How melting scrap is priced, offered, contracted, and paid for in international trade — a plain-language primer.
How melting scrap is priced, offered, contracted, and paid for in international trade — a plain-language primer.
Melting scrap has no exchange of its own. Every price is derived: non-ferrous scrap is quoted as a percentage of, or a discount to, the underlying metal price on the LME or COMEX, while ferrous scrap prices key off benchmark assessments — most famously the Turkish deep-sea HMS 1&2 (80:20) CFR index published by the price-reporting agencies.
The discount reflects recovery (how much metal the buyer will actually get out), processing cost, and contamination risk. Clean, dense, well-prepared material trades closest to the metal price.
A typical offer names the grade (usually a ReMA code word), the quantity, the packing (loose, bundled, briquetted), the delivery term, and the price basis. Delivery terms follow Incoterms — FOB at the load port, CFR or CIF to the discharge port — and the term chosen decides who arranges and pays for freight.
Quantities in container trade are quoted per box or per month; bulk cargoes move in vessel lots. Long-term supply relationships matter enormously in this industry — mills reward suppliers who deliver on-spec, on time, repeatedly.
International scrap sales are commonly settled by letter of credit or documents-against-payment through banks, with a percentage sometimes held back pending discharge-port inspection. The document set typically includes the invoice, packing list, bill of lading, certificate of origin, and inspection and radiation certificates where the destination requires them.
Many destination countries require pre-shipment inspection by an approved agency before scrap may be imported — see our quality inspection guide →
The recurring disputes in scrap trading are weight (draft survey or weighbridge shortfalls), quality (off-grade or contaminated material), and market moves between contract and arrival. Reputable counterparties, named grades, independent inspection, and clear contracts are the standard protections. Nothing on this page is trading, legal, or financial advice — it is an editorial description of how the market works.
This page is a general guide. Requirements may change; check the relevant authority's current information before relying on them.
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