How Low Prices Affect The Scrap Industry

Knowing how scrap yards and the markets are affected by low pricesWe have talked to many people both on the scrap yard end as well as the scrapper end and no one seems to be happy about what is going on with the markets right now. We know that many people are hoping that the market will turn around (and quickly), but knowing some of the tough sides of business is hard to figure out.

How Do Low Prices Affect The Scrap Industry?!

There are many bad things happening because the prices of scrap are so low. Many scrap yards across the US and Canada are being forced to shut down because the prices of scrap are so low that they don’t have room to make enough to cover overhead. Scrap yards know that during winter months that they could get hit with a slow patch because the weather is poor, but with the prices at the level that they are, it is much harder for them to make enough money to cover overhead.

What About Us? The Scrappers?!

What happens to scrappers when the scrap prices go down? Well you know that feeling all too well. With the markets so low it makes it hard to get motivated to pick up steel and other ferrous products. Many scrap yards have placed minimums for purchasing the material and even if you have a few thousand pounds of steel you may not make enough to fill your gas tank. Not only is that discouraging but many of the part time scrappers are giving up on certain materials like steel and iron.

#1 Prepared Steel

A lot of people think that hoarding materials or saving some of their top quality items will be a good thing, and that all depends on an opinion on how you want it done. Others like to have a constant cash flow for their hard work and we think that this is one of those scenarios where it is a personal opinion and there are multiple right answers. You could hold onto higher priced items like copper and brass if you have a secure and spacious place to store it. While others may be cashing everything in now, expecting that prices will continue to fall.

What Will Turn Scrap Prices Around?

Countries like China, India, and other middle Eastern countries are some of the largest consumers of scrap metals and other metal ore. Because many of them are not building or further developing right now many of the scrap and other raw metal demands have significantly decreased. Until there are large upticks and growths in construction, you will continue to see the prices of scrap at multi-year lows.

No one can pinpoint one indicator the overseas markets can have to help learn what is going on with copper and brass pricing, but you have to wait and see how people react to new industries, products, market news, and more. There are so many factors that affect scrap prices and the related markets that every day could be different.

If The Stock Market Is Up…Shouldn’t Scrap Prices Be Up?

Many people wish that this was true right now but unfortunately it is not. A lot of the prices have to do with demands for finished goods and with little growth across the U.S. and the rest of the world right now it is going to be tough to see prices increase soon. Things that you may want to look for for growth in the market:

  • Positive News About China – If you hear good things happening in the largest consumer of copper in the world, this would be a good thing.
  • Gas Prices Rising – We know that many people think that gas prices being so low are a good thing, but if you are selling scrap metal the price of gas rising could affect the prices of metals going up as well.
  • Scrap Yards Are Positive – Talk to the owners and workers at the local scrap yards that you visit. They will hopefully be honest with you and let you know their opinions on the markets.
  • Check iScrap App Often – With thousands of people posting the prices of scrap metals that they are selling (and you can post yours as well), why not do the same and post scrap prices to help out yourself and others.

Where Are The Scrap Markets Headed?

We wish that we had this answer, many people have asked us when the prices are going up and we have no news. If we had that answer we tell everyone that we would be retired on our own private island already, but there is not a crystal ball that we could find to predict the future. Tough times Lead to good times, so continue to have a positive attitude and keep on scrapping.

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