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Decline in price of many scrap metals hurting auto scrap market?
Posted on:Sunday, April 28, 2013

So far in 2013 most metals used in automotive recycling have exhibited a decline a value, which is a sharp contrast to the overall market pricing of metals, commodities and precious metals over the last few years. Even gold, which had been surging for several years now, has declined recently by approximately 10%. All markets have volatility and so it should be of no surprise.

Auto scrappers are primarily focused on prices of: steel, brass, aluminum, platinum and copper.  Let’s take a look at some examples within the commodities market, specifically spanning the 1st quarter of 2013. The analysis below shows the metal and commodity pricing (rounded off) as of late November 2012 compared to that at the market close on Friday April 26, 2013. Although not specific to the auto scrap metal market, gold was included to illustrate the overall picture.

Copper: 3.52/3.23 (-8%)

Platinum: 1573/1476 (-6%)

Silver:  33/24 (15%)

Gold:  1723/1462 (-15%)

Of the commodities listed above, the most surprising is Platinum, which had been a consistent gainer.  Platinum is a crucial component of a vehicle’s catalytic converter and as with Palladium, does an efficient job of oxidizing hydrocarbons and carbon monoxide that a car produces. Rhodium, another precious metal that hinges on supply and demand is also used in making catalytic converters and rose slightly is usage and market price in auto manufacturing in 2012.

Only time will tell if the prices that automobile scrappers receive for car bodies and the parts containing valuable metals decreases significantly or not.  Two critical factors that could decide the future of the emission-related precious metals are:

Whether more developing countries, with expanding percentages of vehicle ownership, institute tight emission control policies?

When will the automobile industry itself develop a low-cost alternative to Platinum, Palladium and Rhodium that can effective achieve the environmental requirements needed for catalytic converters in the US and abroad?  I imagine that auto manufacturers would welcome independence from reliance on scarce and over-priced metals in vehicle production.   About the writer: Founder of Cleveland Scrap Cars in Cleveland, OH and can be reached at anytime.


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