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Why Does the Price of Scrap Metal Fluctuate?

scrap metal pricesThe short answer is because the price of virgin metal fluctuates, influencing the price paid for scrap metals. When the cost of virgin metal rises, the price of the scrap metal also goes up. Recycled metal costs less to produce than virgin metal, and thus becomes more desirable and carries a higher price when demand for a particular metal is higher.

Like all commodities, metal prices change with supply and demand, and the cost of production. For instance, the price of copper rises sharply during a housing boom, because builders demand record amounts of copper pipe and wiring to build millions of new homes. In a housing bust, the price of copper drops, rebounding when the housing market recovers.

The price of rarer imported metals can change because of politics and importation costs with countries such as China or Russia. When they raise their export taxes or costs, Americans must pay more for the metals they import. When favorable trade agreements are made, the cost of those metals decrease.

The greatest influence on metal prices is the price of fuel. Almost all metals require high heat to make basic industrial products such as sheet metal, wire, rods, and bars. Most foundries use natural gas, coal, or electricity to produce that heat, and when fuel costs go up, so does the cost of the metals.

For scrap metal pricing, or for information on containers and pick-up, please contact Mann Metals.

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