Saturday, August 16, 2008

Information on Scrap Metal

Scrap

Before we get to metal scrap lets understand scrap first. Scrap is refers to anything that is leftover. For example for a lumberjack, leftover bits of wood are scrap.

Scrap normally refers to recyclable materials leftover from any form of product consumption. Scrap has monetary value and different from trash or waste.

Metal Scrap

So anthing leftover while producing any metallic thing or unusable metal commodities is metal scrap. Metal scrap is recycled on large scales and thus this market has lot of potential in today's growing economy.

Types of Metal Scrap

Scrap metal is divided into two types: Ferrous and Nonferrous. Ferrous scrap is scrap iron and steel. This includes scrap from old cars, household appliances, steel beams, railroad tracks, ships, and food packaging and other containers.

Nonferrous scrap metal is scrap metal other than iron and steel. Examples of nonferrous scrap include aluminium - including foil and cans, copper, lead, zinc, nickel, titanium, cobalt, chromium, and precious metals.

Although there is less nonferrous scrap than ferrous scrap, it is often worth more financially. Millions of tonnes of nonferrous scrap metal are recovered by processors and consumed by secondary smelter, refiners, ingot makers, fabricators, foundries, and other industries.
Scrap metal, ferrous and nonferrous, can be categorized as either "home scrap" or "purchased scrap."

Home scrap is scrap generated at the mill, refinery, or foundry, and is generally remelted and used again at the same plant. Home scrap never leaves the plant.

Purchased scrap represents the fractions of the metals that need to be collected before they can be recycled. Large goods eg vehicles and fridges have historically been collected by scrap metal merchants owing to the value of the metal recovered.

Scrap Industry

Overall, the scrap industry processes more than 145 million tonnes of recyclable material each year into raw material feedstock for industrial manufacturing around the world.

The industry contributed $65 billion in 2006 and is one of the few contributing positively to the U.S. balance of trade, exporting $15.7 billion in scrap commodities in 2006.

Recycled scrap is a raw material feedstock for 2 out of 3 pounds of steel made in the U.S., for 60% of the metals and alloys produced in the U.S., for more than 50% of the U.S. paper industry’s needs, and for 33% of U.S.

Scrap is often taken to a wrecking yard (known colloquially as a scrapyard), where it is processed for later melting into new products. A scrapyard (also known as a breaker's yard), depending on its location, may allow customers to browse their lot and purchase items before they are sent to the smelters although many scrap yards that deal in large quantities of scrap usually do not, often selling entire units such as engines or machinery by weight with no regard to their functional status.

Buying & Selling Scrap

So if you are a recycler, buyer or reseller chances are that in order to minimize the cost and maximize the profits you will have to import metal scrap from countires like South Africa, China, mauririus and South America.

You will first have to find a genuine seller from these countries or the better way is to find a reseller in your locale and buy it from him. It's better than risking your money onto someone whom you dont know.

Before you look for buyers always have a seller in hand who can provide you with quality material at good prices.

Now when you import stuff from different countries you will also have to be familiar with few terminologies used in the shipping lines as your materials will be shipped across to you. So you should be aware about major shipping lines, duties appliable and laws in your country for importing metal scrap into your country.

Before you order please ask your seller for the following:

  • Description
  • Quantity Available
  • Price and Payment Terms
  • Origin Of Material
  • Shipping Line Used
  • Average Weight/Container
  • Validity of Price
  • Shipper & PSIC

Buying Terms

Most Commonly used terms while quoting a price is CNF and CIF.

CNF stands for Cost & Freight which means that the seller is giving you the price for your material which is inclusive of price used to ship the material to your local port.

CIF stands for Cost, Insurance and Freight which means that the price is inclusive of Cost of material, Shipping cost as well as Insurance of the product shipped to you.

Payment Terms

If you are in the same country or know the seller you can either pay by cash, cheque but most advisable payment terms while dealing are paying by Letter of Credit and Payment against the Bill of Lading.

