Possible Future of Scrap Metal Prices Not So Good - Page 2

Originally Posted by freonjoe

I think the prices for existing houses is so low is because there are too many houses avalable for the number of buyers in the market. Just wait till more of the shadow inventory starts showing up!

Or looking at it another way. We need more buyers for the many houses available. Higher wages, more jobs = increased number of buyers. Home prices are low compared to the high of the bubble, but in many areas they are still higher than they were before the bubble.

Originally Posted by CMHN

I think the biggest thing right now that will impact scrap prices is the end of the war. At my company we noticed the price of metal drop a little and were not sure why.

On another note, I hope the price does drop again, you will see these new vultures go back into their caves and let the scrapping to the truley dedicated recycler. Back when the price was $20 a ton I was the only scrapper on Craigslist list and I would have a full load of scrap every day of the week. Now that the price is high there are hundreds of ads on Craigslist along with a flagging war and I can barely get a load a month because of the vultures. When the price goes back down and the vultures actually have to work for the money they will be nowhere to be found and back collecting wellfare.

Ok rant over, you can now enjoy the rest if your program.

I think you are right about the end of the war. I too have done a lot of scrapping at $20 ton iron, 25 cent brass, 60 cent copper... I didn't end up scrapping a lot of the iron because I could sell it as useable but then the economy was better back then too. If I tore down an old warehouse, I'd have all the corrugated tin sold before I ever took it down. Same with water tanks and towers... It's tougher to sell for reuse now, but I think essentials will increase as economy continues to decline though I may end up trading a lot more than selling for cash - barter works too!

Originally Posted by rbrooks715

we could eliminate unemployment and greatly reduce dependence on social services if we repaired or rebuilt that infrastructure. bring back the old wpa and ccc programs. take all of that money we spend in foreign policy and spend it here instead.

Right on! But we have to be sure that U.S. companies hiring well paid U.S. workers get the infrastructure work. I'm thinking the new San Francisco Oakland Bay Bridge. The pieces of the bridge are brought on giant barges from China.

here's the thing...there's only so many houses, and so many condos and apartments, and right now there's a growing population. So eventually its got to even out based on supply and demand. As rentals become more expensive because they're in demand, ownership will again be seen as more attractive. <<

there are more houses for sale than there are buyers. well, qualified buyers at the very least. you are going to have calculate the ability to buy into your formula. our population is growing, but at a slower pace.

Banks aren't just going to dump a property they've invested 200k for 25k...The sky is not falling. Its just low clouds. <<

they are and have been. check out some of the real estate auctions and the prices on reo property. you can also browse thru trulia. hud homes. or similar sites. it is true that many of these need repair. i just bid on some houses in atlanta. they originally sold for over 250k. 15 years later and they brought 45 to 50k. detroit is even worse off. so is vegas. sometimes a loss is the best answer. write it off and put that capitol back to work.


vacancy rates for rentals around here is 15%. eviction rates are up. and we have a lot of vacant property for sale.

the problem is not a lack of interested buyers or renters. regardless of what the true number of unemployed is. unemployed folks normally do not have the money to rent or buy. they are going to find it difficult to qualify for a loan to make that purchase.

mall owners like to charge rent based on door counts. the more people counted coming thru the doors supposedly equates to higher sales. sounds reasonable. until you stand at the door and count the number of people leaving who did not buy anything. 100 people walk in and 90 walk out empty handed. no purchase. true door count is 10. this is even worse in real estate or used vehicles. 100 people are interested in it. only 10 can afford it. and how many of those 10 will want to buy it. that 10 is the potential customer base. if none of those 10 want it, no sale.

is the sky falling? well, i guess that depends on where you are standing. can we change that. of course.

i know i am glad i don't have any property in detroit.

Originally Posted by IronPirate

Also, something odd about current housing prices - we're seeing houses sell for much less than replacement cost. This concerns me. Even used cars always sell for more than the market value of their components...but not houses? Something seems artificial about these low prices. I agree we're in a correction, but something isn't right here...

I don't see any newer homes going for less than replacement, but I do see some older ones going like you say. Maybe homes are becoming more like cars and other things. As they get older, more worn out, they depreciate in value. I question replacement value too. I've seen same contractors building and selling houses for 400k and not so distant past building and selling similar homes for 150K yet seemingly still making a profit. The building trades are in shambles, low paid labor is king. I would think, relatively speaking, it is much less expensive to build a home now than it was in the 70s and 80s when you still had union plumbers, carpenters, electricians and viable apprenticeship programs. Couple that with lumber going for 1/3 of what it was going for at height of boom.

Originally Posted by IdahoScrapper

400/ton sounds nice.

Hey CHMN, when scrap was 20/ton, were you cashing it in, or stockpiling it for when it climbed back up?

Same problems here with people spamming CL for metals. Imagine it's a problem every where.

I know you addressed to CHMN but I'll chime in. When I was salvaging (I like this term better than scrapping because it implies reuse over scrap) back when iron was $15 or $20 a ton there was no climbing back up. It had been that price for awhile and no reason to think things would change. Thought I think prices now will fall, I don't bank on it. I don't ever think it makes sense to hang onto things hoping for a price increase if you paid cash money for it. For me, no matter what prices do, I can always make more turning things over as quickly as possible so I have that cash and then some to reinvest in more. Waiting for a 20% price increase that may or may not occur will bring you much less profit than selling $200 worth of stuff today, using that money to buy more tomorrow, selling that... on an on. Cash flow has always been most important to me. If I sat on things the cash would not flow.

