The Value of Scrap Metal Recyclers in the Supply Chain

All market indicators point to a deficit between the supply and demand of metal on a global scale due to the diminishing supply of raw materials while the demand keeps increasing. This has resulted in a spike in metal prices in the market, as you would expect of any market where the demand supersedes the supply. 

But the metal recycling industry is becoming a game changer in the global metal supply chain. According to industry projections, the scrap metal industry is set to reach $1.4 by 2027, representing a CAGR growth of 4.9%. 

If you have an interest in the scrap metal industry as a recycler or middleman, this guide will be a good read. 

Keeping the Prices in Check

If you have basic business knowledge, you know that higher demand without matching supply always leads to high prices. The supply and demand imbalance for metals is being felt by all players in the industry but more so by the consumer at the bottom of the chain. 

According to industry data, over 90 million tons of ferrous metals are recycled annually. Such many tons of raw materials mean that the US industries dependent on metal do not have to rely on the availability of natural raw materials alone to produce metals. 

This ensures there is less strain in accessing raw materials and consequently lower metal prices. Recycling is also much cheaper than extracting metal from natural sources like iron ore. So the more accessible scrap metal is for recycling, the more stable the supply and prices will be. 

The Impact Extends Beyond America

America has a considerable demand for metal products. This means that if the US is dependent on metal ores as its source of metal production, it would create a significant strain on the demand and supply equilibrium on a global scale. 

Thankfully the United States is a leader in scrap metal exports which helps keep the prices in check at home and abroad. According to a study by John Dunham and Associates, the US scrap metal industry generates approximately $28 billion yearly in exports. 

Impact on the Economy

Besides its effect on the supply chain, metal recycling has a significant impact on the economy. According to the EPA, the recycling industry employs over 1.1 million people in the US. 

Over 40,000 of these work in metal recycling industries. This figure doesn’t consider all the jobs the industry created indirectly, which according to industry data, can be as high as 50,000. 

Providing employment is not the only impact the metal recycling industry has on the economy.

According to Global Recycling, the sector accounts for 0.69% of the US’s economic activity yearly and generates $13.2 billion in federal and local tax revenue. 

Helps Individuals Generate Income

If you have loads of scrap metal but cannot recycle it, you could sell it to recyclers or intermediaries dealing with it. If you have substantial amounts, you could use it to get into the scrap metal business, where you buy from people with small amounts of scrap metal and sell it at a higher price to recyclers. 

Often buyers will buy scrap metal by weight, meaning the more you have, the more money you can expect to fetch from it. Besides the quantity, the type of metal is also a factor.

Ferrous metals from appliances can fetch between around $0.20 to $0.35 per pound. 

Non-ferrous metals can attract significantly high prices ranging from around$0,35 per pound for aluminum to about $2 for copper. This may sound like a small figure, but it can be pretty significant if you have large amounts of metals. 

If you do not know where to sell your scrap metal, check online for scrap metal dealers. Most scrap metal buyers will come to your location if you have substantial amounts of scrap metal. However, you have to be careful about state laws, as some states require proper licensing when selling metals. 

Impact on Environment

It is easy to look at the impact of metal recycling on the supply chain and the economy and forget its effects on reducing trash. Over 90 million tons of metals recycled yearly means 90 million tons that could have ended up in landfills. 

While biodegradable, some metals can take up to 200 years to degrade, so recycling them is a massive step in minimizing trashing and getting economic value out of them.