Homeowners and small businesses can easily turn unwanted scrap metal into cash. Recycling companies will gladly buy various types of metal for cash, but the price you get can vary enormously. To get the best deal, it's important to understand what can influence the money a dealer is willing to give you.
Market economics
Perhaps unsurprisingly, one of the most significant factors that will influence the value of scrap metal is supply and demand. When more people want the metal you are trying to sell, dealers are more likely to offer you a better price.
Market analysts closely follow the value of all commodities, including metals, and prices can change rapidly or over a lengthy period. An issue in one high-production country can quickly influence global prices. For example, a natural disaster in Chile could drive copper prices, as Chile is the top copper-producing country in the world.
Certain industries use large amounts of some types of metal. For example, home builders tend to use a lot of copper for pipes and wiring in new properties. As such, during a global property boom, the price of copper can rise sharply. Conversely, if the number of new homes starts to dwindle, the value of copper can head in the same direction. Events outside Australia can still strongly influence the prices you see here.
Condition
Condition influences the value of scrap metal, and dealers normally publish price ranges to account for this issue. For example, a dealer will offer one price for contaminated brass and a higher value for clean brass.
Carefully consider the condition of your scrap metal when you decide how long to hold on to any items you intend to sell. While some people like to treat their scrap metal like stocks and shares, if you hold out for the best price too long, you could actually receive less cash. As an asset, scrap metal can quickly deteriorate in condition, so if you don't have the space for safe storage, you're probably better off selling the material on quickly.
Dealer specialisations
It pays to shop around because one dealer may offer a better price than another. Like any other types of business, scrap metal dealers work to different operating models. As such, a dealer who specialises in copper recycling is likely to give you a better price. Additionally, some dealers work to quotas. If a particular dealer exceeds his or her quota for the month, he or she is less likely to pay top dollar for your scrap metal until the next quota is due.
Dealer location
Scrap metal is the heaviest commodity to deal in, with the highest transportation costs. Dealers must consider labour costs (to load the material), driver wages, vehicle depreciation, insurance, fuel and license fees. As such, a dealer's profit will erode according to the weight of a load and the shipping distance required.
Dealers near ports will normally have lower transportation costs than merchants in remote, rural locations. Prices can also fluctuate when the cost of fuel increases because this change directly influences the dealer's bottom line.
Time of year
Scrap metal prices are surprisingly sensitive to seasonal variation. In Australia, scrap prices are generally higher in the winter because it's harder for dealers to gather and store waste during colder, wetter weather. Most industries also follow seasonal trends. For example, home construction tends to slow down in the winter, lowering scrap prices.
The scrap metal market is surprisingly price-sensitive, and the value of your materials can vary considerably between dealers. To make sure you get the best price for your unwanted scrap metal, it's important to understand the factors that may drive demand.
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