Introduction to the Scrap Metal Trade

Recycling scrap metal has always been a potential business in which one can make money and even more so now with a huge emphasis on recycling. Millions of tonnes of scrap metal are processed every year, examples being cars, bikes, pots, radiators, appliances, pipes, electrical wires, sinks, ships and many more. This article gives a brief overview of the scrap metal industry helping one get an understanding of what it’s all about.

Scrap metal comes in two types, Ferrous and non Ferrous. Ferrous only includes steel and iron scrap, whereas non ferrous is scrap metal other than iron and steel and includes copper, aluminium, zinc, lead, nickel, titanium, cobalt chromium and precious metals. Ferrous scrap is more readily available than non ferrous and hence ferrous is less expensive than non ferrous.

Scrap metal is also categorised using other criteria, for instance ferrous and non ferrous can be grouped into home scrap or purchased scrap. Home scrap is produced in the foundry or mill and is reused by the foundry or mill. Purchased scrap can be further classified as either industrial (new) scrap which is unwanted scrap created in the manufacturing process like when producing a new car, or obsolete (old scrap) which is worn out scrap like a car that has reached the end of its life. Other examples of obsolete non ferrous scrap include copper pipes, radiators, catalytic converters etc.

Also for instance in ferrous scrap metal you get many grades to classify, for example you have HMS1, HMS2 and further classifying ISRI codes. These basically define the type of scrap in terms of content, size, source and mix.

The price that scrap metal is purchased and sold for is determined by its type, source and any further classification. Additionally depending on supply and demand, the prices can fluctuate reasonably and quite frequently with a short space of time.

The various parties that trade in the purchase and sale of scrap metal are defined as follows.

Scrap processors purchase scrap metal from various sources, for example from builders, plumbers, mechanics, foundries, and other sellers. The scrap processor may deal in ferrous or non ferrous or both. The scrap processor will sort the scrap metal in their scrap yard with the use of cranes, magnets, shredders etc, and then sell the processed scrap metal to foundries, mills, recyclers and other purchasers. Alternatively the scrap processor may recycle the scrap and then sell on the recycled products.

Peddlers collect scrap metal from various sources and sell to the scrap processors. Or they may purchase from scrap processors and move the scrap to other countries. For instance a peddler may source unused cars for the scrap processor, or may collect aluminium cans for the scrap processor to recycle.

As can be seen, to get involved in this business, there are many factors to consider and options to choose.