Scrap Aluminum Prices
In today's confusing economy, assets are a staple. For
people who are concerned about the environment, recycling is also a critical
thing. The sale of scrap aluminum combines two very exciting phenomena;
recycling and the sale of assets. Whether you are a company whose business
causes heaps of scrap metals to pile up or a family household who likes to
recycle aluminum cans, it can be very financially beneficial to sell your
scrap material. Aluminum is a valuable metal that can be sold back into the
economy, even in the form of scrap.
Currently, scrap aluminum cans are selling at a little over .60 cents a pound.
The Amount the person
recycling can receive is usually .20 below the trading price. this is due to
a number of factors, such as cost the company doing the recycling is
undertaking and the transportation of the scrap aluminum to its destination.
Aluminum alloy in a more refined state is selling closer to .80 cents
a pound. While this may not seem like fortunes, it can really add up.
However, the price of aluminum scrap tends to fluctuate with the market. In
the complex economy of the day, this can make for some pretty wild swings in
The London Metal Exchange listed
the official price in August 2012 for aluminum alloy as .7852 USD per pound.
Here are a sample of current prices (August - October 2012) in USD per
pound, quoted by different American companies for a sample of recycled
aluminum: beverage cans: .23, .28, .30, .50; old mixed aluminum: .24, .32,
.38; scrap aluminum: .44, .47; aluminum extrusions: .54, .72; cast aluminum:
.68, .83; insulated aluminum wire: .23, .28; aluminum radiator: .21, .42;
aluminum auto wheels: .30; .56. As can be seen, the prices vary because of
daily fluctuations and different pricing by company and location.
There are several factors which influence the price of scrap aluminum. One factor is scarcity. Aluminum is an asset. It is something that exists in a particular quantity that must be refined and introduced into the market. However, it is not a rare commodity like gold. Aluminum is one of the more abundant metals. On the other hand, aluminum is priced in currency. Ever since Keynesian economics has taken the minds of central bankers the world over, money has become much less valuable. This means that inflationary pressures will generally, over a long curve, increase the price in Aluminum.
Conversely, the aggressive spending caused by low interest rate central bank policies can sometimes increase the demand for aluminum. If malinvestment causes an increase in automobile production, for example, there will be more demand for aluminum, albeit temporarily. This increased demand could have the effect of an increase in price. This would be an example of how an inflationary central bank policy could encourage a short-term increase in aluminum pricing, followed by a crash. After the crash, the subsequent loss of value to the currency could cause another increase in the value of aluminum. That is very likely a direct explanation of what is happening to the price of aluminum today. Production of goods built with aluminum fell after consumer spending dimmed, but a weak dollar can drive the price back up. These are some examples of market pressures that might have an influence over the value of aluminum.
Demand is another major factor that has influence over the price of aluminum. Most of the material which is sold into the market is used for commercial goods. Whether it might be used for complex machines or a beverage can, aluminum is a favorite metal for consumer products. It is easy to shape and relatively low cost. The demand for it is pretty constant. However, market-wide changes can affect even the most usable resources. When consumer spending fell after the housing crash, the general demand for finished goods dropped. This had the effect of price deflation for all consumer goods. Resource or asset prices tend to come from their value as a finished product. If the demand for commercial aluminum falls, the price will fall also. The general trend in the economy, after the immediate burst of the housing bubble, was deflationary. This was felt in the price of aluminum. For more scarcer metals, such as gold, which have less consumer utility, the immediate effect was an increase in value. Aluminum will benefit from inflation over a long term, but ultimately it gets short term value booms from increases in consumer spending, and, consequently, commercial production.
Supply of aluminum can be influenced by more than the scarcity of the material itself. Aluminum is pretty common. However, in order to have utility for the creation of commercial goods, it must be refined. Aluminum does not specifically exist as a loose metal. It tends to bind with other elements. Aluminum must be extracted from ores of other materials such as bauxite. The fact that aluminum has to be produced through a chemical process introduces a labor element to the value. This means that the usable aluminum on the market has to either be mined and refined or recycled. This causes a degree of change in supply. This limitation has the effect of causing scarcity.
Supply and demand cause the short term fluctuation of the value of aluminum. The demand is generally from its use as a material that can be combined with others to make a consumer good. The general health of the economy will help dictate this price. However, the other dimension affecting the value of any real item with asset value is inflation. Inflation may not take the form of immediate price inflation; inflation is an increase in the supply of money, whereas price inflation is an increase in the cost of consumer goods. This means that an asset is the final thing to feel the increase in price that comes with a wave of new money. Ultimately, if more money is being used to buy items which are made of aluminum, the price will rise over time. Booms and busts are generally caused by events that have huge consequence over the supply of money. If huge amounts of new money are entering the economy through low interest rates, you will see price inflation. If there are massive defaults on loans or bank failures, there will be sudden deflation.
Aluminum is a very common scrap item. It is often found in industrial or commercial production, and sits in the trashcans of nearly every household. Recycling aluminum is a cost-effective way of reintroducing this material into the economy. It is also good for the environment. It is definitely worth the effort to save and recycle your scrap aluminum. You will be doing your part to create a more sustainable world and will be financially rewarded for doing so.