How To Manage Scrap Metal In Your business

If your business is in heavy machinery or any machinery industry, you will be familiar with trying to manage scrap metal.  This is an area often overlooked when you’re doing income streams, but if you can harness your scrap metal, you might be in for a pleasant fiscal surprise.

Managing scrap metal and machinery, go hand in hand really.  After all the machinery you have in your fleet, at some stage will move it or become it so it is sensible to try to understand it better.

What is Scrap Metal

Put simply, scrap metal is the combination of waste metal and any product that contains metal that is capable of being recycled from previous consumption or product manufacturing. … These scrap metals can be reused again and again.

They are the definition of recycling in a practical sense.  It requires considerable processing however to get a raw scrap metal into a “new” reusable state.

When it comes to selling your scrap metal, it is a good idea to keep the processing aspect of it, at the forefront of your collecting.  This will be reflected at the scrap metal yard; in terms of price, you can achieve.  It takes organization and a reasonable grading technique.  And is worth the extra effort.

There are over 40 different categories of scrap metal at a dealership and this can become daunting.  You are not a professional scrap grader after all.  Operator, yes, but a completely different skill set. These categories are then divided into 2 predominant distinctions.

selling scrap metal

Ferrous Metal – (HMS1)

This is the overall category that steel fits into.  Ferrous is used for metals that have a higher percentage of iron in them.  And these metals are the most common because they are used in all domestic and industrial buildings.  In fact, the growth of steel production indicates the overall development of the industrial world.  As traded on the London Metal Exchange since 1877.

To confuse matters further, we have to break down ferrous metal into several categories, when selling.  The main 2 categories for generating income though will be under HMS1 (1 & 2).  HMS1 is fundamentally defined by the fact that it does not include galvanized and blackened steel.

Every scrap merchant will have its own grading standard, so get familiar with some of them to get a consistent standard that you can work with. This will ensure you get the best price you possibly can.  The main 2 categories you will need to know are:

HMS1 is separated into two codes themselves which relate to the size of the pieces of scrap metal that you can sell and recycle. These codes are designated ISRI (Institute of Scrap recycling industries), and for HMS1, are as follows:

  •  Pieces that are smaller than 36×18 inches in size.
  •  Pieces that are smaller than 60×18 inches in size.

For both of these codes, the pieces must be at least a 1/4 inch in thickness.

Manage Scrap Metal In Your Business

If you put some thought into how your yard functions, you can easily work out ways to streamline.  Remember double handling costs your money, so get some infrastructures and procedures sorted out that is easy to follow.

The first thing you’re going to need is suitable containers to store your different grades of metal on your job site.  Bins are the obvious answer and these come in a range of sizes.  You can come to an arrangement with your preferred scrap dealer for a supply of bins.

Keep in mind if you choose to use their bins, there will be a reduction in payment.  Effectively you will be hiring the bins.  With this model, the scrap yard supplying the bins will pick up and drop off, so will save you handling costs.

Although, it is also worth noting that any weights and payments will be done at the yard’s discretion so if you get a dodgy yard, be prepared to lose a cut.

Moving Scrap Metal

Having bins built to suit, is also an excellent long-term investment.  Take into consideration, how you’re going to move the bins.  Remember you will need to account for the extra weight.  If you’re moving them by forklift, you will need skids under the bins.

Also, take into consideration the width of the truck you will be used to carry the bins.  If you’re having bins built, take the time to weigh them at the time of construction and have the tare weight clearly marked on the bin.

The other thing to keep in mind for the best return is to not contaminate the bins with other products.  If this happens, the scrap merchant has every right to deduct from your bins.  This downgrades it and consequently, you lose money.  A good way to avoid this is to have strict workplace policies and education.  This will show dividends in the long-term operation.

Non-Ferrous Metals

These are metals that have no iron content.  If you frequent scrap yards you will probably see metal graders using magnets.  This is the easiest way to determine whether metals that are dubious have iron content.  A non-ferrous metal will have no magnetic pull.

Non-ferrous metals are then broken down into over 25 subcategories. These are some of the common non-ferrous metals in the construction and trade industries.

  • Copper
  • Brass
  • Aluminum
  • Stainless Steel
  • Lead

For this reason, you need to be discerning with what you want to cash in.  Also, you will need to generalize your grades when it comes to non-ferrous.  This saves you sorting time and storage time.

Copper, aluminum, brass, and steel are the most commonly scrapped metals and of these, copper is by far the most valuable due to its scarcity. Although you’re unlikely to find copper in any great quantities, the scrap price that copper wire, guttering, and plumbing can fetch far outstrips what you’ll get for bringing in even twice that weight in stainless steel.

If your non-ferrous is attached to other types of metals, this will downgrade it.  This is where you will have to calculate the cost of processing the scrap yourself or selling it as is.  Familiarise yourself with the different grades and what you need to do to achieve the cleanest scrap product.

You might find it more economical overall to sell one or two grades lower than to take the time to clean it up yourself.  This is a balance and may change from product to product.  When you think of grading non-ferrous scrap, think of it as a sliding scale.

Cleanest Scrap Metal is best

The cleanest, purest form of non-ferrous, as the highest return.  The scrap that has other metals or plastics or anything else attached is “dirty” and will need processing.  In this scale there will be various grades, depending on the amount of contamination. If you look at your scrap in this light, you can work out how you want to process for an overall return.

Lead in batteries, like copper is also highly paid, because of the shortage of lithium.  Batteries are easy to recycle.  They don’t need to be broken down at all but do need to be stored in a bunted, non-flammable area.  Use a hardwood pallet and stack two batteries high.

This at a very rough average will give you approximately 1 tonne.  Once the pallet is stacked to capacity, wrap it securely in cling plastic for transport.

With tighter EPA guidelines worldwide, processing, storing, and sorting your scrap metal makes your business, more professional and compliant.  While also adding to your overall profitability.  An initial investment in bins, and staff education, will result in less mess, and a streamlined working yard.

Learn to know the fundamentals of managing the scrap metal market in your area. Build relationships with scrap metal traders to get the best prices available.  And soon, a regular scrap metal cheque will be part of your overall income stream.