So What Is The Current Value Of Scrap Cars?
When was the last time you scrapped a car? Gone are the days when you could expect a couple of hundred pounds for your run of the mill 10 year old car when it comes time to recycle it. This may have been the case as little as two years ago or even one year ago if you were near a higher paying scrap collector. There has recently been a gradual but major slump in the prices offered due to the international decrease in demand for the scrap metals that would be obtained from recycling a vehicle.
Hasn’t this already happened?
Around ten years ago you would expect to pay to have your car removed and recycled in the proper way. It looks like the future will be a replay of the past once again. The legally licenced scrap collectors are called Authorised Treatment Facilities (ATFs) and many of these are now being forced into only offering a “free collection only” rather than paying the public for their cars as people have been used to for the past decade.
What signs have we had?
You may have read our news article at the beginning of October regarding the SSI UK Steel Plant in Redcar where around 1,700 jobs were lost. The plant kept on around 400 employees to keep the stoves alight however at the time of writing this; the last few shifts are coming to an end. Smoke and steam have been seen bellowing from the plant’s coke ovens which are now being shut down after no buyer was found for the Teesside plant. This process of cooling these ovens will take weeks and means that even if a buyer is found in the near future, it would cost them hundreds of millions of pounds to start the plant once again. Once the cooling is complete the ovens will inevitably collapse with severe structural damage to the inside.
Tata Steel announced today that they are cutting 1,200 jobs at their plants which are based in Scunthorpe and Lanarkshire. This is the second large steel plant within the space of a month to do this now. The UK steel industry blames our government for not effectively controlling the cheap Chinese imports of steel, however David Cameron has stated that he’ll “raise the issue” with the Chinese President, Xi Jinping, who are currently on a four-day visit in the UK as of now.
When will the scrap prices increase again?
Unfortunately as far as we are aware, nobody is currently predicting a factual increase in the price paid for scrap vehicles. Even the largest companies in the industry do not attempt to make predictions as the scrap metal industry is simply too volatile and involves too many factors. Due to vehicles being made of more than one type of metal, any prediction would need to be based using data from prices of steel, aluminium, zinc and copper.
“Scrap price will go up after it bottoms in a few months.”
According to Wikipedia, China and Japan are the countries producing and exporting the most steel, with the USA, Germany and Thailand being the countries importing the most steel from around the world. In 2014 China produced half of the steel for the whole world even through the global recession where they were actively seeking the raw materials to make the metal, iron and carbon. This large production of new steel will directly affect the price offered for your scrap car, making your car worth less as it still needs to be recycled before it can be used again.
“I think the domestic steel industry will work very hard to do things to create a higher-priced market.”
Governments are giving ever increasing targets to vehicle recyclers to achieve higher and higher percentages of each vehicle being recycled (for environmental reasons) resulting in more expensive recycling processes. Countries such as China are achieving to produce higher amounts of new steel (from raw materials rather than recycling) while finding cheaper methods of production. The growth in the amount of steel used in China is slowing down to a point where they have to export it which floods the steel market of other countries with cost effective new steel. Steel producers in countries such as the USA need the governments to introduce higher taxes on steel exports from places like China, so that the prices become in favour of internal trade.
“Domestic scrap prices could potentially benefit from a decrease in steel imports.”
Above Image: Steel production (per million tonnes) by country in 2007 (Source Wikipedia)
Click here see the history of crude steel production around the world from 1980 to 2013.
What if I need to scrap my car now?
If you are looking to get rid of your old vehicle at this point in time (October 2015), we would simply advise you to make sure you have seen a number of various offers from different companies. Scrap Car Comparisons online site can instantly provide you with a price after entering a few details. Apart from doing this, there is not much you can do, it’s simply not the right time and you may have to sell your car for less than you thought you would. Contacting a comparison website such as www.scrapcarcomparison.co.uk is your best bet as they will be able to see a number of different offers from collectors within your area so that you have an educated decision. They will also ensure that you are dealing with a reputable buyer who will fill in the correct forms necessary and issue a Certificate of Destruction when scrapping your vehicle. This way you won’t receive any bad news of parking fines or speeding takes later on in the future.
Shall I wait until the price improves?
In the near future we are expecting collectors not to be paying for vehicles, but offering free collections only, just like a couple of decades ago. The worst case scenario would be that you would have to pay collectors to remove vehicles from your driveway for you.
Waiting for the price to increase would probably be a very long term solution as some scrap yards around the country who have been stockpiling cars for months have found out the hard way! It may take many months or even years to improve to a reasonable level once again. For the time being we advise customers to ensure they are selling or recycling their vehicles through approved buyers or authorised treatment facilities. Keep an eye on our blog for future industry updates and enter your vehicle registration into our calculator to find the best price for your car right now!
What are you hearing about the scrap market values? Contact us by email email@example.com