2019 Recycling Industry Yearbook

Institute of Scrap Recycling Industries, Inc. 8 SCRAP COMMODITY MARKETS Scrap prices are subject to many of the same market forces as primary (virgin) commodity prices, thus they experience similar price volatility. Domestic and global manufacturing demand, changes in currency markets, transportation supply and prices, energy prices, trade barriers, and the cost and availability of comparable virgin commodities are all factors that can affect the price of scrap commodities. But scrap commodity markets and primary commodity markets have some critical differences. Primary commodity prices generally follow traditional supply-demand relationships: As supply grows, prices fall. As supply shrinks, prices rise. Primary commodity producers often stockpile their commodities in large warehouses to manage large swings in inventory. Scrap recyclers generally do not stockpile material and hold it until prices increase. Instead, they secure a contract to supply scrap to a consumer and then purchase the material they need—from thousands of sources each day—to fulfill that contract’s demands. After acquiring and process- ing the scrap as the contract specifies, recyclers deliver the material based on current market pricing conditions the consumer has set. Scrap processors are generally considered price-takers, not price-setters, thus the mantra “scrap is bought, not sold.” 150.00 170.00 190.00 210.00 230.00 250.00 270.00 290.00 $ 310.00 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18 May-18 Aug-18 Nov-18 Feb-19 May-19 ISRI INDEX OF SCRAP PRICES, AUGUST 2012-JULY 2019 Source: ISRI