What Affects Scrap Metal Prices?
More than a million tons of scrap is recycled every year around the world. Today scrap metal recycling has generated great revenues for all stakeholders involved in the recycling business – from recycling centers to distribution. Since the beginning, the scrap metal industry has flourished for quite some time now and the price of scrap metal continues to rise.
Rise in Scrap Metal Prices
The rise in scrap prices can be contributed to the growing need for using metal in various industries and commodities. Scrap metal is used in almost all areas of everyday living. The best part of recycling is that it can be reused and repurposed repeatedly without losing its value. Besides, both the environment and the economy benefits from using scrap metal for recycling because less energy is consumed and less pollution is released into the environment.
When there is a higher demand for durable metals such as iron, coal, or copper, there is a rise in their prices and this directly affects the price increase in scrap metal as well. It is an economic characteristic that when demand increases there is a relative increase in prices as well.
Apart from the market rate and the quantity of the metal, the purer the scrap metal is the better the prices will be. The quality of the scrap metal matters – the purer it is, than the more valuable it is. Purity is one of the direct influencing factors that affect scrap metal prices.
Fluctuations in Scrap Metal Prices
All participants involved in the scrap metal industry should keep track of fluctuating scrap prices because if it dips too low then scrap metal processors ultimately close down temporarily. They would not be able to pay for their business’s overhead costs. So far we looked at what affects the rise in scrap metal prices. Here is a quick look at actual factors that affect the fluctuations.
When disposal grows recycling and repurposing metal industries falter. When certain metal is out of circulation the supply decreases and the demand continues to rise, therefore increasing the prices. Similarly, when the supply is on the higher side this affects the prices as well. Conversely, with low demand the prices may fall.
Location of the metal is another crucial factor. If the scrap buyers are located farther apart this naturally affects the transportation costs. The buyers must factor transportation cost into the prices they offer for the scrap metal to protect their individual profits.
The quantity of the scrap metal is an obvious factor. When the scrap metal is of high-quality combined with large volumes, then it would be a positive gain for the buyer and the seller.
The market prices of other materials such as plastic, paper, glass, and other materials, the scrap metal prices also tend to fluctuate. For example, if the prices of aluminum rise, there will be a relative increase in the scrap metal price for aluminum as well.
The time of the year is also a critical factor that affects scrap metal prices. It mainly depends on the manufacturing cycle. For example, when there is a big demand for products related to construction, then the demand for scrap metal also increases. There could also be a time during the year that the metal from virgin ores may be less available. That is when the prices for scrap metal increase as well. This is one of the reasons why buyers of scrap metal may wait for the ‘right’ time to sell their scrap materials for optimal profits and earning.
Another factor that affects scrap metal prices is international commodity trading. The biggest countries of the world, India and China, deal with very large quantities of scrap metal imports. This can have an effect on the scrap prices in case either economy slows down, such as the recent economic downturns of China. This has caused a serious slump in the scrap metal prices lately.
Remember that since metals such as iron, aluminum, or copper are valuable metals, it is imperative that you track the market trends and wait for the right time to sell your commodity to get the best scrap metal prices!