Have you ever wondered why scrap prices may seem so much higher in one place and much lower in another when you are looking at the same material? There are a lot of factors that play into the prices that yards pay, but a lot of has to do with location as well. Unfortunately, the locations of scrap yards can severely handicap them from paying even close to national average scrap prices. Below we explain various ways location can affect prices.
Location, Location, Location
Over the years, during our weekly reports and different blogs and videos, we have talked about how location matters so much. Understanding your location in the country, compared to what the prices are is very important when comparing your prices to other people reporting theirs or ones that you see through social media.
Sometimes Steel Has Up To A $50 Difference!
Markets could be at record highs and the price differences between different parts of the country could be extremely drastic. In the past, we have seen price differences of $30-$50 per ton on steel, based on location and $0.20-$0.30 per pound on copper also, based on location. While saying, “cost of transportation” has something to do with it, it’s much more than that.
Does Your Yard Have Access To Ships Or Waterways?
Many scrap yards that are located directly on the East Coast and the West Coast, as well as on major waterways have the opportunity to load their loose steel and iron into barges.
Why is this important?
By being able to load a barge, it gives the scrap yard the ability to export directly to different countries and get a higher price per ton for their scrap. Some scrap yards that live on major rivers, also have a very similar ability but could be limited to the size of the barge due to the depth of the water.
For many decades scrap metal has been exported overseas to places like the Middle East or Asia, along with multiple other exporting markets. Larger scrap yards that are located away from the water do not have the opportunity to be able to load these barges directly, even though they might have the equipment as well as the material to do so.
There are other scrap yards that rent water rights or rent a yard on the water with permission and are able to make more money, as well as buying material from other scrap yards because of the power of exporting and loading these barges on the water.
Those are all major factors in contributing to the price that you will receive per ton at your local scrapyard.
Suggested Reading: Why Do Scrap Yards Have Weight Requirements For Steel?
Proximity to Mills, Smelting Facilities, & Other Yards
For the scrap yards that do not have operations on the water or barge access, many of these scrap yards will sell their material domestically to local mills and furnaces inside of the United States or whatever country that they’re doing business in. Some yards have a considerably longer ride than others do and that will affect how they are able to buy their material as well.
We have heard of some scrapyards purchasing material at a premium from their customers in order to get more volume into their yards, which only helps everyone out. Again, this is not going to be a large number of scrap yards, as many if not most scrap yards are generally selling to a larger scrap yard in order to get much quicker payments.
Rail or Highway Access
We have interacted with multiple scrap yards over the years that had rails for the railroad companies installed in their yard in order to transport. Others have bought properties contiguous with rail access to be able to load large rail cars with their scrap metal. This cuts down on trucking transportation and increases the safety of the scrap yard. This also will give many people that sell to the scrap yard a higher price on common items like copper or steel.
Size of Scrap Yard
As we mentioned above, the size of the scrapyard both physically and operationally will affect pricing as well. About 80% of scrap yards sell their material to larger scrap yards and will not be able to offer an extra $15-$20 per ton, as some larger yards will be able to. On social media, some people post some of their prices and other people comment about how high the prices are and cannot figure out why there are such large price discrepancies. These price discrepancies are generally due to the size of the scrapyard, as well as transportation costs and the ability to move material relatively quickly.
What Can I Do For Better Scrap Prices?
While scrap prices are always going to be changing, new players are going to be entering the mix, and location is always going to have a large impact on prices there are some things you can do.
- Move Your Scrap – While we don’t suggest up and moving your family just for better scrap prices, it may be a good idea to look into some of the other local scrap yards and see how far it is to get to them.
- Call Local Yards – Ask for prices for the same item when you’re ready to sell and see which ones pay better. You may find that one yard pays better for steel, while another pays better for copper.
- Create Relationships – When you are loyal to a yard, they could be loyal to you. Ask your local yard if they have any tier pricing for their better, more consistent customers.