How does the trade war affect scrap prices?
When the United States and its trade partners don’t see eye to eye, it’s bound to affect commerce. That includes raw and recycled materials alike such as scrap steel and aluminum, not to mention copper and rubber. But as the nation’s 45th president, Donald Trump, presses the world to tilt the scales more in favor of American interests, it’s causing disruption.
What Effects Does a Trade War Have on Metal Prices?
China is one of the United States’ primary trading partners – at least, on a good day. Whether or not you agree with the White House’s tactics or not,
The Effect on Steel
The US has been at a steel trade deficit for a decade. However, China is the largest importer of scrap metal in the world, and that can turn the scrap industry on its head.
Imagine how tensions in trade will affect China’s willingness to pay fair prices for scrap metal. And that’s if they don’t close the border to imports completely! Recyclers who purchase scrap steel that would have, in turn, been shipped to China are seeing their yards piled high with steel headed nowhere.
The laws of supply and demand dictate that over-supply means a serious drop in prices. Compared to scrap metal prices from the first quarter of 2019, you could be seeing as much as 30 to 50 percent less when you sell metal to a junkyard.
The Effect on Aluminum
The United States imports 12.5% of its aluminum from China, second only to Canada. The Trump administration has slapped a tariff on aluminum products coming in. But in recycled materials from aluminum cans to car parts, China was the largest purchaser until April 2019. They’ll still accept aluminum at the moment, but the United States is being assessed a 25 percent tariff on it all.
Realistically for the average consumer, it hits you twice. When you buy the products new, from a car to metal toys and electronics, you’ll be paying more to make up for the added tariffs. Then, when you’re done with your aluminum product and you dispose of it, you’ll get less money back in return.
How a Trade War Affects Copper
Copper prices reached a two-year low recently because of the US-China trade war. That’s due to a 25% tariff from China as well as lowered demand from their manufacturers. See, when China isn’t able to sell their products as easily to the United States due to tariffs, they don’t need to buy as much raw material for manufacturing. It’s down a solid 20% in value from June 2018.
What do you think is in the miles of wiring in all modern vehicles? You guessed it – copper. So when your scrap car is being broken down to re-sell for raw materials, it commands less money on the open market with the largest trade partner the US has.
Other Markets Too
You name it, it’s affected. Rubber, nickel, zinc, manganese, lead, and other recyclable materials would normally be destined overseas in huge containers. Since there’s less trade happening, higher prices that reduce demand, and higher costs for raw materials including scrap metal, you’ll see the prices dip lower…and lower… and lower yet.
Prices for products, on the other hand, will likely rise at the same time.
What it Means for Scrap Prices
Scrap vehicles are a major source of these raw materials stuck in the middle of a US-China trade war. Inevitably, as cars break down or are involved in accidents, they’re still going to head to the junkyard. There’s nowhere else for them to go, really.
As junkyards and scrap yards find their inventory increasing, scrap prices will nosedive. If they aren’t getting what they deem a fair price for scrap metal, they’ll stockpile until the market changes. And while prices have dropped a little already, it could get worse. Much, much worse.
If you have a vehicle that you’d deem scrap, or a car that you don’t think is worth repairing, or you’ve been in a collision and need to sell your car for quick cash, now is the time. While scrap prices are relatively strong right now, you should take advantage. On a moment’s notice or at the next tariff announcement, prices could plummet to all-time lows, and you’ll be on the losing end.
JunkCarMasters.com Can Help
If you’re ready to sell a junk car or scrap vehicle of any kind, JunkCarMasters.com can help you get the best offer for it from local buyers. Our network includes scrap car buyers that pay top dollar, regardless of the tariffs and trade war.
Simply request an online offer for your car as it sits right now. Within 90 seconds, you’ll get a guaranteed offer for your vehicle. If you accept the offer, you’ll be paid the guaranteed price within 24 to 28 hours typically. Then, your vehicle will be picked up at no charge to you and hauled away.
If you’re looking for a solution to low or unpredictable scrap prices, request a no-obligation offer today from JunkCarMasters.com.
