1. Take control of the relationship

I am often struck by how unbalanced the relationship can be between companies who produce scrap metal and the scrap merchants who buy it from them. For example, it is common for the scrap merchant to decide how much they are going to pay (per tonne) at the end of the month following collection and inform the supplier how much to invoice them. No negotiation; no prior notification. Would manufacturers sell any other product to customers on these terms?!

2. Understand the market

Of course, it is hard to negotiate effectively without knowing the market value of your scrap. Given that around 60% of UK-produced scrap is now exported to markets such as Turkey and India, it is necessary to keep abreast of both domestic and export market trends. Non-ferrous metals are traded on the London Metals Exchange, which can give rise to scrap price volatility from trading in commodity investments. Currency fluctuations can also play a part in export pricing and have clearly done so since the Brexit vote hit the value of sterling.

3. Ensure you see the benefits of market upswings

Scrap metal processors inevitably try to pass on to suppliers the full amount of each drop in price and have done so in recent months. When prices rise again they invariably try to hold on to a chunk of any increase in order to increase margins. The vast majority are able to get away with this, as most contracts are not tied into market movements.

4. Check your weight data

Another area of concern is with weight recording. Rebates are typically paid based on the weights recorded by the scrap merchant’s weighbridge and computer systems. It is important that regular auditing is carried out to minimise the chance of errors resulting from missing tickets and under-reporting of weights either through error or deceit. Whilst we aren’t suggesting that systematic fraud is commonplace, it isn’t exactly unheard of either.

5. Keep it clean

The value paid for scrap metal depends partly on the ‘grade’ of the material. Higher quality grades naturally attract higher prices. Often it is in the scrap merchant’s interests for scrap to be well segregated and both parties can benefit from this. However, sometimes they are happy to let you downgrade your material by contaminating or mixing grades together, especially if they can easily process or clean it and upgrade it themselves before selling it on.

6. Keep it safe

Theft of scrap metals, especially the more valuable non-ferrous grades, was enough of an issue a few years ago to cause the police to set up a national task force to tackle the crime. The success of this operation, helped by declining prices in the interim, means that the situation is no longer acute and headlines about cancelled trains due to theft of cables have thankfully subsided. But nevertheless this remains a significant issue. High value materials need to be kept under lock and key.

Feel free to contact us for more information.