Scrap metal business: detailed instructions and business formats

The scrap metal collection point is a complex business , it is not suitable for everyone and is tightly controlled by the supervisory authorities. In this article, we tried to provide as much useful information as possible in order to determine the prospects for the long-term development of such an enterprise.

At the start, the company generates income through retail. It accepts scrap metal in small quantities from the public and resells it to larger companies that work with the end consumer. Revenue is the difference between the selling price and fixed costs (transportation, rent, taxes). This scheme allows you to work with minimal profit.

The business will develop steadily and generate income through bulk shipments to large companies and processing enterprises, on favorable terms. Such customers immediately make a calculation and are ready to conclude long-term contracts for the supply of scrap metal.

Market overview and competition analysis

The handling of non-ferrous and ferrous scrap is a highly competitive market ! It will take from several months to a year until the company becomes recognizable, and the business scheme is debugged. It is not recommended to open an organization near a large number of scrap metal collection points: as a rule, they have a base of suppliers, buyers, and logistics are well established. Or, when making such a decision, you should carefully evaluate your capabilities and offer conditions that will obviously be more profitable than competitors.

On the market today are:

  • Small illegal offices . They do not have a license, they accept metal mainly for cash and resell it to larger sites. Unprofitable for the population and suppliers, as they cannot offer adequate prices. They resell scrap metal at the lowest price, do not have the resources to sort it, clean it, etc. In addition, resellers lay down their commission and buy at a lower price. The margin of such companies is formed due to the fact that they do not pay taxes, do not register employees, save. Illegal firms are identified and subjected to high fines. Running such a business is risky and unprofitable.
  • Middle grounds . They have a license, a minimum set of equipment, they can work on a franchise. Companies are limited in assets and financial capabilities in order to accept large volumes of scrap metal, hire qualified personnel, and maintain their own fleet of equipment. Often they do not have time to track and predict all changes in the market, and quickly respond to them. However, they may have profitable long-term contracts with end users.
  • Large offices, traders, subsidiaries of processing enterprises . They sell metal in large volumes and are guided by factory prices. They have large production areas, equipment, transport, chemical. laboratories, staff of qualified personnel. They supply products to the domestic market and work for export. Including, they provide additional services for dismantling, recycling, work with metals of a high hazard class.

At the start, you need to analyze competitors, choose a suitable business model, for example:

  • Buying metal from a car . We need a truck adapted for these purposes or a scrap truck with a manipulator crane, electronic scales, equipment for cutting metal. The owner travels around the villages and villages and accepts scrap from the population, inexpensively, for the purpose of further resale.
  • Scrap metal collection point for the population . In addition, car dismantling, household appliances, sorting, to improve the final cost. In order to work with large customers, you need to have a base. Otherwise, the activity will also consist in the resale of small lots.
  • Transshipment base, acceptance of scrap metal, sorting, cleaning, cutting, briquetting . Shipment by own forces, or by the customer. The base may work with one large wholesale counterparty, processing plant, or have several lucrative contracts.

Obtaining regional grants, for example, for the dismantling of industrial facilities, dangerous metal structures, unused railway lines, and so on.

Ferrous and non-ferrous metal, pricing

Ferrous metal (ferrous metal) – industrial, household, transport waste, scrap metal containing iron and other alloys. For example:

  • cast iron (pipes, radiators, production equipment)
    16,500 – 23,000 rubles / ton ;
  • stainless steel (sheets for sheathing, containers, sinks);
    40,000 – 75,000 rubles / ton ;
  • steel (fittings, machine parts and equipment)
    16,000 – 23,500 rubles / ton ;

Non- ferrous metal – metals and alloys that do not contain iron, do not have magnetic properties. For example:

  • lead (batteries, production waste);
    50,000 – 90,000 rubles / ton ;
  • copper (wires, compressors, electric motors, etc.);
    300,000 – 460,000 rubles / ton ;
  • aluminum (food packaging, wires, car parts)
    55,000 – 110,000 rubles / ton .

The average estimated purchase prices in Moscow are indicated. Prices can change daily, depending on the current situation in the capital market, the scale and specifics of the company. Pricing is also affected by:

  • the volume of recyclables, the more, the higher the cost;
  • type of metal, black, non-ferrous;
  • quality and contamination;
  • average market price, demand.

At the planning stage, we recommend to understand in detail the pricing of the region. Analyze competitors’ prices, view information on aggregator websites, Avito, Hand over lom.rf, or personally visit reception points.

Analyze potential customers, factories, large wholesale companies, prices, working conditions with them, long-term prospects and logistics opportunities.

A company that is engaged in resale may have 3,000 – 5,000 rubles per ton of ferrous metal, 30,000 rubles or more per ton of non -ferrous metal . It all depends on how the business is organized.

Step-by-step business plan for opening a scrap metal collection point

At the planning stage, it is necessary to familiarize yourself with regulations and laws. Activities related to the purchase of scrap metal from individuals and legal entities, storage, processing and subsequent sale are licensed.

  • No. 99-FZ;
  • No. 1287-PP RF;
  • No. 369-PP RF;
  • No. 370-PP RF;
  • No. 89-FZ;
  • No. 2787-75 GOST;
  • No. R 54564-2011 GOST.

Additional regulatory requirements may be fixed by local documents of the constituent entities of the Russian Federation.

It is not required to obtain a license if the enterprise sells its own metal, for example, which is left as waste from production activities.

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