What’s Happening With Scrap Car Prices In 2021?

As we enter a new year, we leave behind one of the most forgettable years in memory. Metal import tariffs kicked it off, followed by a pandemic that’s ongoing and political unrest in the nation. While it might not seem at first like it’s related, the scrap car industry is closely tied to these economic decisions and factors. And from all appearances, it’s bound to be another active year.  

What do scrap car prices look like at the beginning of 2021? Are there indications of what’s going to happen in this coming year? We explore those questions here.

Where Are Scrap Car Prices Currently?

Prices in the ferrous scrap market have taken a turn for the better, and it’s welcome news for the recycling industry. In mid-January, the price for shredded steel #2 hovered right around the $400 mark per ton. That pricing accounts for strictly the steel content in recycled complete automobiles after processing, not the whole car.

Typically, scrap car prices are around half of the price per ton of shredded steel #2. That means that the average price per ton for scrap carsis toeing the $200 line – a reprieve from the suppressed amounts from earlier last year.

How Did We Arrive Here?

Unless you’ve been in hiding for the past twelve months, you’ve seen some of the factors in the United States that affect scrap car prices play out. Although scrap metal prices are a relatively steady commodity in most years, 2020 went down very differently.

Metal Tariffs To Kick The Year Off

President Trump’s tariffs on steel and aluminum were in place as 2020 started. With tariffs in place on steel imports, demand for local scrap steel increased by manufacturers. The increase in demand meant that scrap prices began the year positioned well above average – a good thing for both consumers getting rid of scrap cars and the junk car buyers reselling them.

Concerns of a bubble bursting in the manufacturing sector due to tariffs went unrealized in the first quarter, but that certainly didn’t mean scrap prices held steady.

The Pandemic Strikes

The scrap industry is directly tied to supply and demand in the economy, and it’s no surprise what happened when COVID-19 arrived in the United States in April. On a dime, the taps turned off, and scrap car prices plummeted, dropping to around $120 per ton in some instances. It was due to a lack of production and the resulting lack of demand for steel as factories shuttered for weeks on end.

Supply Soon Disappeared

After prices bottomed out in April, a quick rebound began in May. As suddenly as demand stopped, it restarted in manufacturing, both within and outside of automotive factories. But by that time, the pipeline for scrap cars had dried up with Americans holding onto their vehicles rather than replacing them. Scrap metal became rather scarce, and prices rose as much as $50 per ton in May alone.

Throughout the following months, the demand continued to increase, pulling the prices for scrap cars up with it.

Political Unrest In The US

In addition to the metal tariffs, an ongoing dispute with China – America’s largest trade partner – has seen exports of scrap steel shrink. In 2018, the Chinese government moved to ban recycled material imports by 2020 to prevent becoming a global dumping ground. As China tightened their restrictions on scrap steel imports, domestic prices stabilized and dipped in July.

That’s far from the end of the political impact on the scrap industry in 2020, however. As American companies resumed their lives amid the coronavirus pandemic, auto sales resumed at nearly the same pace as pre-COVID. Construction industries also saw a boom. Higher demand once again commanded higher prices for recycled metal products like scrap cars.

Of course, a tumultuous presidential election occurred as well. However, during the most active campaigning months, scrap car prices and scrap steel remained in a holding pattern, slightly higher than the same time in 2019.

Factors For Scrap Car Pricing Going Forward

Last year ended in a very unusual position for the scrap car industry. The American Iron and Steel Institute (AISI) announced that volumes of domestic and imported steel were down between 20 and 25 percent compared to 2019, leaving manufacturers wondering where their raw materials would come from.

The year ended with scrap car prices jumping around 20 percent in December, and there doesn’t appear to be any notion that prices will drop anytime soon.

Industry experts are torn on how the scrap industry will perform in 2021. They’ve split down the middle – some saying they believe the bubble will burst and prices will begin to plummet while others predict that scrap car prices and other recycled metal products will continue to increase throughout the year.

How It Affects Car Owners

For car owners looking to offload junk cars for scrap, the prices are among the highest seen in recent years. Although it’s a small portion of their original investment price, selling a car for scrap will provide the best return right now.

There’s potential for scrap car prices to increase in the coming weeks and months, but it’s certainly not guaranteed by anyone in the industry. The safe play is to sell while the prices are high rather than gambling on a 50-50 chance that prices will increase or drop.

For owners looking to sell their vehicles for the top scrap car prices, JunkCarMasters is an industry leader with a top reputation for fast payment, fair prices, and top-rated service. You can receive a no-obligation quote for your scrap car in minutes. If you agree to the price, you’ll receive your payment within 24 hours in most cases, and your vehicle will be picked up from its location at no charge to you.