A few years ago cashing in a junk car would net you enough for a weekend road trip. Today you’d hardly get enough to pay for a hotel room. What gives?
Car junkers (including Junk Car Medics) didn’t suddenly start taking advantage of you. We’re facing a big problem: the price of scrap metal has plummeted in the last two years. The cars that auto junkyards buy that have reached the end of their life are stripped of all materials and fluids and crushed, with the remains sold to a local shredder. We (and other junk car buyers) can’t get nearly what we could previously. And it’s a lot of work to tow a car, strip it and crush it believe it or not. Therefore the price we are able to offer to buy cars has reduced greatly.
But why are scrap metal prices suddenly so low even when compared to last years scrap car prices? How does that affect the junk car industry? And what can you do to ensure you get the highest value possible for your junk car? We have the answers.
How Do Scrap Prices Affect the Value of my Junk Car?
According to an article on ETF.com, the average car contains 2,400 pounds of steel. The average truck contains 3,000 pounds. That accounts for about 55 percent of the car’s total weight. There’s also approximately 300 pounds of aluminum in the average vehicle.
When a car junker purchases your vehicle, what they’re really buying is the value of that scrap metal by the ton. Steel, aluminum, copper and other metals can be sold for cash to scrap metal dealers. Those scrap metal dealers, in turn, sell the metal to manufacturers who recycle the metal and turn it into new cars, building materials, wire, smartphones and other items we use every day.
The price for scrap metal varies based on demand. If car manufacturers aren’t making many cars, the price of steel and aluminum drops. If builders aren’t constructing new homes and apartment buildings, the price of metal also drops.
Right now demand for metal is low and supply is high. That means prices are low. In fact, the price of steel has fallen from $480 per ton in February 2015 to $50 in early 2016. You can see the precipitous drop in prices in this chart from Quandl:The trend looks similar for aluminum, although it’s not nearly as alarming, as you can see on this chart from InvestmentMine.com:
Why the sudden drop in metal prices? It has to do with what’s happening in countries all over the world.
A brief (recent) history of the international metal market
Metal is a commodity (a raw material for manufacturing or food products) that’s traded internationally. That means what’s happening in the world affects the prices. For years China’s economy was growing so rapidly it created high demand for steel, copper, aluminum and other metals. As its economy slowed from a sprint’s pace to a marathoner’s stride, demand for metals has also gone down, says an article on CNN Money.
However, that doesn’t mean China’s production of steel has slowed down. China has huge overcapacities in steelmaking, says Jan Pfeifer with InvestmentMine. “This steel has to go somewhere and now it is going into the world market, where it depresses prices.”
China produces both finished and semi-finished steel, says Nick Tolomeo with Platts, a leading global provider of energy and commodities information and benchmark price references. The semi-finished steel (also known as billet) has been used as a scrap substitute by steel mills in Turkey, the largest overseas buyer of U.S. scrap. Now that they’re opting for Chinese billet, U.S. scrap is left stranded on the east coast.
Pfeifer says the U.S. and EU have imposed huge import tariffs on steel to try and counter the influx of inexpensive materials from China. That’s helping, says Tolomeo, but it will still be a while before the entire U.S. steel supply chain sees sustained market improvement from these measures.
“Any time you’re trying to figure out what China is doing it’s a guessing game,” he says. “They have somewhere around 150 million metric tons of excess capacity. They seem to be getting more serious every day about rationalizing this capacity. But even if they’re serious about that and taking measures, it’s probably two to four years before the U.S. market sees a material impact.”
Thanks to the tariffs, there were slight upticks in the price of steel in February and March. If price increases can sustain themselves through June and July, Tolomeo thinks recent gains in U.S. scrap prices can be sustained.
“Most steel mills are tied pretty closely to the energy industry” because it’s a major consumer of U.S. steel, he says. If oil and gas prices go up and drilling increases, that may also help increase the demand for scrap steel. However, “overall fundamental demand probably won’t recover too much in 2016,” he reports.
The Wall Street Journal calls junk car dealers “the latest victims of the commodities bust.” They interviewed several auto scrap yard owners who confirm they’ve gone from paying consumers $400 for the average car to between $50 and $100. The Institute for Scrap Recycling Industries notes that 50 scrap metals yards have ceased operations altogether. Others have stopped selling cars and are simply stockpiling them until prices come back up.
Understanding Scrap Metal Prices
Scrap metal prices vary on a nearly daily basis. They even vary in different parts of the country. And obtaining accurate pricing can sometimes require a subscription service.
To give you an example of scrap metal prices we have pulled these numbers from Scrap Monster:
Steel – this is what the majority of your car is made of.
Aluminum – is used on various parts such as the engine, doors, hoods and rims.
Copper – located throughout in the wires of the car.
Lead – Sometimes found on the wheels and in the battery.
Platinum & Palladium – located within the catalytic converter.
How to get the best scrap car price per ton for your automobile?
Given all of this, how do you get the highest price possible for your junk car?
Are you wondering – “How much is my car worth in scrap?”
If you’ve received one or more quotes from junkyards for your unwanted car, you might wonder if you’re getting the best scrap car price possible. Selling an unwanted car to a junkyard doesn’t happen very often to the average consumer, so they have very little experience to rely on when determining the value of their junk car. Unlike the new or used car markets, there are no published prices for junk cars by make, model, year, or condition to go by, or nothing that says junk cars in Lancaster sell for this and junk cars in Philadelphia sell for that. So here’s a simple list of things to consider if you’re wondering if you’re being offered a fair price for your junk car when you are wondering how much I can get for my car.
