Factors Affecting Scrap Metal Prices

The scrap metal industry is both lucrative and volatile. While you get good money for your scrap metals, the prices vary significantly and can change every day. Numerous factors ranging from market demand to location and scrap metal quality determine how much scrap yards pay for scrap metals. Learn seven factors that affect the cost of scrap metals.

Quality and Quantity

You will get a low price for scrap metal covered in insulation, corrosion, or residue, or metal that is mixed with other metals. This is because more time and effort will go into cleaning and organizing the metal before processing and recycling. Take time to remove any residue and insulation on your scrap metal before taking it to a scrap yard to earn you more dollars and save the dealer hours of labor.

The amount of scrap you take to a scrap yard can also affect the price. The more the scrap, the more money the seller pockets in a single trip, and the less the transaction and transportation costs for the dealer. Also, you can negotiate a higher price for a truckload of aluminum cans compared to a few pounds of the same.

Supply and Demand Laws

Supply and demand are among the biggest drivers of scrap metal prices. The demand for scrap metal in industries such as construction and technology affects costs. A metal in high demand and low supply will fetch you a higher price compared to one in low demand and high supply. Regular scrapers wait until demand rises to sell their metal and get higher pricing.

Geographical Location

Surprisingly, where you live determines how much you a dealer pays for your scrap metals. In most cases, local scrap yards collect and separate scrap metals then transport them to other yards or cities for processing and sale. If you live in a city where long-distance transportation is necessary, you may get lower prices.

Similarly, the cost of doing business in your region affects prices. You can expect low scrap metal prices if you live in an area with a high cost of doing business. In addition, local competition and processing methods affect the scrap metal costs. 

Season

The demand for scrap metal is higher in warmer months and lower in colder months, which affects prices. Typically, the construction industry slows down during the winter months, which also lowers scrap demand. During cold seasons, there is slow traffic in scrap-metal-related industries, so you may not see great rates.

New Commodity Prices

A change in new metal prices influences the cost of scrap metal. For instance, you can expect the scrap metal costs to increase when new metal prices surge. This is because companies will opt for recycled metal instead of new metal to cut costs and thus hike the demand and price of scrap metal.

Likewise, when the cost of the new metal decreases, many companies will opt for new metal, reducing the demand and cost of scrap metal.

International Trade

Like other industries, international trade affects the scrap metal sector. Demand fluctuations in the prominent importers of scrap metal like India and China impact scrap metal costs. If the demand for scrap metal in these countries increases, the prices rise, and vice versa.

Also, an amendment in these countries' scrap policy — how they purchase or classify materials — can have a tremendous effect on scrap costs.

Energy and Production Costs

Many scrap yards consider energy and production costs when determining the price of scrap metal. High processing costs due to a surge in fuel costs and other factors lead to a drop in scrap prices.

Get in touch with Big Daddy Scrap for the most competitive prices for your scrap metal. We offer transparent pricing, employ honest scales, and stay updated on current market prices to give you the best price possible.