Why Do Scrap Metal Prices Change?
Learn why scrap metal prices fluctuate and get more from your investments. We are often told that the value of an item is determined by demand. The greater the demand, the higher the price; the lower the demand, the lower the price. Though largely true, this is a simplified explanation. There are many factors that affect scrap metal prices — on a local, domestic and international level.
Scrap metal dealers that are near large cities or transport hubs will have lower transport costs than inland competitors. They may inflate their prices to offset their overheads.
Fuel prices are constantly fluctuating and this can affect the cost of transportation day to day. Scrap metal prices may be inflated in line with a rise in fuel prices to offset these costs.
The emergence of a new scrap metal dealership can impact the prices of scrap metal at all the existing dealerships nearby. New competition means that existing dealerships may need to vie for customers by increasing prices or marketing/advertising costs.
- Industry demand
The state of different industries can impact scrap metal prices. If the demand for cars begins to stagnate, then so too will the demand for the metal required to manufacture cars. Equally, if business is booming and manufacturers are seeing a huge demand for their products, scrap metal becomes more valuable and the price increases.
There are a huge number of industries that use scrap metal — electronic, automotive, technological, construction — and even slight changes within that industry can have a knock-on effect for the scrap metal industry.
- International trade
Many domestic scrap metal dealerships rely on international exports. Countries such as China and India are significant importers of scrap metal. If any of these countries begin reducing their rate of imports, perhaps due to stockpiling too much metal, the value of scrap metal will drop.
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