There are many factors that can contribute towards scrap metal prices. Some believe that the lower the gas prices, the more expensive the metals. Other believes that the time of year affects the direction scrap metal prices go. One thing is for sure – scrap used to be easier to calculate. However, with the stock market and world commodity markets becoming increasingly complex, it is difficult to be able to predict which way scrap prices will go.
Here at Bradford Waste Traders we have been a part of the recycling industry for years, and one of the questions we are asked more than any other is “why do scrap prices vary?” One day scrap can get one price and another the same scrap could go for less or more. But why is that? We use of industry expertise to let you know why.
Virgin Metal Prices
The price of metal depends on the price of virgin metal. When the price of a metal is adjusted, so is the price that will be paid for recycled metal. It may seem that scrap metal prices fluctuate dramatically, but it is simply that recycled metal has a higher price than virgin metal as it costs less to produce – thus recycled metal becomes desirable and carries a higher price when a particular metal is in more demand.
Like everything else metal prices change depending on supply, demand and cost of production. For example, the price of copper rises during a housing boom because building demand more copper pipe to help build new homes. In a housing bust the price of copper drops only recovering again when the housing market recovers.
One of the more unknown facts about scrap metal pricing is that politics plays a major part in prices paid for scrap metal. Policies affect taxes, shipping costs and importation costs which then increased the price of scrap metal – Americans must pay more for the metals they import. Trade agreements can also come into affect causing the price of scrap metal to fall.
The greatest influence on metal prices is the price of fuel. Almost all metals require high heat to make basic industrial products such as sheet metal, wire, rods, and bars. Most foundries use natural gas, coal, or electricity to produce that heat, and when fuel costs go up, so do the cost of the metals.
Cost of Fuel
The price of fuel is the greatest influence on metal prices. High levels of eat is needed to break down scrap metal and recycle it into another usable product. Most recycling plants and foundry’s do this through the use of natural gas, electricity and coal. This increased the price of fuel which in turn increases the amount of recycling metal.