6 Factors That Affect Scrap Metal Prices

There’s money in the trash. The only question is how much. One type of junk where you can potentially earn big bucks is scrap metals. Like in other commodities, the prices of castoff metals can go up or down depending on market factors. However, don’t let this price volatility put you down; you can make money by taking advantage of the price fluctuations.

You need to understand that, like in the stock market, the cost and resale values of scrap materials are dictated by various market forces. Below are six factors that affect scrap metal prices.

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  1. Law Of Supply And Demand

Just about anything in the market is affected by the law of supply and demand. This rule is relatively easy to understand. When the supply is abundant and demand is low, the commodity price will likely go down. Conversely, if the demand is high and the supply is dwindling, price is expected to rise because many people compete to get their hands on a scarce resource.

In most cases, supply and demand are usually the primary deciding factor in metal prices. For the best prices, you need to sell when demand is high and supply is low. But access to information about the industry may not be readily available to anyone. So, if you want to deal in metals but have no time to study the market, you need to find a trustworthy company, such as Mainline Metals, that’ll give you the best deals.

  1. Volume

The amount of scrap metal you’re selling can have a significant impact on its price. The bigger the quantity you’re selling, the more inclined a buyer will want to get your goods. It’s true mainly if the type of metals you have are in low supply.

So, for example, if you’re a small-time steel trader and want to get the best price, it would make sense to accumulate a significant amount of metal before you transact with companies that buy and sell bulk steel.

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  1. Location

Location is a determining factor in the prices of castoff metals for two reasons. First, if you transact in an area where the cost of doing business is extremely high, you can expect a slightly lower price for your goods. Second, your distance to the nearest metal processing facility can determine how much you’ll get for your scrap since metals are heavy and bulky to transport.

If you’re looking to discard your old car, for example, there are several things you need to consider before selling. These include knowing local laws and notifying the DMV. But one crucial thing to keep in mind is doing your research and understanding the market for metals. By doing so, unscrupulous traders are less likely to take advantage of your situation.

  1. Foreign Market

You must widen your scope of interest if you plan to go into the business of buying and selling scrap metals. You have to study international markets, particularly if foreign countries are causing a spike in demand for scrap metals.

For example, Morgan Stanley, an investment think tank, estimates a 20% to 30% rise in scrap steel in China. It can significantly drive down the profits of global mining companies and other businesses involved in the metal trade. Since China is a chief importer of metals, anything that’ll affect their demand will also impact the prices of both new and scrap metals.

  1. Timing

If you’re not a seasoned junk metal seller, you probably won’t notice that there are times in a year that affect the price of castoff metals. Market experts will tell you that when the weather is conducive to construction, the cost of metals will be slightly higher than during the winter months when snow can affect the construction market.

So, if you’re selling castoff metals from your car or old building, you might want to wait for spring when there’s a boom in construction in many places.

  1. Condition

One obvious factor that affects the price is the quality or condition of the recycled metals you sell. If the metal you’re selling is in terrible shape, corroded, and covered in residue or insulation, you can’t expect to receive a premium price. Naturally, scrap yards will have to work double-time to clean your scraps so they can be suitable for recycling and processing.

Thus, if you have time in your hands and want to get a better price for your used metals, try cleaning them first and getting them ready for processing before selling them to the metal processor.

Bottom Line

Selling scrap metals is an excellent way to earn extra cash; buying and selling junk can be a reliable business. But whether you want to go into the scrap yard business or want to make some money from discarding your old car or other castoff metals, it’s a great idea to know the factors that affect scrap metal prices so you can get a better deal for your stuff.