of global copper scrap exports. However, Japan commanded the highest average export price among major peers ($8,112/mt), thanks to a substantial quality premium. This price spread revealed fundamental differences in product mix. Thailand primarily served as a processing hub, with limited high-grade copper scrap output domestically. In contrast, Japan was organically driven by its mature "urban mine" ecosystem, consistently producing high-purity, high-grade materials. Flow of Japan's Copper Scrap Flow of Japan's Copper Scrap Rising Trade Volume and Shrinking Net Exports: A Shift Toward Domestic Retention Smelters Drove Copper Scrap Consumption Growth While Downstream Processing Enterprises Saw Declining Usage According to SMM, compared with 2021, processing enterprises' copper scrap usage declined by 8% in 2025. Processing enterprises: Weak downstream demand (automotive, construction) and fierce global competition for high-quality copper scrap severely squeezed domestic processing enterprises, resulting in a sustained 8% decline in their absolute usage. Smelters: Tightened environmental protection and export policies implemented since 2023 restricted the outflow of copper scrap, significantly accelerating this structural "reflux" toward smelters. Combined with the plunge in TC/RC, Japanese smelters were forced to rely on these raw materials to maintain production. Consequently, the share of copper scrap consumed by the smelting segment has maintained an overall upward trend in recent years. Japan's overall scrap supply is contracting; despite robust growth in domestic consumption, the structural decline in net exports is the primary driver. Since the 2021 peak, Japan's total apparent supply of copper scrap has been on an overall downward trend. This indicates structural tightening in domestic scrap generation and social recovery rates, with increasingly scarce available resources. Despite the overall supply contraction, domestic apparent consumption demonstrated strong resilience, as Japanese smelters actively secured local raw materials to maintain production amid plunging TC. This robust local demand is significantly squeezing exports. Net exports have consequently declined structurally to low levels. Japan is shifting from a "resource overflow" model to an "internal absorption" model, which will severely exacerbate raw material shortages for Southeast Asian and Chinese buyers. Bare bright copper payable indicator stays high: supply tightness and China's tax-driven demand outweigh the impact of recent copper price rebound Since early 2026, market copper prices have risen steadily overall; in March, copper prices experienced a periodic pullback, and copper scrap sellers held prices firm with strong willingness to defend price floors, directly driving the bare bright copper payable indicator passively higher. Entering April, futures copper prices rebounded and stabilized at highs, but the copper scrap payment ratio deviated from conventional pricing logic and did not pull back accordingly, remaining firmly in the 98.5%-99.0% range. The core supporting logic lies in: continued tightening of domestic tax regulation, with China's downstream processing enterprises increasingly relying on imported copper scrap to obtain compliant input tax deductions, forming rigid procurement demand; coupled with tight spot copper scrap supply, the dual support of supply and demand underpins the copper scrap payment ratio to stay high. Japan's Scrap Policies Japan's Scrap Policies Regulatory Shift: Building an "Invisible Wall" Although Japan has not explicitly imposed export bans, it strengthens its domestic closed-loop system through a strategic policy combination. For global buyers, this signals a structural shift in the Japanese market going forward: intensified competition, soaring procurement costs, and increasing difficulty in accessing high-quality scrap. Regulatory maturity and standardized transparency are the primary drivers of the "Japan premium." Policy Lag vs. Market Reality: Although the EU Waste Shipment Regulation and potential US export restrictions have not yet been formally enacted, the market has already priced in expectations of future supply contraction, compelling downstream buyers to proactively pivot toward trade hubs with higher compliance and transparency. "Reliability Premium" Logic Emerges: As a pioneer in industry compliance and market transparency, Japan can effectively hedge against risks prevalent in other regions, such as insufficient information transparency and origin rerouting, providing the market with an important safe-haven and pricing anchor function. Outlook and Forecast Strategic Outlook and Forecast Driven by aggressive development targets at both enterprise and national levels, scrap consumption by domestic smelters in Japan is set to experience significant structural growth. According to SMM, the climb in scrap consumption by Japanese smelters is not a short-term cyclical response triggered by declining mine TCs, but rather a fundamental structural transformation underpinned by strong capital strength and long-term commitment. As 2030 ESG-related targets continue to materialize, the trend of retaining domestic scrap for internal use in Japan will deepen further, structurally tightening global circulating scrap supply over the long term and continuously compressing the available sourcing volume for ex-China buyers. Response Logic for the "New Normal" in Japan's Copper Scrap Market Volume and Flow Direction: Steady Decline Net exports of copper scrap will not plunge to zero abruptly, but rather exhibit a sustained structural decline trend. As domestically subsidized capacity comes fully online, exports of high-grade secondary copper such as bare bright copper and No.1 copper will enter a steady contraction trajectory. Pricing Logic: The traditional medium and long-term linkage of "rising copper prices, declining scrap payment ratios" has been structurally reshaped. Under the dual effects of persistently tight copper concentrates supply and China's rigid tax-driven procurement demand providing a floor, the payment ratio for Japan's high-quality copper scrap is expected to establish a long-term upward baseline. Strategic Pivot: Constrained by the upper limit of domestic secondary copper output and tight labor supply, Japanese recycling industry alliances will accelerate their expansion into markets outside China. Japanese enterprises will invest in overseas joint venture projects to solidify downstream processing capacity deployment while maintaining Japanese-led control over raw material supply chains. According to SMM analysis, the current Japanese copper scrap market is gradually transitioning toward a fiercely competitive "seller ecosystem." Trade models that rely solely on spot purchases are increasingly exposed to the risk of supply disruptions. To secure long-term resource supply, ex-China purchasing enterprises need to move beyond the traditional spot trading mindset and establish structural partnerships through deep-binding approaches such as signing long-term contracts and equity cooperation, thereby adapting to the persistently tight market landscape.

Germany's crude steel production fell by 8.6% to a historical low of 34.1 million metric tons (mt) in 2025, remaining well below the 40 million mt designed capacity threshold required for sustainable industry utilization. Consequently, domestic steel mills' scrap purchases declined by 5.3% to 12.0 million mt, forcing a shift in trade dynamics that resulted in a net scrap export surplus of 3.7 million mt, as scrap exports rose by 5.3% to 7.7 million mt while imports dropped by 9.4% to 3.9 million mt.

Trade between Libya and Brazil showed clear divergence in Q1 2026. Libya’s aluminum scrap exports to Brazil surged, driving total exports up 347.4% YoY to about USD 1.7 million. Meanwhile, Brazil’s exports to Libya fell 57.2% to USD 94.19 million, though Brazil still maintained a trade surplus of about USD 92.4 million. Brazilian exports mainly included iron ore, poultry, beef, tobacco and coffee, with iron ore accounting for about 36.8% of the total. Overall bilateral trade fell 56.5% YoY to USD 95.9 million, while rising aluminum scrap flows reflected changing dynamics in recycled resource trade.