Experience with a scrap metal business?

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March 03, 2021

by a searcher from Stanford University - Graduate School of Business in Dallas, TX, USA

Does anyone have experience with a scrap metal business? E.g. a business which places bins in industrial facilities, collects scraps, picks up the bins, sells the scraps, and then provides a cut back to the industrial facility?

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Reply by a searcher
from Stanford University in Paris, France
Jory - I have some experience with the scrap metal recycling business having owned one through a restructuring in the past. Industry insiders love saying you make money on the buy not on the sell. The industrial part of the business is definitely better than the scrap yard business as you have a more reliable source of supply. But there is GDP cyclicality in supply and you are very much a price taker on the demand side. Even at the time recycling machinery was getting cheaper lowering barriers to entry. If you have a strong view on a commodities cycle it may be interesting but it generally would strike me as not a great industry for the ETA model.
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Reply by a searcher
from Texas A&M University in Elizabethton, TN, USA
This is common also in Plastics industry for industrial regrind, etc. Provides a known, low contaminant stream ideally there. In metals, depends on your process, materials. I would ask for your case, what would keep your customers using you to coordinate vs collecting and selling straight to scrap yard? Happy to talk metals if you want. DM. Industrial plants aren't above cutting you out to make a little extra on the scrap... Metals recycling in general should be a good long term thing though. Look at Nucor, others, no one hardly makes steel from ore anymore except Chinese.
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