Plus, Ultimate Photo Guide to Scrap Metal Types and Pricing
Sometimes when you are in an industry for a long time certain words and phrases become very common and you throw them around all the time. Upfront formula pricing is one of those phrases and we find may commercial customers don’t truly understand the information being provided, the source and how this information can help you maximize the value of your steel, aluminum, copper, brass and stainless steel.
At Sahd Metal Recycling we value operating with integrity and transparency, and that means giving the customer all of the information necessary to make an informed buying decision. By sharing with the customer the end price we get for their material they can see our gross margins right away. Of course, this does not include trucking from the customer to the yard, sorting and processing and delivery to the mill and foundry in addition to all the other costs that go into running a scrapyard.
So, when we say you see the end price we get for the material, in the case of steel, stainless steel and some grades of aluminum this is certainly true. Fastmarkets publishes a market rate for the Philadelphia region (Lancaster, York, Harrisburg, Lebanon business falls under this region) that displays the price we get for various categories of metal. This information is sourced from both the buyers and the sellers of the material and that information provides a consensus market rate. In our market there are a few mills and foundries that are a part of the mix and these numbers are either averaged or basically dead on the same for each of the mills.
What we can then do for our customers is give them a predictable percentage that they can count on against that mill rate for what we would be paid for the material. So, while the market will move up and down, your percentage of each category will remain the same. An example of this is for A36 steel with very low copper (under .15) and no nickel and low manganese (under 1.0) your percentage of HMS. This material is often called foundry steel can be valued at between 75% and 90% of the HMS #1 price. So, as an example a formula of 82% of HMS #1 of $290 would yield a price of $237.80 per gross ton or 10.6 cents per pound. If HMS #1 moves up to $320 the next month that 82% would $262.40 per gross ton.
This ensures pricing predictability for your scrap metal, helping you understand the value of your steel skeletons, drops and obsolete scap. This process is repeated for each commodity you have, alloy by alloy. Sahd Metal Recycling will work with you, understanding the differing jobs you have can create many different alloys of scrap and giving you the value for your higher end materials even in a mixed steel dumpster.
Stainless steel alloys like 304 stainless, 316 stainless, 310 stainless, 330 stainless and Inconel 600/601/625 would all use the corresponding category in Fastmarkets for its benchmarks. Aluminum categories like printing lithoplate aluminum and aluminum mixed low copper clips are also categories we track and give customers formulas for in Fastmarkets. Again, all of these are indexed as a percentage to the reported end price we get for a 40,000 pound full truckload of material.
Other aluminum and copper alloys either move too quickly for the Fastmarkets report or really don’t have good corresponding categories on Fastmarkets. For these items we use our subscription to Metal Exchange Direct. This gives us, and by extension you, up to the minute live LME and Comex information with the trading floor prices for copper and aluminum.
Unlike the Fastmarkets platform this index is based soley on trading value for each metal. Scrap value for these metals includes a spread that buyers attach to this to help these indexes become more relevant to supply and demand. The trading floor often will predict shortages ahead, world events that change the perspective on metal availability and be very reactive to innovations like AI, the energy shortage due to the data server expansion. The spreads are deductions off of that number for copper based alloys.
At the same time aluminum often attaches a cost, the Midwest Premium to its trading number. This can sound complex, but it really is just the cost of aluminum in the Midwestern US. Attached is a link to a very good explanation of the Midwest Premium.
No matter what the index, report or benchmark is used consistency and communication are king! Keeping the category consistent over time and learning the trends are very important for understanding your scrap metal pricing. Aileen sends out monthly updates with some market insights we share with our customers so everyone gets a look at pricing during that snapshot in time along with our sale price and your price per pound.
After you know your price it’s the basics of our signature service:
Guaranteed service within 24 hours of notification, often within a few hours
Personal communication with Aileen, Dan, Mike or Shelbie to ensure you are cared for
Sorted load in our yard to give you maximum value for your mixed metal dumpsters
Prompt payment, with checks that go out on the last day of the month
All of this done with the transparency and integrity that is a hallmark of our company, having served the community for 83 years!
Here is a library of some of the different steel grading categories with pictures (in general descending order of value) :
Foundry Steel (mild steel, low copper, manganese and no nickel, pictured above)
Here are some of the aluminum and stainless items we price off of either Fastmarkets or Metal Exchange Direct:
Here are some of the popular copper based alloys that we use Metal Exchange Direct formulas for our customers:
