What Factors Determine Scrap Metal Prices?

March 6, 2018

Scrap prices are constantly changing and can be difficult for people to navigate and understand. There are many factors that go into determining the prices that are seen at the scales of scrap yards all across the world. We’ve listed some of the most impactful factors below.

Market Prices

International scrap metal markets, especially the ones in China and India, have a big impact on scrap metal prices here in the United States. The reason is because these countries have large amounts of imports of scrap metal, which affects scrap prices globally. Similar to international markets, the domestic market also affects scrap metal prices. This is why those in the scrap industry carefully watch the NYSE for the slightest movement. Although it can be overwhelming, knowing what determines the current prices is important so you can better assess the change in prices at your scrap yard.

Industry Demand

Several industries in the United States, like the construction and automotive industries, directly impact the commodities market and scrap. In fact, there are some good indicators that correlate with scrap metal market prices. One indicator is construction and public projects, like bridge constructions and improvements. Usually, there is an uptick in these projects when the economy is slow. So when the demand for steel increases, the prices at scrap yards increases too. Another indicator is new car sales. When sales are down, that results in decreased demand for steel and lower prices for steel. One last indicator is demolition projects. An increased rate of these projects can impact the scrap metal market too.

Scrap Yards

Scrap yards have to consider market prices and industry demand when determining scale prices. The quantity of scrap metal that a scrap yard takes in can impact current prices. For example, if a particular scrap yard hauls and ships more steel than other locations, they will have better pricing. In addition to quantity, the location of a scrap yard can impact scrap metal pricing. Location indicates how much travel and cost a scrap yard incurs. Therefore, locations closer to ports will generally be able to pay more money for materials because they have less travel costs.