What’s Happening With Scrap Car Prices In 2021?
As we enter a new year, we leave behind one of the most forgettable years in memory. Tariffs on metal imports kicked off, followed by an ongoing pandemic and political turmoil in the nation. While it may not seem related at first glance, the scrap car industry is closely linked to these decisions and economic factors. And by all appearances, it’s bound to be another active year.
What will be the prices of cars to be scrapped at the beginning of 2021? Are there any indications of what will happen in the next year? Let’s explore these questions here.
Where Are Scrap Car Prices Currently?
Prices in the ferrous scrap market have taken a positive turn and this is good news for the recycling industry. In mid-January, the price of shredded steel No. 2 was around $ 400 per ton. That price only takes into account the steel content in complete cars recycled after processing, not the entire car.
Typically, scrap car prices are about half the price per ton of # 2 shredded steel. This means that the average price per ton for auto scrap is approaching the $ 200 line – a respite from the suppressed amounts from early last year.
How Did We Arrive Here?
Unless you’ve been in hiding for the past twelve months, you’ve seen some of the factors in the US that influence scrap car prices. Although scrap metal prices are a relatively stable commodity for most years, 2020 has fallen very differently.
Metal Tariffs To Kick The Year Off
President Trump’s tariffs on steel and aluminum were in effect in early 2020. With tariffs in place on steel imports, demand for local steel scrap has increased from producers. Rising demand caused scrap prices to start the year well above average, which is good for both consumers getting rid of scrap cars and buyers of junk cars reselling them.
Fears of a bursting bubble in the manufacturing sector due to tariffs were not realized in the first quarter, but that certainly does not mean that scrap prices have remained stable.
The Pandemic Strikes
The scrap industry is directly tied to supply and demand in the economy, and it’s no surprise what happened when COVID-19 arrived in the United States in April. In an instant, the taps closed and scrap car prices plummeted, dropping to around $ 120 per ton in some cases. This was due to the lack of production and the consequent lack of demand for steel, as factories closed for weeks.
Supply Soon Disappeared
After prices hit a low in April, a rapid rebound began in May. As soon as the demand stopped, production resumed, both inside and outside the car factories. But by then, the pipeline for scrap cars had dried up with the Americans holding onto their vehicles instead of replacing them. Scrap metal became rather scarce and prices rose to $ 50 per ton in May alone.
For all the following months, demand continued to increase, driving up the prices of cars to be scrapped.
Political Unrest In The US
In addition to tariffs on metals, an ongoing dispute with China, the United States’ largest trading partner, has seen exports of steel scrap decline. In 2018, the Chinese government decided to ban imports of recycled material by 2020 to prevent it from becoming a global landfill. As China tightened restrictions on steel scrap imports, domestic prices stabilized and declined in July.
However, this is far from the end of the political impact on the scrap industry in 2020. As American companies have resumed their lives amid the coronavirus pandemic, auto sales have resumed at almost the same pace as in the pre-COVID period. . The construction industries have also seen a boom. The increased demand has once again led to higher prices for recycled metal products such as automobile scrap.
Of course, there was also a tumultuous presidential election. However, during the busiest months of the campaign, the prices of auto scrap and steel scrap remained unchanged, slightly higher than in the same period in 2019.
Factors For Scrap Car Pricing Going Forward
Last year ended in a very unusual position for the scrap car industry. The American Iron and Steel Institute (AISI) announced that domestic and imported steel volumes have fallen by between 20 and 25% compared to 2019, leaving manufacturers wondering where their raw materials come from.
The year ended with scrap car prices rising by around 20% in December, and there seems to be no idea that prices will drop anytime soon.
Industry experts are undecided on how the scrap industry will behave in 2021. They split in half: some say they believe the bubble will burst and prices will start to plummet, while others predict that scrap and car prices will other recycled metal products will continue to increase throughout the year.
How It Affects Car Owners
For car owners looking to dump junk cars for scrap, the prices are among the highest seen in recent years. Although it is a small part of their original investment price, selling a car for scrap will provide the best return right now.
There is the potential for scrap car prices to rise in the coming weeks and months, but that’s certainly not guaranteed by anyone in the industry. The safe game is to sell while prices are high rather than betting on a 50-50 chance that prices will rise or fall.
For owners who want to sell their vehicles at the best prices for scrap cars, is an industry leader with an excellent reputation for fast payments, fair prices, and top-notch service. You can receive a no-obligation quote for your car to be scrapped in a few minutes. If you accept the price, you will receive payment within 24 hours in most cases and your vehicle will be picked up from its location at no cost to you.