Scrap metal recycling is very beneficial to the environment and economy. In fact, they are known to have higher demand in the market compared to metals from the mining industry! However, just because they are scrap metals doesn’t mean they come at the cheapest prices, and many have probably noticed the seismic shifts in scrap metal prices.
But what are the factors that influence the price of scrap metals? Whether you’re a small-time scrapper or own a large scrapyard, here are some vital pieces of information to help you out, so you know what to expect regarding any price fluctuations.
Factors Affecting Scrap Metal Prices in 2020
It can be a bit tricky figuring out the scrap metal market, since prices can change as quickly as hours, just like the commodity and stock market! While the answer isn’t as simple as you’d expect, it isn’t as tough to understand what determines the scrap market prices.
These are the five main factors to look into:
1. Market Price and Domestic Markets
When the global metal prices of copper rise, it would also affect the prices of scrap metal, just as it would if the prices lowered. The same would go for domestic markets. For instance, if automobile sales in your area are falling, there would be too much inventory in the domestic market, which will then drive the price of scrap metals down.
2. Industry Demand and International Trading
Various industries such as construction, electronics, and technology would directly affect commodities markets and scrap metal prices. If any of your target industries is slow, then the demand for such materials will go down, which will affect the prices. Think of it this way: The more companies need scrap metal, the higher the prices would be, and vice versa.
International trading is also a huge factor in scrap prices worldwide. Countries such as China and India that import large amounts of scrap metal may have new changes in demand and trading, which affects the scrap metal prices accordingly.
3. Scrap Quality and Quantity
This is one of the crucial factors that determine scrap metal prices. The amount of scrap metal you sell to metal recyclers affects its value. When selling a large number of scrap metals in bulk, then this is a positive gain for both buyer and seller. Furthermore, the scrap yard’s intake of scrap metals would determine prices.
For instance, if a certain scrap yard hauls and ships more copper than other locations, then you get higher prices as they recover and ship more materials.
And of course, the quality of scrap metals is a heavy factor. When buying or selling high-quality scrap metal, expect it to have a higher value in markets according to metal recycling company. But with scrap metals affected with corrosion or insulation, it will have lower rates, since scrap metal yards will have to remove the insulation and/or clean the metals before recycling.
4. Location and Time of the Year
The location is also a crucial factor. If you’re out of the country and need to transport the scrap metal to your target market, the prices will rise. But if you’re living within the area without having to put much effort in delivering scrap metal, then it won’t be as high of a price.
Time to market is also another significant factor, as different times of the year and weather conditions impact the prices. Not only does the weather and season affect the prices, but the demand, which differs during certain times of the year.
5. Economic Environment and Policies
The economic environment and any new policies rolled out by leaders would also impact the scrap metal prices. President Trump announced tariffs on industrial metals from areas like Argentina and Brazil. These policies would reduce the demand for aluminum and steel, which will then affect the prices of scrap metal negatively.
Another example is China, the world’s largest economy, who deals with large quantities of scrap metal imports. China tightens the impurity threshold on scrap imports, as well as banning certain imports, with these policies creating a slump in the scrap metal market.
Wrapping It Up
What happens in the scrap metal prices this 2020 can’t be forecasted with certainty, since it depends on the factors above. Besides learning more about the factors affecting scrap metal prices, there are websites and companies that publish current rates. You can monitor such prices to see when is the best time to invest or sell when needed.
Hopefully, you found insight and learned more about what impacts the scrap metal industry and its current prices. Start studying the scrap metal industry further to ensure that you buy or sell scrapyard at fair prices that have you make a profit in the long run! Good luck and comment down below if you have any questions.