With the scrap metal prices taking the plunges over the last few months, we wanted to take some time aside to explain one of the factors of the turn in the industry and the US economy during 2015 thus far. Like we mentioned this is only ONE of the factors that plays into the condition of the scrap industry and is only a small part of the bigger picture.
Significant Drop in Scrap Metal Exports in 2015
According to Journal of Commerce (JOC), some of the statistics gathered during the first half of 2015, there has been a drop in scrap metal exports (by volume) compared to 2014. “In May, scrap metal exports were down a whopping 26.5 percent year-over-year, after a 1.6 percent decline in April,” as stated in the JOC reports.
So Why Does This Happen?
Like we mentioned this is a small fraction of the bigger picture, but the easiest way to explain this is as follows. The US economy is stronger than others throughout the world at the moment, so our dollar value is stronger than others. Because of that other countries are investing in the US stock market instead of others like China’s. Because of this influx in investment, scrap metal exports are declining because they are more expensive. Countries like Turkey are instead buying from other countries like Russia, where their currency is weak.
How It Affects Scrap Prices
So, because the scrap metal exports are happening elsewhere around the world, there is not as high of a demand for the US scrap industry to buy more scrap because it’s not being exported. This is one of the factors that is playing into the lower scrap prices during 2015. While this is not the sole reason for the drop in prices, it is significant to relate it back to the economy and how the US dollar is stronger than most right now, so more people are investing in the economy rather than buying goods.
- This Week’s Scrap Metal Market Update
- Factors That Determine Scrap Metal Prices
- How Often Do Scrap Prices Change?
Read more information on Recycling Today.