You can start collecting scrap without spending any money at all. All you need is a small area to collect metal in, some large boxes or bins, heavy work gloves, the tool kit described in the Outdoors section of this book, a magnet, and a vehicle or trailer to haul the metal to the scrap dealer in. Bolt cutters and a hacksaw come in handy, as well.
This chapter is intended to be a very general guide to the art of scrapping. After reading this chapter, you should feel very comfortable with the process of selling scrap metal. You will understand the basics of how to separate metal, and where to go online to increase your knowledge base. It is not a complete how-to manual for starting a scrap metal business. You will still need to broaden your knowledge of metals through experience and your own research.
Selling scrap metal is one area in which people with very little spare time can save themselves and their family significant money. Even if you do not want to commit the time and effort into starting a second business using the other information in this book, you should strongly consider selling scrap metal. You could easily save enough metal to sell once a year and pay for all of the Christmas presents for your family!
THE BASICS OF SCRAPPING
You have to realize that the scrap metal business works just like any other business. The metal itself has a value, which is similar to stock prices. The value is called a spot price. The spot price of each particular type of metal fluctuates, depending on supply and demand for that metal across large regions of the country and the world. The spot prices for each type of metal can be found at any time on the internet.
The spot price is the only point in the scrap selling process that has a fixed value. Everything else is determined by individual scrap metal dealers. To illustrate this, let’s say that you have a load of shiny aluminum to sell. You check online, and see that the spot price for Aluminum is $0.85/LB. Should you expect to be paid $0.85/LB when you go to your local scrap dealer? Of course not.
The spot price is quoted for clean processed aluminum. You have used manufactured aluminum. The dealer you are selling it to is a middle-man. He has to buy your metal, and then negotiate a better price with the larger metal processing company that he sells to in order to make a profit.
What does that mean for you? Number one, you will never sell your scrap metal at the spot price, but it gives you a good indicator of whether the metal’s value is rising or falling. Try to sell when the spot price is rising, not at the bottom of a price fall.
Number two, the prices quoted to you at a scrap metal dealer are not etched in stone and they are not the same at all scrap metal dealers in your area.
Scrap metal pricing is similar to how gas stations set gas prices. Not all of the gas stations in your area will charge the same price for a gallon of unleaded gas, but they will almost always be in the same ball park because of the overriding oil prices.
The difference between metal and gas is that sometimes if you contact the scrap metal dealer ahead of time, the buy price for particular metals can be adjusted if you have a large load of a particular type of metal. At the very least, you may want to check around to see which scrap dealer has the best buy price for the metal you are going to be selling before you decide where to take your scrap.
Before you even start scrapping, you should go to a Metal Spot Price internet page and take a look at the values of the common metals that you will be finding. You should know which metals are more valuable, so that you can look for them.
SEPARATING SCRAP METALS
The easiest way to increase your profits in the scrapping business is to correctly identify and separate the more valuable non-ferrous (non-magnetic) metals from the more commonly found ferrous metals, such as steel.
Let’s revisit the load of metal that we sold at the beginning of this chapter. $160 is not bad for a load of junk metal. But, if you are going to make the effort to save the metal and haul it to the scrap dealer, you may as well get the maximum value for it.
You will want to sell loads of one particular classification of metal whenever possible, instead of half-full loads, or mixed metal loads. At the very least, you will want to remove the non-ferrous metal from the steel. Steel will get you about $240 a ton, or about 12 cents a pound. Shiny Aluminum can be sold for over 45 cents a pound, and bare copper wires can be sold for over $2.50 a pound.
Copper and aluminum can often be found inside large metal items, such as appliances. You can usually remove the more valuable metals in several minutes, making it well worth your time to do so.
So how do I tell the different types of metal apart, you may ask. There are many ways to identify metals, but the easiest method to separate metals is to use the visible characteristics of the metals. If the metal is not silver colored, remove it from the rest of the scrap. Non-silver metals would include copper, brass, bronze, gold (if you are lucky), and their alloys. All of these metals are worth removing and collecting separately.
For similarly colored metals, there are several ways to further distinguish them. The first way is to check the metal object with a magnet. This is particularly helpful for separating non-magnetic stainless steel and thick aluminum from common magnetic steel. A magnet will also tell you if a copper colored metal item is pure copper or an alloy, which is worth much less.
Another easy way to separate metals is by their weight. Lead items are extremely dense and very heavy. Steel items are also relatively heavy. Aluminum, on the other hand, is fairly light compared to non-ferrous Stainless steel. Shiny aluminum and non-ferrous Stainless can be difficult to differentiate for beginners.
A third way you can tell metals apart is with a ‘spark test’. This method sounds more difficult than the other two methods, but really is quite easy. All it involves is hitting your metal with a rotary tool (Dremel) with a cutting wheel. This is extremely helpful for differentiating stainless steel and thick aluminum. Steel sparks, aluminum does not. You can also identify several high value metal carbides with a spark test.
Once you start separating the different types of metals, you will quickly become proficient at the task, and you will often be able to tell what type of metal an object is made of just by looking at it, or feeling the weight of it.