Why Commerical Industries Will Always Control Scrap Metal Prices

We had many of our users and listeners on YouTube ask this question and have felt at odds with the current state of scrap prices. As many of our listeners typically find their scrap through more traditional avenues on a person-to-person basis, we see the volume that commercial applications can bring.

We’ve witnessed firsthand how the influence of commercial and consumer goods sways the market’s tides. As a result of this discrepancy, it is not surprising that commercial goods will always affect scrap prices more heavily than the consumer realm.

Why Businesses Will Always Control Scrap Metal

Imagine the sheer amount of metal within the average household, approximately 25,000 pounds. While residential spaces generate a steady trickle of scrap – think of the occasional replaced car, a new electronic gadget every few years, or perhaps a kitchen appliance upgrade – the volume of these items is relatively small. Contrast this with the realm of commercial recycling and scrap.

“No, you’re new home appliance will not affect scrap prices.”

Consider a retail giant like Costco, with its expansive chain of locations. Commercial settings like these undergo a perpetual transformation cycle, where heavy machinery is replaced annually, and vehicle components are swapped out for newer models. The sheer number of commercial establishments and their insatiable demand for metal inputs dwarfs the sporadic and smaller-scale residential scrap contributions.

Suggested Reading: 7 Tips To Find The Best Scrap Yard & Prices

The Impact That Commercial Industry Has On Scrap

The point to grasp here is the scale of consumption. The appetite of commercial users for metal has a huge impact on the scrap metal market, whereas the residential sector’s needs are comparatively modest. The sheer amount of commercial turnover leads to substantial shifts in supply and demand. As the need for metal surges in response to commercial growth, market fluctuations are driven by this overwhelming demand, overshadowing the more gradual shifts in the residential sector.

In this video, Tom explains a bit more about this topic.

The Market Can Also Affect These Prices

The forces affecting scrap metal prices depend not solely on the commercial-consumer relationship. Other factors, such as slower commercial growth, fluctuations in loan interest rates, and external market uncertainties, contribute to the market’s volatile nature. Tom talks about these issues every week in our weekly report.

Consumer Scrap Doesn’t Make A Big Enough Dent

It’s essential to acknowledge that consumer-level scrap is not inconsequential. Household items ranging from fridges and freezers to smaller gadgets like blenders and toasters, copper wires running through homes, discarded motorized items like ceiling fans and lawnmowers, and electronic devices like phones and computers all contribute to the scrap stream. Even siding and gutters from homes find their way into the recycling process.

However, the total effect of these smaller-scale contributions pales in comparison to the industrial-scale demand needed by commercial entities. This is not to say that residential scrap is insignificant; rather, it supplements the gargantuan impact of commercial scrap on market dynamics.

Understanding this dynamic is key for us, fellow scrappers. It reminds us that the collective needs of businesses shape the ebb and flow of the scrap metal market through the supply chain, which in turn affects the prices we see.