When Do Scrap Prices Increase? People in the scrap metal industry watch TV and computers constantly, not just to entertain themselves or surf Facebook, but they are constantly checking industry trends and prices. There are many factors that determine the prices seen at the scrap yard scale around the world. Many of these factors are constantly changing, changing the outlook of the market that determines scrap prices.
Factors Determining Scrap Prices
Below are some key key factors in how scrap metal prices are determined in the industry. They range from larger effects such as international markets to the individual scrapers themselves.
The prices of the foreign and especially the Chinese scrap market play an important role in determining the scrap prices. An estimated 55% of ferrous scrap metal is exported from the United States each year. Fun Fact: In 2010, the number one U.S. exports to China were scrap and garbage, worth about $8 billion. When you really look at the volume of scrap metal coming from the United States, you realize how effective our exports can be.
The NYSE is another set of gauges, indicators, bells and whistles in the scrap industry that is carefully watched throughout the day. Domestic markets are also affecting scrap prices, which goes hand in hand with the next point. Whether it’s processing companies, mills, metal mines or manufacturers, there are many industries in the United States that can have a big impact on how scrap prices are set.
Supply and demand
When the economy is a little slow it’s always a good indicator to see more construction and public projects happening in your area. Often bridges are modified or improved; projects like this require new materials like steel. Also, car sales can be a good indicator when new car sales are down, which means production of new materials like steel is declining. When the demand for steel increases, it will cause the prices at the scrap yards to rise slightly. If there are demolition projects happening faster than usual, it can also significantly affect the scrap metal market.
Like anyone who sells scrap, bulk sellers want to make money off of it. Some sellers try to make more money on certain materials, so these fees come into effect when scrap prices are set by buyers.
Scrap yards have to consider all the above factors when determining the weighbridge prices at their location. Those who control prices in the scrap yard should be ready to drop prices by a penny at any time. With markets constantly changing, scrap yards have to determine their operating costs and overheads. Sometimes market prices can cause some scrapyards to adjust their prices to better reflect their business model.