Written by Brian Sedasky
Published on the 7th of November, 2022
For new scrappers, getting into the scrap metal recycling industry can be difficult and intimidating, especially if you know nothing about it. Usually, we get a lot of questions from beginners wondering how they can start this business.
Among the many questions, one of the most common ones is, “What do I really need to know about scrap metal recycling before I start the business?”
Honestly, we understand why this comes up often. As in any other type of business, it’s good for you to understand the basics first to help avoid common errors that most beginners make.
Our article is an in-depth guide for everyone looking forward to making more money scrapping metal.
Read further to learn more about the basics of recycling scrap metal.
You can do so many things with scrap metal. For instance, you can repair old appliances – such as microwaves – and reuse or resell them on E-bay. You can also give it away at a recycling facility or give it scrap metal buyers.
Alternatively, you can sell these materials to a nearby scrap yard for money.
Many scrappers earn a fortune from selling scrap metal because these materials are always in demand. Some of the scrappers we’ve trained have gone from selling scrap metal on a part-time basis to developing a full-time profitable business like this scrapper on side hustle nation who earns up to $400 a month.
If you want to start selling scrap metal in 2022 – and beyond, you are on the right path. The industry has grown to become one of the most lucrative industries in the world, with a market size of more than $55.20 million in 2022. Global analysts predict that people should expect a growth of around US $83.77 million by 2028.
How do you set up your business? How much should you invest in it? What are some of the laws you should be aware of before you start the business?
In some countries, selling scrap metal is illegal because of scrap metal theft. If you live in such countries, you may not be able to sell scrap metal – unless the law changes.
Countries that allow scrap metal selling also have regulations you need to follow.
For instance, if you live in the United States, you can’t sell scrap metal to any scrap yard if you don’t have proof of ID. Besides that, if you are selling a junk car or any car parts (such as catalytic converters and engines), you have to give the scrap yard proof that it belongs to you.
The government does this because the theft of catalytic converters in the US has become common in recent years. Deputy Inspector of the NYPD’s Auto Crime Unit, Robert LaPollo, calls it “An automotive epidemic" in an article on Spectrum News.
Further, some states don’t allow scrap yards to pay via cash. If you are in Arizona – for instance, scrap yards will send a transferrable check via your address after a few days. Sellers in Vermont, on the other hand, can get cash payments. But it would help if you ask the scrap yards how they pay their clients before you start transacting with them.
The best way to get information on the laws regarding scrap metal buying or selling is to check the state’s official website or consult a solicitor to help you understand the laws, permits, and licenses needed to start this business. You can also get other updates on scrap metal laws in different locations worldwide, including the USA, United Kingdom, South Africa, New Zealand, Italy, Germany, Australia, and Canada on our website.
According to an article on the entrepreneur, you need approximately $10,000 to start selling scrap metal. The amount can go higher or lower depending on the things you need and what you don’t have.
The money will go to:
People always have pieces of equipment, appliances, and junk cars that they want to throw away on a daily basis. Your best chance of accessing these materials is to advertise yourself. You can use flyers or join online forums that deal with scrap metal. You can also go around your neighborhood and tell people what you do.
Other good places to get scrap metal include:
Note that if you can get free scrap metal, the better since you can maximize your earnings.
Scrap metal can be anything around your home, compound, or neighborhood that’s no longer in use. It can include:
When starting a scrap metal business, you’d probably want to identify the most profitable scrap metal so that you can collect more of it. Unfortunately, the scrap metal industry doesn’t work that way. Scrap metal prices change on a daily basis because of demand and supply.
Prices also change because of certain restrictions, such as Brexit and the 2020 Covid-19 lockdown.
The other thing about scrap metal is that scrap yards will grade them depending on quality. Scrap copper prices can go high or lower depending on the color.
For instance, if you are in Colorado, USA, the price of bare bright copper wire (highest quality of scrap copper) is around $3.23 per pound in October 2022. The price of dirty roofing copper should be about $2.67 (October 2022). You can check the average scrap metal prices on our website here since we update the prices on a daily basis.
