We all remember the song from the 1990’s by Tina Turner, “What’s Love Got To Do With It,” but many people ask us what does scrap have to do with the economy. We wanted to go over the ups and downs of the scrap market as this article should help you figure out long and short-term things that pop up overall.
Tariffs have been one of, if not the hot metals topic of all of 2018 and how they are going to affect the markets both in the US and the world scrap markets has been the key issue. So with tariffs, many people ask what does the scrap market have to do with the tariffs and the economy as a whole. Let’s try to go over it and explain what is going on.
What Scrap Means To The US Economy
With over 90,000 jobs in the US provided through the scrap metal industry we have been able to see real job creation through the years. The tariffs do not seem to be closing scrap yards because of metal prices but have drastically hurt them over 2018 (and we are not sure how this ripple effect will go into further years).
Scrap metals are so much more than job creation, it is also how they keep material out of landfills, extra cash in thousands of peoples pockets, and keep metal from growing weeds around it all over the place.
You probably have seen scrap yards through social media posting about how X amount of aluminum cans is worth $Y dollars- or how recycling saves energy from the creation of raw ore into product. And by all means all of that is VERY true- but what most people care about is prices and how much money that they can make with their scrap.
Higher prices equal more cash in peoples pockets and that is the key for so many people when they are looking to sell their scrap and where to sell it to.
Cranes = Good Signs
Ever drive around big, medium, or small cities and notice a lot of cranes or those big yellow machines (Caterpillar) at big open plots of land? That is what you want to see because that means that we have development and growth and those things need metal. I-Beams, copper wire, aluminum fencing, just to name a few of the thousands of metal items that go into commercial properties.
Home Building/Renovations = Good and Bad
Homes being built are a great thing because that means that you will see some scrap being generated, but don’t forget that most homes are constructed from wood and plastic nowadays and very little metal. But what that does mean is that the economy is healthy and that means that the commercial side of things is having an uptick.
On the residential side if you start to see more scrap out there like grills, computers, misc steel pieces and other like items, that also means that you are going to see old appliances going out as well. So you will be able to grab some steel, but nothing crazy heavy (other then boilers).
Road Work (No not you driving- Literal Work on Roads)
Seeing trucks replacing guardrails, overhead signs, and anything else that is metal along major and local highways is a great sign. That shows that the states and governments are looking to not just replace pieces that have been damaged in accidents but to ensure that they are keeping up with the maintenance of all types.
Same goes with paving- of course, it is an inconvenience to be driving home and hit traffic due to paving, but this is a positive sign because if there were low tax dollars coming in then you would see more pot hole repairs which is far less expensive.
New bridges and replacement pieces to bridges are also a very positive sign. Some bridges cannot be replaced with one alongside it, but during 2011-2018 there was a replacement project for the Tappan Zee Bridge between NY and NJ that was a $4 billion dollar job. This massive project provided little metal to scrappers (the proceeds from the scrap went to offset a minor part of the new bridge cost and dismantling of the old one). With the old bridge weighing an estimated 50,000 tons, if it was priced at $200 per ton it would have been a $10,000,000 offset (which seems like a lot until you compare it to the $4 billion new install price tag (insert half laugh here).
We are just trying to share how and what scrap has to do with things that you see going on all over the place and may not be able to make money on. Sometimes knowing what is going on makes it easier to know what to look for.