Nov 102023

The trade of scrap metal is an evergreen business providing glorious returns for the fortunate opportunist, as well as rewarding wise investment. As a commodity trade, the sale of scrap metal relies on various socio-political and economic externalities that fall well out with the sphere of influence of the market. However, unlike other commodities, the trade in scrap is somewhat more stable, and of course is purposeful to boot, ensuring its steady status as a useful business asset and essential raw material. Having said that, embarking into the world of scrap metal trade is something that many organisations almost fall into; a sort of by-product of secondary sector manufacturing, which proves profitable, even as a subsidiary revenue stream. But why is this the rule, rather than the exception in the trade of scrap metal, and indeed, why is this industry booming as a consequence?

The trade of scrap metal, by virtue of the sheer nature of the commodity, is destined to be a secondary pursuit. Seldom does an organisation establish with the sole intent of trading scrap metal. Rather more common is the trade of scrap metal as an after thought, as a surplus of apparent wastage builds up, and thoughts of improving efficiency begin to surface. The fact that this practice also promotes a strong and steady market is really no big surprise. As far as competition is concerned, introducing challengers with alternative and mainly superior sources of income negates the ultimate desire and hunger of new start-ups, why detracts largely from the ruthless nature of other markets. Additionally, this ensures that prices remain at a relative constant, rather than fluctuating wildly. On top of that, its generic nature also allows free trade in the commodity, by largely reducing the need for formalities of inspection, and the associated cost implications. It is the fact that scrap can in fact be put

to good use in many industries that ultimately creates the necessary demand to ensure a perpetual demand and supply cycle to keep the market steady.

An interesting current example of economics at play in the scrap metal market is the rapid growth of the sector in China. As China reverted to a more liberal economic approach, their heavy industry has boomed, and generated rapid wealth for the economy. China has quickly risen to become one of the strongest world economies, and with this growth, the scrap metal market has benefited. Over the last few decades, the growth in trade of scrap metal in the region has almost doubled, cementing its position as an international super power since its resort to capitalist economics.

Furthermore, the trade in scrap metal is bolstered by the increasing tendency towards in-house scrap recycling. Under normal market circumstance, this could create a serious problem for those reliant on the sale of goods, although again the nature of scrap metal as a commodity and the nature of the bulk of involved traders means that the market can actually benefit from this apparent threat.

The principles of economics at play in the scrap metal trade would be sufficient to produce countless papers of substantial academic merit, and no doubt this has been the case in countless Universities across the world. In practice, the market is very much living testimony to academic perceptions, and thus can be the basis of many hypothesis on economic activity. The buying and selling of scrap metal on the open market is fascinating, and its status as a true and stable commodity looks clear to remain for many decades, if not centuries to come.

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