Scrap Metal
Scrap Metal: Throughout the ages, man has been recycling metals by melting and reusing them. A visit to
almost any industrial area in the country will demonstrate that the scrap business is alive and well.
You'll notice scrap processors (scrap facilities or scrap yards) where the scrap metal is piled high
cranes are lifting and sorting the metals, and trucks are hauling the scrap metal in and out of the
facilities. Recycling metal is important because it creates big business. It also plays an important
role in conserving our national resources. It helps keep our highways and cities free from debris
and helps preserve landfill space.
In the U.S. alone, scrap metal processors handle the following approximate quantities of scrap
metal yearly:
56 million tons of scrap iron and steel;
1.5 million tons of scrap copper;
2.5 million tons of scrap aluminum;
10 million tons of scrap automobiles; (This is included in the 56 million tons of scrap iron and steel recycled.)
1.3 million tons of scrap lead;
300,000 tons of scrap zinc; and
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800,000 tons of stainless steel scrap.
Example
Iron ore is extracted from the ground. It is shipped to a mill where iron or steel--steel in this
example--is made into different forms, such as sheet or bar stock. The steel is then shipped to a
buyer, such as a stamping plant or screw machine shop, to be fabricated. During that fabrication,
scrap metal is generated; then, it is sold for processing and/or melting.
Scrap metal is also produced by the ultimate user at the end of the steel product's useful life. The
obsolete product enters the recycling system at that point.
After processing the scrap metal, the scrap processor will sell the processed scrap to a mill,
foundry, or other concern that will use the metal to make new products.
Examples of commonly recycled scrap metal products are:
Aeronautical and aerospace equipment, including airplanes and rockets; Aluminum siding, doors, and window frames; Appliances; Automobiles; Bed frames and mattress springs; Bicycles; Bridges; Cast iron sinks and bathtubs; Computers; Cooking pots and pans; Electrical wire; Elevators; Eyeglass frames; Farm equipment; Food and beverage containers; Hospital equipment; Industrial cuttings; Industrial machinery; Locks and doorknobs; Office equipment and furniture; Park and playground equipment; Pipe; Railroad and subway cars; Roadbed reinforcing bars; Roofing; Ships; Structural steel building frames; Telephone wire; Tools; and Toys.
Scrap recyclers purchase recyclables from various sources, including manufacturers of metal
products; airlines and railroad companies; apartment complexes; automobile dismantlers; auto
mechanics; builders, roofers, and other construction sources; demolition contractors; factories;
mills; foundries; fabricators; farmers; federal, state, and municipal government agencies and
programs; hospitals; universities; schools; machinists and appliance repair shops; municipal
curbside collection programs; offices; stores; hotels and restaurants; plumbers and electricians; the
general public; the U.S. Armed Forces; and utility companies.
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Types of Scrap Metal
Scrap metal is divided into two types: ferrous and nonferrous.
Ferrous scrap is scrap iron and
steel. This includes scrap from old automobiles, farm equipment, household appliances, steel
beams, railroad tracks, ships, and food packaging and other containers. Ferrous scrap accounts
for the largest volume of metal scrapped. Ferrous scrap is classified into almost 80 grades;
additionally, there are another 40 grades of railroad ferrous scrap and even more grades of alloy
scrap. Metal alloys are made from a combination of two or more metals.
Nonferrous scrap metal is scrap metal other than iron and steel. While the volume of nonferrous
scrap is less than ferrous scrap, it is more valuable by the pound. Here are some examples of
nonferrous scrap: aluminum, copper, lead, zinc, nickel, titanium, cobalt, chromium, and precious
metals. Millions of tons of nonferrous scrap metal are recovered by processors and consumed by
secondary smelter, refiners, ingot makers, fabricators, foundries, and other industries in this
country.
Scrap metal, ferrous and nonferrous, can be categorized as either 'home scrap' or 'purchased
scrap.' Home scrap is scrap generated at the mill, refinery, or foundry, and is generally remelted
and used again at the same plant. Home scrap never leaves the plant.
The other category, purchased scrap, is further classified as either industrial (also called prompt or
new scrap) or obsolete scrap. An example of industrial scrap is a piece of metal that is cut or
drilled. The metal that is cut or drilled out and is not incorporated into or made into the finished
product is known as industrial scrap. The largest source of industrial scrap is the automotive
industry. Obsolete scrap, also referred to as old scrap, is scrap that is worn out or unwanted in its
form. Examples of obsolete ferrous scrap are automobile hulks, old farm equipment, and major
home appliances. Examples of obsolete nonferrous scrap include radiators and catalytic
converters from old automobiles, electrical boards from old computers, old pipes from buildings,
and spent photographic film. Recyclers can recover copper and lead from radiators, platinum
from automobile catalytic converters, gold from computer electrical boards, and silver from the
spent photographic film.
Purchasers of Scrap Metal
Examples of purchasers of scrap metal are foundries, mills, mini-mills, brokers, peddlers, and
scrap processors. The industry prefers either the term 'facility' or 'plant,' be used to refer to
their place of business, but you may also see the term 'yard' used.
