When is it more profitable to sell scrap

When is it more profitable to sell scrap

Author:  Cheburator

For many people, scrap metal has been gathering dust or is stored in the garage as rubbish. At the same time, someone collects or buys scrap purposefully, in order to resell it later. Many people underestimate the real benefits of selling metal, considering it to be just useless trash. However, with the right approach, scrap can serve as a good tool for earnings and investment.

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For the real master it is important not only to find, collect and sell metal waste, freeing up space from them, but also to do it with the maximum benefit. At once, we will notice that summer is not the best time for selling of scrap metal! At this time, it will be just more profitable to collect or purchase it.

Seasonal fluctuations in metal prices

Scrap ferrous and non-ferrous metals have such a strong feature, as seasonal fluctuations in the purchase price. For ferrous scrap, this difference reaches 30-50%, and for copper 15-20%. Of course, to make good money, you need large amount of metal, which is measured in tons. However, even with smaller amounts, you should not miss the opportunity to wait for the moment and pass the scrap at the maximum price.

In summer, the average price for the reception of ferrous metals ranges from 3.5 to 4.5 hryvnia per kilogram. And copper is purchased for 111 hryvnia. Price increase for these materials begins in late autumn, closer to winter, and gradually grows until the beginning of spring. For example, in the early spring of 2018 ferrous scrap was taken at 6 hryvnia per kilogram, and this price was 50% higher than the one that the receiving sites gave later in the summer. If you look at the seasonal difference in the price of copper, in winter it was 145 hryvnia, and in the summer it was 120. That is, the difference is about 95 cents per kilogram. Current prices for reception of non-ferrous metals can be found here.

Other factors that affect metal pricing

It should be taken into account that, apart from seasonal fluctuations, the cost of metal on the Ukrainian market is also influenced by other important factors that are not always predictable.

  • Amount of scrap
    With selling of large wholesale batches of metal the price will be significantly higher. Therefore, if the priorities are earning on scrap, and not just cleaning the area from unnecessary trash, then there is no point in taking less than 1 ton. Starting from 5 tons, the cost of scrap increases by 10-30% due to the amount.
  • Metal grades
    Type and condition of scrap is determined by DSTU and has a significant impact on its value. In the spring of 2019, for the categories 500, 501 and 506 it was given 3% more than for mixed waste of group 509 and 20% more than for chips from the 503-rd category.
  • Clogging
    This is an indicator of metal contamination, which is regulated in DSTU and is 3-5%. Rusty, burnt or excavated metal has impurities that reduce its value.
  • Occupancy of warehouses of metal processing plants
    The end users of scrap in Ukraine are local metal processing plants. These enterprises set the highest scrap purchase price on the market. During the period of active purchase and accumulation of scrap by them, the demand rises, increasing the price. By the winter period, as a rule, combines create considerable reserves of raw materials in their warehouses and work at their expense. Accordingly, the seasonal resumption of purchases of scrap in early spring leads to an increase in prices in the internal market. Depending on a number of factors during this period, the price jump may be from 10 to 50%!
  • Amount of export duty
    Now in Ukraine there is an increased duty on the export of scrap iron at the rate of 58 euros per ton. For copper, the rate is 15% for several years. High duty significantly affects the price of scrap in Ukraine, reducing it compared to world prices. The cost of freight for the carriage of scrap in ports also has some significance for the internal price.
  • Current situation in foreign markets
    In recent years, Turkey is the main consumer of Ukrainian export scrap metal. For example, in August 2017 this was the reason that prices went up sharply and even exceeded the winter rate. One of the main competitors in the foreign scrap market for Ukraine is Moldova.
  • National currency rate fluctuations
    In recent years, the hryvnia exchange rate has steadily devalued from autumn to winter, and in the summer, it keeps up or even grows a little. During the year, the course usually fluctuates within 5-10%. However, a sharp fall in the hryvnia can significantly reduce the profitability of operations with scrap in the internal market.
  • Other factors
    Accuracy of scales and decency of a receiver.

How to maximize the benefits of scrap selling

If you buy a ton of copper in the summer at the current price, in the winter it can be resold much more expensive. So, having lain in the barn for several months before the arrival of spring, a ton of copper will add another 950 dollars to its value. A kilogram of ferrous scrap for the same time will rise in price by about 2 hryvnia or 7.5 cents. In this case, it will be possible to make a profit of $77 per ton of ferrous metal.

In case of delay of freezing weather and late arrival of spring, the most favorable price will last for a rather long time. Therefore, it is important to monitor the weather conditions: as soon as they become comfortable to collect scrap metal, prices will start to decline.

With the seasonal increase in prices for ferrous metal, you can make more money than on copper, but this will be more difficult. After all, to earn $ 1,000, you need to collect 13 tons of ferrous scrap, and this is quite a large amount. It will need to be stored somewhere, the delivery of such amount of metal to the receiving site will require additional costs for its loading and transportation by trucks. In this case, the required amount of metal increases to 16 tons.

In order to hire a couple of MAZ or ZIL trucks, load them with scrap and take them to Kharkiv to scrap receiving center, you will have to spend at least 2000 hryvnias. This amount will be asked to pay immediately or it will be deducted from the price at which the metal is sold. Cheburator Company offers one of the best terms for receiving ferrous scrap in Kharkiv. Scrap from 20 tons is exported for free!

Investing in scrap metal is much more profitable than in precious metals

Purchase of ferrous metal is a profitable business, although it is rather labour-intensive. Nevertheless, such percentage of the increase, which seasonal fluctuations in scrap prices gives, you will not receive from any deposits. Earnings from the storage and timely selling of metals is even more profitable than from investments in gold. The cost of bank gold bar is growing very slowly. In addition, in order to sell it at a higher price than the price paid for it, it will take several years to wait. It is advisable to invest in gold only if you buy it at the price of scrap, and not as jewellery items.

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For example, pawnshops buy popular gold of millesimal fineness 585 at 620 hryvnia per gram (23,600 dollars per kilogram), which is equivalent to about 5,200 kg of copper in summer prices. But in winter, the price of gold will remain the same, or it will change slightly, but 5,200 kilograms of copper will cost almost $ 5,000 more!

Choosing the right moment of purchase and selling of scrap

In terms of predictability of price movements, non-ferrous metals look more preferable compared to the ferrous metals with regard to investment, since the increased demand for these materials and their high cost in conditions of free competition in the market are more dependent on world prices than on internal instability.

If time and resources are available, it makes sense to collect or purchase scrap metal in the summer season at the lowest prices and closely monitor their growth, especially in winter, in order to sell it on time during the year with maximum benefit. As a rule, the end of winter or early spring is the best time for delivery of scrap metal. With the right approach, you can make good money on this.

Of course, tons of ferrous metal or copper is a significant amount that will not be easy to collect and store in Ukrainian realities internally. However, according to all calculations, it turns out that investing in non-ferrous and ferrous metals is much more profitable than in gold.

Good luck in collecting and selling of scrap metal!