Look at any restaurant or mall parking lot on a Friday night. Parking lots full of new cars. Recession my a@&.<<

lets first look at all of the closed malls and restaurants. they are no longer in operation. ergo, their are fewer over all customers. then we will look at the % of the total population that the remaining business' represent. is their current customer rate simply a result of of gaining new customers from the business' that have closed? and then we can look at their seating ratios vs gross and net during the rest of their business hours. is friday the only night that is profitable? what is the net rate comparison. how does that compare to the last 15 years.


Parking lots full of new cars. Recession my a@&<<

i am curious. do you think the economy is thriving and healthy?

Originally Posted by RecyclingSecrets

I know you addressed to CHMN but I'll chime in. When I was salvaging (I like this term better than scrapping because it implies reuse over scrap) back when iron was $15 or $20 a ton there was no climbing back up. It had been that price for awhile and no reason to think things would change. Thought I think prices now will fall, I don't bank on it. I don't ever think it makes sense to hang onto things hoping for a price increase if you paid cash money for it. For me, no matter what prices do, I can always make more turning things over as quickly as possible so I have that cash and then some to reinvest in more. Waiting for a 20% price increase that may or may not occur will bring you much less profit than selling $200 worth of stuff today, using that money to buy more tomorrow, selling that... on an on. Cash flow has always been most important to me. If I sat on things the cash would not flow.

I kinda see your point in turning items asap.

I had a pile of copper that would have gotten me another $1,400 to $1,700 had I waited a year/18 months. Percentage wise I don't know what that comes out to. Wishing I had held onto it, but a person can't foretell what the market will do.

What period was scrap at 20-30/ton? I've only been serious about this for roughly 2 years, and prices have been fairly decent from then till now.

Originally Posted by rbrooks715

i am curious. do you think the economy is thriving and healthy?

My glass is half full.

In 06/07 I was getting around 300/ton iron and 3.50/lb for copper in 08/09 it dropped to 65/ton and .90/lb but is now back at 210/ton 2.80/lb

Three simple words supply and demand. 2001 44 steel mill in bancrupty Americas production hovering at 25 percent capacity or lower. Many mills mothballed or idled. Fast forward 2011 zero mills in bancruptcy and capacity at 85 percent or more. 1500 industrial plants in manufacturing are closed each year less scrap more mills fighting over less supply. The price of scrap isn't going lower anytime soon. I got news for you at the rate we are closing manufacturing plants we have thirty years left of manufacturing get ready for the price to go higher in the future. Its a 90 billion a year industry. I remember when I couldn't get more then a hundred for prepared per ton and the market moved up or down five or ten dollars a month.

I think... The price of fuel is keeping up prices.

You hit the whole issue square in the head, Fuel prices are at the real heart of scrap prices vrs. new mining extraction. The Leeb analysis described in Game Over is a comprehensive review of what we have left in both oil and metals. I would say this is a must read if you are in the scrap biz. The price of oil and scrap will more or less "stairstep" over time. From all the research I have done copper,platnium, and palladium are the sure fire "strong" metals, scrap steel also looks good since there is not much easy to get to iron ore for new mining. If I was wealthy I would physically acquire and horde copper (there are wealthy investors that have done (are doing) this, 40K lbs in conex boxes), 2 billion people are electrifying their lives over the next 10 years. Unlike gold "real" industrial metals are hard to create bubbles around due to the price being tied to legitimate demand and growth. Ever study 3rd world economies, they work hard to develop and export value to other markets, sound familiar? We already have record levels of metal theft as the poor try to remain solvent, this will increase as prices increase. We will part ourselves out to meet the demands of world markets. The only thing I can see to disrupt this trend would be a total oil embargo from the middle east..that would stop Eastern development. The Chinese have publicly stated they would be comfortable with 200/bbl oil since they could control the market at that point, that shows a very confident long term out look for our scrap metal.

Originally Posted by RecyclingSecrets

Thinking about Gold too. Usually when the economy does poorly gold does well and that's been the case so far. BUT, this time our on-the-street economy is doing poor but wall street and the stock market are doing very well. Gold historically has been a hedge against poor stock performances and the like. With Wall Street doing well, I'm wondering if we're seeing the beginning of a slide in gold as well.

No offense but recheck you gold facts. The last 10 years gold has been on a roughly 250-1650 bull run while the S&P is up about 165 points. Gold moves with alot of things. Interest rates, turmoil, the dollar strength, leverage in the stock market, you name it. Be careful linking it to the economy only because you trade that way and your going to get broke right off. We get a melt off in the stock markets and the first thing traders are dumping to cover their leverage in stock trades is winning positions. Gold has been a nice hedge on a weak dollar and low intrest rates but traders start taking margin calls on 50 to 1 plays that are going bad and you can bet gold is going negative 10-15% like yesterday.......just something to chew on.

Wall Street's had a nice rebound off the 09 lows. Gold has done quite well in that time frame too as it did set a unadjust for inflation all time high in that period.

So 2011 vs 2010 for me was less pounds of stuff but more $$. Best prices I have seen on many items, but also high gas prices and the most other scrappers out there! I do agree that there are many new yards and other places purchasing items in the last few years!