In 2004, my husband and i decided we would follow along in the footsteps of hundreds of people in our Spartanburg, South Carolina, area and become involved in the scrap metal market. At the time, prices of scrap metal were at an all time high, there was literally tons of money to be had for the taking. Which i suppose is why there were so many people choosing to get into the business. After making the decision to buy into scrap metal, we invested what little bit of money we had saved up, into a one ton truck suitable for hauling the vast amounts of automotive engines, transmissions and parts we hoped to purchase.
The scrap metal business is really simple. All you must do is find junk yards, scrap yards, salvage yards and pretty much anyone else who might have automotive scrap material for sale and purchase them at discounted prices, then turn around and sell it to the highest bidder at a huge profit. I’ve seen the days when my husband would buy a truckload of scrap for $500.00 and sell it at almost 60% profit. We did so well we were soon able to invest in another truck and hire our first employee, all within the first year. Our gross income for the first 6 months was $40.00 dollars. Little did we know a mere 5 years later, the bottom would drop out of a booming market, turning our gold mine into an aluminum can not worth 2 cents.
Around the middle of 2008 local scrap metal dealers began to notice the prices on materials starting to drop. At first no one was really concerned, as prices on automotive scrap tend to fluctuate on a regular basis. However, as we began to see the prices we had been getting for our material dropping lower with no end in sight, we quickly became concerned. Finally, right around January 2009, scrap metal prices hit an all time low and have stayed there. In the scrap metal business we depend on buying scrap from others to resell, Iron scrap is a high demand item as it is required in the production and manufacturing of new steel and cast iron products.
However, when the prices that we receive when selling material are so low we cant afford to pay anything to the junk dealers we purchase from, of course they don’t want to sell and take a loss, so we cant resell because there’s nothing to buy. Its a vicious unending circle and as a result, nothing moves. People hold on to what material they have hoping prices will go up soon. But we still have a business to run, even though prices have fallen we must find something to purchase because we still have company bills, expenses and employees that must be paid. Our business is floundering, we are barely making enough to keep the doors open, and with the economy in the shape it is today, there’s no end in sight. The Milwaukee Journal Sentinel reported that the price on prime scrap steel has dropped from $430.00 per ton last November to $150.00 a ton in June. As bad as things have gotten for us, we are one of the lucky few that have managed to stay in business, to keep our doors open. There are many companies in our area and others, who’ve had to close because of the decrease in value on automotive scrap.
A few years ago there were hundreds of scrap metal dealers to compete with. Now, there are a scant few who still struggle to buy a few little pieces here and there, hoping to make a couple of bucks in the process. No one has any answers on when the prices on automotive scrap will begin to rise once again.
So all we can do is struggle to get by, just hoping to find an engine or a transmission to purchase and resell so we can pay our bills. All the while praying we can stay in business just long enough for the economy to clean up and get us back to the point we were at in 2004. Steele is a vital commodity, it is required in the production and manufacturing of many of the items we depend on. So as is the case with all things that are commonly needed, the supply has to meet the demand and with prices at what they are today, its just not doing it. It is however, forcing many family owned businesses to close there doors for the last time. Raising unemployment rates, forcing struggling families into poverty, and in some cases, pushing people who have worked there entire lives in the scrap metal business and depend on it to survive, to the point of desperation.