Operations of Purchasers
Scrap Processors (also known as Scrap Dealers or Scrap Recyclers)
Scrap processors collect, sort, process, and eventually sell the scrap metal to foundries, mills,
mini-mills, and other purchasers. Most processors handle both ferrous and nonferrous metals but
may specialize in either. Exhibit A identifies the properties of ferrous and nonferrous metals and
their sources.
The equipment utilized by the scrap processor to process the scrap will vary with the type and
volume of scrap the processor purchases. Most processors will have a crane that is either a
traditional cable type or a hydraulic crane that is available on crawler, truck, pedestal, gantry, rail,
or overhead mountings. Large magnets or grapples are attached to the cranes that lift and move
the ferrous scrap. Processors may have a hydraulic baling press, an alligator shear, or hydraulic
guillotine shear. Some processors have shredders that can turn an auto into much smaller pieces
of scrap. Because shredders are very expensive machines, there are fewer in number. However,
the shredders produce a large volume of tonnage. Additional equipment utilized to process the
scrap might include scales, conveyors, mobile auto crushers, and the truck fleets and containers
used to store and move the scrap from the originator to the end user.
When the scrap metal arrives at the processor's location, the scale operator normally weighs the
scrap placed on the scale and creates a cash slip/weight ticket. The cash slip/weight ticket
generally identifies the type of metal, total weight, price per pound (or per cwt. or per ton), total
amount to be paid, and name of the individual or business selling the scrap metal. The cash
slip/weight ticket is then presented to the cashier for payment. If the processor services
businesses where containers are kept on the seller's premises, these businesses, often referred to
as industrial accounts, normally will be paid once or twice a month.
The scrap market can be volatile. Even experts have a hard time predicting prices for any scrap
commodity at any given time. For example, ferrous scrap valued at $100 a ton in one year can be
worth $50 two years later and $130 the next year. In this market, the purchaser determines the
market price. When demand increases for scrap metal, a higher price is offered to the seller.
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When enough scrap has been purchased, the price begins to fall. There is less incentive for the
processors to collect scrap when the price is low because the profit is also lower. If the market
price of scrap metal is low and processors can afford it, some may stockpile scrap and sell later
when the market is more favorable. Thus, inventories may vary depending upon market
conditions.
Most scrap processors eventually sell scrap metal to larger processors, foundries, or mills.
Payment is usually made by check but can be made by wire transfer or in cash.
Peddlers
A scrap peddler is usually a sole proprietorship reporting on a Schedule C. The peddler purchases
scrap metal and resells it to the scrap processor. Depending upon the size of the peddler's
operation is, the peddler may have drivers working for him to help transport the scrap. The
peddler may have industrial accounts at machine shops and stamping plants or may search for
scrap metal. A peddler with industrial accounts may maintain containers at the customer's
location to store the scrap metal. The peddler is different from the processor because he does not
process or store the scrap metal. He merely transports the scrap metal from the seller to the
buyer. When a customer calls or the peddler locates scrap metal, the peddler takes the scrap
metal to a processor. The peddler may be paid by the processor upon delivery or later with or
without an invoice being issued. The peddler usually does not deal exclusively with a specific
processor but 'shops around' for the best price.
Brokers
Brokers act as agents for others in negotiating contracts, purchases, or sales. Brokers may act as
intermediaries between any buyer or seller of scrap metal. The broker is different from the
peddler because the broker may not take physical possession of the scrap.
Sellers of Scrap Metal
Types of Cases
There is no limit to the types of businesses that may sell scrap metal. Listed below are some of
the more common business operations.
They are establishments engaged in:
1.Fabricating ferrous and nonferrous metal products, such as metal cans, tinware,
hand tools, cutlery, general hardware, nonelectrical heating apparatus, fabricated
structural metal products, metal forgings, metal stamping, ordnance, and a variety
of metal and wire products;
2.Manufacturing metal bolts, nuts, screws, rivets, washers, formed and threaded wire
goods, and special industrial fasteners;
3.Manufacturing iron and steel forgings or nonferrous forgings;
4.Manufacturing automotive stampings, such as body parts, hubs, and trim;
5.Manufacturing metal crowns and closures;
6.Manufacturing metal stampings and spun products, including porcelain and
enameled products. Products may also include household appliance housings and
parts;
7.Manufacturing, on a job basis, special tools and fixtures for use with machine
tools, hammers, die-casting machines, and presses (commonly known as tool and
die shops);
8.Cutting, slitting grinding, polishing, or sanding metal;
9.Demolishing buildings and selling scrap metal from the destroyed building;
10.Selling used auto parts, such as alternators and transmissions;
11.Purchasing and selling scrap metal; for example, peddlers and brokers; and
12.Conducting any type of business activity where the obsoleted equipment or
buildings may be sold as scrap metal.
18.04.2007. 10:28
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