Factors That Determine Scrap Prices

scrap prices

People in the scrap metal industry are constantly watching TV and on the computer, not to entertain themselves or check to Facebook but constantly checking the industry trends and prices. There are many factors that go into determining the prices that are seen at the scales of scrap yards across the world. Many of these factors are constantly changing and adjusting the overall outlook of the market that determines scrap prices.


Factors That Determine Scrap Prices

Below are some basic key factors in how scrap metal prices are determined within the industry. They are in order from the larger effects like international markets all the way down to the individual scrappers themselves.

International Markets

The prices of the scrap metal market overseas and especially in China, play a large role in determining the scrap prices. An estimated 55% of ferrous scrap metal is exported from the United States every year. Fun Fact: In 2010, the number one U.S. export to China was scrap and trash for approximately $8 billion. When you really take a look at the volume of scrap metal that comes through the United States you realize how much of an impact our exports can have.

Domestic Market

The NYSE is another set of tickers, screens, bells and whistles that are carefully watched during the day within the scrap industry. The markets here at home also affect the prices of scrap which also goes hand-in-hand with the next point. Whether it’s processing companies, mills, metal mines, or manufacturers there are many industries that are in the United States that can have a large effect on how scrap prices are determined.

Supply/Demand

When the economy is somewhat slow, it is always a good indication when you see more construction and public projects occurring in your area. Often time’s bridges are being replaced or improved; projects like these require new material such as steel. Also car sales can be a good indicator as well when new car sales are down, that means production of new materials like steel are down. When the demand for steel is increased, it would result in a slight increase in prices at scrap yards. Also if there are demolition projects occurring at a rapid rate compared to normal that can significantly affect the scrap metal market.

supply/demand


Sellers/Brokers

Like anyone else selling scrap, the large quantity sellers want to be able to make money on it. Some sellers try to make more money on certain materials so those fees come into effect when scrap prices are being determined by the buyers.

Scrap Yards

Scrap yards have to take all the above factors into effect when determining their scale prices at their locations. Those that control the prices at the scrap yard have to be prepared for any moment to drop the prices on the turn of a dime. With the constant changing of the markets, scrap yards have to determine their cost of business and their overhead expenses. Sometimes the prices of the market can cause some scrap yards to adjust their pricing to better reflect with their business model.

Scrappers

While scrappers don’t have direct control of determining the scrap prices, some scrap yards will offer premium pricing for customers depending on the amount of scrap they have. So saving up your scrap for a larger load, may allow you to get a better price with larger quantities. Always call you scrap yard before heading there to get a price for your materials, but always be prepared because prices can change at any time.

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