Letter Of Credit

Letter of credit is a document issued mostly by a financial institution which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the Letter of Credit.

Once the beneficiary or a presenting bank acting on its behalf, presents to the issuing bank or confirming bank, if any, on or before the expiry date of the LC, documents complying with the terms and conditions of the LC, the issuing bank or confirming bank, if any, is obliged to honour irrespective of any instructions from the applicant to the contrary. In other words, the obligation to honour (usually payment) is shifted from the applicant to the issuing bank or confirming bank, if any. Non-banks can also issue letters of credit, however beneficiaries must balance the potential risk of payment default.

How It Works

Imagine that a business called Ansh Enterprises from time to time imports steel from a business called XYZ Inc, which banks with the ABC Bank. Ansh Enterprises holds an account at the Commonwealth Financials. Ansh Enterprises wants to buy $500,000 worth of merchandise from XYZ Inc, who agrees to sell the goods and give Ansh Enterprises 60 days to pay for them, on the condition that they are provided with a 90-day LC for the full amount. The steps to get the letter of credit would be as follows:


  1. Ansh Enterprises goes to The Commonwealth Financials and requests a $500,000 letter of credit, with XYZ Inc as the beneficiary.
    The Commonwealth Financials can issue an LC either on approval of a standard loan underwriting process or by Ansh Enterprises funding it directly with a deposit of $500,000 plus fees which are typically between 1% and 8% of the face value of the LC.

  2. The Commonwealth Financials sends a copy of the LC to the ABC Bank, which notifies the XYZ Inc that payment is available and they can ship the merchandise Ansh Enterprises has ordered with the full assurance of payment to them.

  3. On presentation of the stipulated documents in the letter of credit and compliance with the terms and conditions of the letter of credit, the Commonwealth Financials transfers the $500,000 to the ABC Bank, which then credits the account to the XYZ Inc for that amount.
    Note that banks deal only with documents required in the letter of credit and not the underlying transaction.

Bill Of Lading

A bill of lading (sometimes referred to as a BOL or B/L) is a document issued by a carrier , e.g. a ship's master or by a company's shipping department, acknowledging that specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee. A thorough bill of lading involves the use of at least two different modes of transport from road, rail, air, and sea.

Main Types of Bills

Straight bill of lading

This bill states that the goods are consigned to a specified person and it is not negotiable free from existing equities, i.e. any endorsee acquires no better rights than those held by the endorsor. So, for example, if the carrier or another holds a lien over the goods as security for unpaid debts, the endorsee is bound by the lien. Although, if the endorsor wrongfully failed to disclose the charge, the endorsee will have a right to claim damages for failing to transfer an unencumbered title.Also Known as non-negotiable bill of lading.

Order bill of lading

This bill uses express words to make the bill negotiable, e.g. it states that delivery is to be made to the further order of the consignee using words such as "delivery to A Ltd. or to order or assigns". Consequently, it can be endorsed by A Ltd. or the right to take delivery can be transferred by physical delivery of the bill accompanied by adequate evidence of A Ltd.'s intention to transfer. Also known as a negotiable bill of lading.

Bearer bill of lading

This bill states that delivery shall be made to whosoever holds the bill. Such bill may be created explicitly or it is an order bill that fails to nominate the consignee whether in its original form or through an endorsement in blank. A bearer bill can be negotiated by physical delivery.

Surrender bill of lading

Under a term import documentary credit the bank releases the documents on receipt from the negotiating bank but the importer does not pay the bank until the maturity of the draft under the relative credit. This direct liability is called Surrender Bill of Lading (SBL), i.e. when we hand over the bill of lading we surrender title to the goods and our power of sale over the goods.

About Us

Established in the year 2008, Ansh Enterprises has the vision of becoming one of the leading providers of vital services such as Ferrous & Non Ferrous scrap metal trading, scrap metal inspection, metal scrap valuation and metal scrap outsourcing services.

Ansh Enterprises aims at sourcing only good quality scrap, metal scrap from the reputed and established Scrap yards worldwide.

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