Understanding Scrap Metal Pricing – Tips for What to Expect

scrap metal recycling yard with crane and metal recycling

Understanding Scrap Metal Pricing – Tips for What to Expect

The price you receive for recycling your scrap metal is dependent upon numerous factors within and outside of the scrap metal industry.  If you follow the news, you may be aware of the conversations that have been going on since February 2018 regarding metal tariffs that would affect the cost of trade for countries, except Mexico and Canada, importing metal products into the United States.  However, these tariffs are not the only player in this game.  Other factors that are, or can, affect scrap metal pricing include lack of export of recycled metal materials, a scrap supply that is greater than the demand, and the value of the US dollar.  Understanding the reasoning and logic of pricing fluctuations of scrap metal helps with processing how and why you are receiving the payment that you do from a scrap yard.

What Are Metal Tariffs & What Do They Mean for the Scrap Metal Industry?

The imposed metal tariffs last year from President Trump’s administration and retaliatory efforts from China’s own tariffs are starting to affect pricing on steel and metal, so manufacturers have been seeing costs go up within the steel, aluminum, and other metals industries. As a result, the scrap metal yards who process metals are seeing a reduction in payout, as their own costs have increased.  However, there is still some communication regarding these tariffs, and it’s not 100% how they will influence the scrap metal industry or how other countries’ reactions will affect the pricing of scrap metal.

Lack of Metal Exports = Supply Greater Than Demand

Associated with the tariffs is the lack of metal exports moving the scrap metal out of the country by taking it from domestic mills to international companies.  This would leave a situation where demand is less than the supply of scrap metal in the United States.  With scrap metal staying in the county, steel mills are not paying up for their scrap and can enjoy nice spreads between raw product and finished goods.  The overall effect on a scrap metal processor would be a lower demand means lower buying prices on their supply, which in turn could mean a lower pay out to scrappers.

The Strength of the US Dollar and Scrap Metal Pricing

Another factor that has a its place in the determination of scrap metal pricing is the strength of the US dollar.  Metal is considered a commodity because it is a basic good used in the production of other goods.  A strong dollar is bearish for commodity prices, as the dollar-priced commodity costs more in other currencies when the dollar exchange rate is strong.  If the dollar is strong, other countries with different currencies can “cash in,” or receive a higher rate for the commodity, by sending their scrap over to the US.  This causes an “oversupply” of scrap domestically, which in turn affects how supply and demand drives the market pricing.  The weakening of the dollar may see a result of rising commodity prices.  So, while it’s far from the only driver of price, it does play a role in setting it.

Scrap Metal Pricing Expectations

Regardless, scrap yards are still accepting and paying for metals. Several techniques are available to accurately understand the pricing of metals when heading to a scrap yard.

  1. Identify scrap metal adequately – Sounds simple enough, right? However, scrap metal is categorized into numerous categories and knowing what category will help you understand the price you will receive. Do a little research into what type of metal you have based upon its properties and specifications of the metals in our possession. If online research is not diagnosing the type of metal in your possession, there are analytical tools that can assist with identifying unknown metals. These can be helpful if you visit a scrap yard frequently, and again, it is recommended to do adequate research on the type of tool that you need. Next, break metal alloys into weight percentages and finally ensure that your metal is in sellable condition. This may mean you have to clean or remove contaminants from the metal you are bringing into the scrap yard.
  2. Market Pricing on Scrap Metal – Metals markets are aware of almost minute-by-minute shifts that could affect the pricing of metal and have publications, editorials and news relevant to the industry. Keeping in touch with local scrap yards can provide you with local pricing for metals and scrap which are affected by conditions of metals and categorical analysis of metals.

East TN Scrap Metal Recycling

Metal prices continuously fluctuate, and scrap yards are set up to discuss the shifting market. Knowing the above tips can help when heading to the scrap yard, as you will have an estimate of what to expect. At Roane Metals, we offer highly competitive scrap metal prices when buying scrap and work to ensure our customers get the most money for their scrap metal.  To determine scrap prices, we use current market prices for metals, industry demand, and quantity. Visit our website or reach out via phone at 865-354-4282 to obtain more information.