1. Waiting Only Makes Your Junk Car Less Valuable
Many people hesitate before selling their scrap cars because of the prices. They may think that they’d like to repair or restore the car when they have more time or money, or might be able to find a buyer that wants the car. They might have ideas about stripping the car to get the maximum scrap value. It may even be a car that’s in bad shape but still runs, and is held as a replacement in case the household’s primary vehicle dies.
No matter the reason you’re storing an unused car on your property, it’s important to understand that the longer you wait to send your car to the junkyard, the less it’s going to be worth. That’s because many parts on a car that isn’t running deteriorate quickly, and the parts that deteriorate the fastest are usually the most valuable parts on the car to a junkyard.
When a car isn’t driven regularly, many of the supposed-to-be-moving parts break down. Rust will appear and spread ever faster. Anything made of rubber like window gaskets, hoses, belts, and tires will become brittle. All the fluids in the car will begin to settle out. Any gasoline left in the tank will absorb water from the air, and if the car is left out in the weather, the seats will fade and crack. Animals and other pests will even infest the car, and rodents will begin to chew the electronics, exposing the wires. Corrosion can degrade valuable parts like the starter motor and alternator until they’re only good for scrap.
Junkyards will often only offer you the scrap value of a car by weight if the car is inoperable and left outside. If you’re thinking of selling your unused car for junk, do it right away and tell the junkyard that the car was on the road until recently to get a better car scrap value.
2. Make Sure you Get More if Your Car Is Drivable
To a junkyard, a car in running condition is always worth more than one that isn’t. First off, a car that runs won’t require towing in order to bring it to the junkyard. Junkyards tow cars all the time, but any savings of time and trouble is worth some money to them so it will factor into the scrap prices for cars.
Junkyards also pay better scrap car prices if they can sell the vehicle at an auction. Not all cars bought by junkyards are actually destined for the scrap heap. A car that’s still in running condition is much more likely to be attractive to an auction buyer who is looking for cars that can be refurbished and resold. But unless your car is in exceptionally good shape, the junkyard will probably sell it at auction as part of a group of cars. That spreads the risk for the auction buyer and seller, and that’s why you shouldn’t assume that just because your car is suitable for auction you could make a lot of money on it. You should, however, be able to get more than the scrap minimum from the junkyard.
3. Use The Blue Book Value As Your Starting Point
It’s easy and free to look up the resale value of your car if it was still running. But if you’re thinking of junking your car, don’t assume the junkyard will pay anywhere near this price for you vehicle. The Blue Book value of a car assumes that it’s in good condition. If it were in the condition necessary to qualify for its maximum Blue Book condition, you wouldn’t be sending it to the junkyard.
Even so, you can still use the Blue Book value as a rule of thumb to estimate whether the offer you’re receiving from the junkyard is high enough. If you take your car’s potential Blue Book value, then subtract the cost of any repairs necessary to get it in sellable shape, you’ll have a rough guide to estimating what the car might be worth if it’s sold at auction or repaired and flipped by the junkyard.
4. Salvage Prices Are Higher Than Scrap Prices for Cars
Remember: the scrap metal price for a car does not take into account the valuable components still on the car. If your car has re-usable parts like an alternator, a starter motor, an expensive onboard GPS system, new tires, or anything else that is easily removed and resold, you should be able to get better than scrap steel prices for it. Keep in mind that all salvage operations involve labor for the scrapyard, and the risk and expense that comes with keeping inventory on hand, so don’t expect junkyards to give you the full value of parts they sell. But you may be able to negotiate for up to half the value of the easily re-sold components.
5. Use The Weight of Your Car as a Last Resort
When all else fails, you can use your vehicle’s curb weight as a guestimate for its value as scrap metal. The majority of the weight in your car is composed of steel. It’s fairly easy to determine the value of scrap steel at local recycling yards. Prices of around $150 per ton are common, so your average car is usually worth around $300 to a scrapyard. If you’re being offered scrap prices for a car that has potential for salvaged parts or even an auction sale, you should negotiate further with the junkyard, or look for additional quotes.
6. Never Accept a Price With Conditions
Set a value when junking your car and stick to it. Then it’s smart to get as many quotes so you have various junk car prices from junkyards as possible before making your decision. Simply ask them how much is a junk car worth. Be on the lookout for one technique used by unscrupulous junkyards: the Bait and Switch. Some junkyards give you a conditional price based on your description, and say they’ll inspect the car when they arrive to pick it up with their wrecker. Once the car is on the truck, they offer you a much lower figure than you agreed upon on the phone. All the pressure is on you to capitulate, because the car is already on their truck.
Don’t worry about missing out on a few more dollars if they ask to inspect your car first. Give the junkyard a detailed description of your car and its condition, and accompany it with digital pictures if necessary. Ask for a firm scrap car price, and make them stick to it.
Junk Car Medics buys and removes junk cars all across the United States in cities such as Houston, Dallas, San Antonio, Charlotte, Pittsburgh, Buffalo, Sacramento, Seattle, Memphis and all other major cities. View our service area now or contact us today for your free quote!
Get your online quote by calling (855) 437-9728 or filling out the form on this page!