Why Do Oil Prices Affect Scrap Prices?

oil prices affecting scrap prices

Many people ask if the oil prices going up or down affects the value of scrap metals, and the simple answer is yes, sometimes. We know that isn’t a clear answer, but there is more to it.

The price of oil is one of, if not the most major commodity in the world, and it affects all prices on things from scrap metals to food prices and more. Oil prices are changing and always affecting scrap prices in more ways than one.

How Do Oil Prices Affecting Scrap Metal Prices?

Oil affects so many things for so many reasons. Think about it: if it is more expensive to run machines because of the high oil prices, then the overhead will affect the price of the new production of metals and thus drive the prices up. But when the price of oil is depressed for such a long time, the reverse effect will begin to take place.

If oil prices are low, it will affect the overhead, driving those prices lower, and then from there, the scrap prices will start being affected. There will generally be a bit of a hangover effect because some of the needed materials will need to fill higher-priced orders, but the overall picture will make sense because of the scrap prices.

Oil Is Affecting Scrap All Over The World

Oil pricing throughout the world will change a lot about the scrap markets. Many countries that rely on scrap metal to help build their infrastructures, like India and China, are affected. The scrap prices can adjust depending on the demand for their stockpiled materials, thus affecting oil prices. The price of oil will continue to affect the overall picture of scrap metal prices, but so will many other factors, such as:

  • Political Elections
  • Overall Health of the World Economy
  • Needs of developing countries for raw materials.

Too bad it wasn’t easier to just say that oil and scrap directly will go up and down with each other, but things are no longer simple or easy to predict. The market has become so complex since the year 2000 that traders in the stock markets worldwide control many commodities like copper, aluminum, and more, and prices are not black or white anymore.

Years ago, things were much more predictable than they are today with normal ups and downs of the markets, but nowadays, it is much more complex. Because of that, we always suggest checking out the most recent prices that your local scrap yards have posted or have been reported on through iScrapApp.com.