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Main Factors that Influence Scrap Metal Prices

29 January 2021

The demand for scrap metals has been increasing every year as more industries embrace these products as the main source of their processes. After all, many products that are being released and sold to manufacturers, plants, retailers, and customers are mostly comprised of metal materials.

Given this fact, recycling centres have amplified their operations in terms of recycling and reprocessing scrap metals. While their operation costs mostly remain unchanged for the past couple of years, the prices of scrap metals, especially those that are ready to be exported and sold, often change very quickly. The changes in scrap metal prices are most influenced by the following factors:

Supply and Demand

Two factors in scrap metal price changes are the availability of the product supply and the demand for the product. Just like other products and goods, the total amount of available scrap metals and their overall demand can directly determine their price. If the demand for the scrap metal remains high, and that their overall supply has been low for a couple of months, then their prices are expected to go high. On the contrary, the prices of scrap metals will be low if these products have high supply and low demand.

Prices of New Metals

All scrap metals come from products that are made from new metals. The prices of newly mined metals, which are metals that are not yet processed, recycled, or used, can be affected by numerous elements such as supply and demand, production costs, and energy costs. When these factors have skyrocketed, then the prices of the new metals will be much higher. And for scrap metals, their overall sales would go high since they are much more valuable and more accessible than expensive new metals. If the new metals, however, become cheap, then scrap metals will be much more difficult to market.

Costs of Production

And speaking of production costs, these specific costs can hugely impact the prices of all types of metals. The production of new metals will not be complete if it will not consume energy. The costs of energy sources such as oil, gas, and electricity normally vary. And if these energy sources become too expensive, then the overall production and processing costs of these metals would also go higher. Scrap metals, on the other hand, would enjoy any increase on these costs as they do not share the same burden of the new metal production and processing.

Other Crucial Factors

Aside from the previously mentioned factors, the prices of scrap metals can also be affected by elements surrounding the industry. Their prices can be influenced by the source location of scrap metals, new commodity market price, the time of the year, and the quantity and quality of the scrap. Policies when it comes to international trade can likewise affect the prices of scrap metals.

To know more information about these factors, just contact us at Victorian Metal Traders.

 

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