In many regions of the Russian Federation, the price of ferrous metal has reached a level of 16-20 rubles per kilogram, and now, for three weeks, it has not moved. There are individual shifts up or down by the ruble and that’s it. The average price at acceptance is 19 rubles. Yes, of course, 19 is not 23 as it was back in May, but still not 10 as it was in June.
So what should a decent and honest scrap metal digger expect in the near future?
Option one. Price drop. The fact that the price is about to fall, literally tomorrow, has been actively discussed over the past two weeks at the scrap metal acceptance sites themselves. However, somehow it doesn’t fall. The price tags are stable and only in some cases the price drops by a ruble, and then not for long.
Rumors about an imminent price drop are not confirmed by anything significant, although in past years this trick worked. Scrap collectors regularly arranged, by conspiracy, price drops at acceptance sites. It worked smoothly and regularly. Scrap metal buyers did this so that people who had been hoarding scrap metal to the extreme price would suddenly start selling it in a panic at a price favorable to the acceptors.
This trick was performed for small buyers. Those who bought ferrous metal from the population without a license in rural areas or in remote towns. These local buyers, in anticipation of the maximum price, hold and store ferrous metal in their gardens. The effect of hoarding, greed, investor passion and, as a result, most of the ferrous metal accumulated in the yard has to be handed over to resellers at the price at which larger resellers will agree to buy from them.
Option Two. Price rise. This option is unlikely at this stage and in the near future. I understand that many ferrous metal diggers, who have been in this business for several years, know that every year, on the eve of winter, the price of ferrous metal rises. This growth is due to the fact that metallurgical plants make large reserves of ferrous metal for the winter period.
What's the point? Almost all of the ferrous metal is used to smelt reinforcement and other construction metals. Construction companies, having grasped the cyclical nature of supply and demand, began to massively purchase fittings in the winter, when the price for this product is minimal. Therefore, the maximum price of ferrous metal has reached its peak at the end of February for several years now.
Now, just before February, you shouldn’t expect an increase in the price of ferrous metal.
Why? And here, the Third Option will be right on topic. The price will remain stably the same until mid-winter. The fact is that at this stage of the economic state of the metallurgical industry, prices for finished products for the construction industry are set by the state. According to plan, according to estimate and at cost.
Over the course of two summer months, steel mills and scrap producers waged a price war based on the Kazan orphan principle. Poor us, beggars, we will go around the world, people will go to the streets, production will collapse, etc. As a result, we managed to agree on prices at which everyone could work comfortably. In fact, factories accept ferrous metal at a fixed price, dealers and resellers have also set a fixed price convenient for themselves for accepting scrap metal from the population.
In order to predict in advance that the price of ferrous metal will go up or down, you need to monitor the prices of fittings. And at the moment it is just as stable.