So, if you are thinking about what scrap metal to collect more, think about collecting all types of scrap metal (ferrous and non-ferrous metal) you come across on the street. Don’t leave anything behind. Ensure, though, that you keep them in a good storage, sort them (scrap metals such as copper need to proper sorting), and update yourself on daily market prices to get a good price out of them.
Between ferrous and non-ferrous, which is more valuable?
Non-ferrous metals – such as copper, Aluminum, Zinc, and lead, are more valuable than ferrous scrap metals. Scrap yards tend to demand more of these materials than ferrous metals such as steel, cast iron, wrought iron, stainless steel, carbon steel, etc.
Why do we say this?
A recent report by Grand View Research indicated that the market size value of non-ferrous scrap metal in 2020 was around USD 236.5 million. On the other side, the market size value of ferrous scrap metal was around USD 89 million, and they predict it to be around 111.9 million in the coming years.
We can attribute the difference between the two market sizes to several factors.
Other essential insights we found about scrap metal from the report were:
How do you distinguish between ferrous and non-ferrous metals?
Let’s say you collect a large appliance such as a scrap fridge. It should have many parts that should be recyclable, including the transformers, the frame of the fridge, insulated cables, and so forth. If you want to determine whether the metals within the fridge are ferrous or non-ferrous, you can run a magnet through different areas.
If the magnet sticks on the shell, it’s probably a ferrous metal, and it’d help if you could keep it amongst iron alloys. If it doesn’t stick, it should be non-ferrous.
You can also differentiate ferrous and non-ferrous metals by color. Non-ferrous are usually very brightly colored. Aluminum is normally dull gray or white, brass takes a yellow color, while copper has bright red-orange color.
You can check out the below video to get more information on the difference between ferrous and non-ferrous metals.
Once you sort your items and are ready to sell, your next job is to find a reputable recycling facility. Now, the thing is – especially in the United States, you’ll find a scrap yard within a 20-mile radius. Therefore, there are so many options at your disposal.
Which one should you choose?
Generally, if you want to sell a car or car parts, you should take it to a junkyard. Those who want to scrap metal or metal parts should look for a scrap metal yard, while those who want to sell precious metals can look for a cash for gold place or a pawn store.
But, still, you don’t just go to any facility that’s close to you. You must first find out what other scrappers have to say about it. You can call fellow scrappers, or you can check the scrap yard’s Google reviews.
Also, calling the scrap yard, really, helps. You can ask them about the following:
Your goal is to take your materials to the suitable scrap yard. If the scrap yard only deals with copper metals, they will pay higher for copper items. However, they can refuse to buy materials they don’t deal with or offer a lower amount for them.
What happens when you go to the scrap yard?
We always advise scrappers only to take their materials to a scrap yard if the current market price is good and when they have enough materials to bring a good profit back home. Taking a small amount to a scrap yard is a loss – especially if you have to go to a busy facility where you have to wait in line before they can serve you. Plus, it’s a waste of fuel and energy.
If you have enough scrap metal and know what scrap yard you need to go to, load your materials into your van or trailer.
When you get there, the scrap yard will measure the amount of scrap metal you’ll bring to them. They can do that in two ways. They can ask you to drive through a weighbridge to get the gross weight of your vehicle and the materials inside. They’ll ask you to offload the materials, and then they’ll take the weight of the vehicle when it’s empty (tare weight). The difference between the gross and tare weight will give the total weight of your scrap metal or the net weight.
Alternatively, some facilities will ask you to offload the vehicle and then weigh the scrap metal using a scale. They’ll then provide a receipt, and you’ll get your payments immediately if they pay with cash. Note that the process differs from one scrap yard to another.
Recycling scrap metal shouldn’t be a difficult thing to do if you know the basics. We hope this article gives you all the information you need to help you get started with buying and selling scrap metal. Ensure that you update yourself daily with scrap metal prices and laws in your state to know what to sell, how to sell, and when to sell it.