Price of scrap

The price of scrap is primarily driven by global commodity exchange indices such as the LME (London Metal Exchange) for non-ferrous metals (copper, aluminum) and the CME or Platts for ferrous scrap (steel, iron). Buyers must understand that prices are highly volatile and are usually quoted as a discount or premium against the spot price. Factors including purity levels (e.g., 99.9% for copper wire), contamination percentages, and current demand from smelting facilities significantly influence the final per-ton valuation.

Scrap is categorized by standardized grades such as ISRI (Institute of Scrap Recycling Industries) codes. For example, 'Berry' or 'Candy' refers to specific copper grades, while 'HMS 1/2' refers to Heavy Melting Steel. Buyers must verify the chemical composition via an XRF (X-ray fluorescence) analysis report and ensure the material is free from radioactive isotopes, hazardous waste, and excessive moisture, which can lead to weight disputes and safety risks during smelting.

Compliance is the most critical barrier in scrap procurement. Suppliers must provide a Pre-Shipment Inspection Certificate (PSIC) and adhere to the Basel Convention regulations regarding the transboundary movement of hazardous wastes. For shipments to specific regions, such as China, suppliers must possess a CCIC (China Certification & Inspection Group) inspection report and valid import quotas/licenses. Failure to provide these documents will result in customs seizure or forced return of cargo at the buyer's expense.

To ensure economic feasibility, buyers should mandate third-party inspections by reputable firms like SGS or Intertek at the loading port. These inspections verify the draft survey (for bulk) or weighbridge tickets (for containers) and confirm that the scrap matches the agreed-upon grade and purity. It is also standard practice to request loading photos and videos to ensure no 'dead weight' (like concrete or sand) has been added to the bottom of the containers.

The scrap industry is prone to payment fraud. Buyers should never pay 100% upfront via T/T (Telegraphic Transfer) to unknown suppliers. The safest method is a Letter of Credit (L/C) at sight or Escrow services provided by professional platforms like Made-in-China.com. Be wary of prices that are significantly lower (more than 20%) than the LME market price, as this is a classic red flag for 'ghost' suppliers or non-existent inventory.

Negotiations should focus on the formula-based pricing rather than a fixed price to account for market fluctuations. Ensure the contract includes a 'Price Adjustment Clause' linked to a specific exchange index. Additionally, negotiate the allowable impurity threshold (e.g., <1% attachment) and define clear penalties for off-grade material. For long-term stability, seek suppliers on Made-in-China.com who have Audited Supplier status and a proven track record of export volume.

Scrap is high-density cargo; therefore, container payload limits must be strictly monitored to avoid overweight fines. Use heavy-duty 20ft containers for dense metals like lead or copper. Ensure the supplier uses proper dunnage and lining to prevent damage to the container walls, as shipping lines often charge high container repair fees for scrap shipments. Always clarify the Incoterms; CIF (Cost, Insurance, and Freight) is common, but FOB (Free on Board) allows the buyer better control over the shipping timeline and costs.

Many countries impose export duties or bans on scrap metal to protect local industries (e.g., recent export restrictions from parts of Southeast Asia and Africa). Buyers must stay updated on Environmental Protection Agency (EPA) equivalent rules in the destination country. Utilizing the sourcing tools on Made-in-China.com can help identify suppliers in regions with favorable trade agreements and lower export tariffs, ensuring a more stable and cost-effective supply chain.