Why Do Oil Prices Affect Scrap Prices?

Many people ask whether rising or falling oil prices affect the value of scrap metals, and the simple answer is sometimes yes. We know this isn’t a clear answer, but there’s more.

Oil prices, one of the world’s most important commodities, affect everything from scrap metals to food prices and more. Oil prices are constantly changing and affect scrap prices in more ways than one.

How Oil Prices Affect Scrap Metal Prices

Oil affects many things for many reasons. Think about it, if it’s more expensive to run the machines because oil prices are so high, the overhead will affect the price of new metal production, thereby increasing prices. But when oil prices remain under pressure for so long, the opposite effect will begin to occur.

If oil prices are too low, it affects overheads, which lowers prices and from there scrap prices begin to be affected. There will usually be a bit of a hangover effect as some of the needed materials will need to meet higher priced orders, but the overall picture will make sense due to scrap prices.

Oil Affects Scrap Around the World

Oil prices around the world will change a lot about scrap markets. Many countries that rely on scrap metal to help build their infrastructure are affected, such as India and China. Depending on the demand for stockpiled materials, scrap prices may adjust, affecting oil prices. Oil price will continue to affect the overall picture of scrap metal prices, but many other factors will also be affected, such as:

Raw material needs of developing countries.

Unfortunately, it wasn’t any easier to say that oil and scrap would go up and down directly with each other, but things are no longer simple or easy to predict. Since 2000 the market has become so complex that most commodities such as copper, aluminum and more are controlled by traders on exchanges around the world and prices are no longer as simple as black or white.