Issuing a metal scrap tender?

Attracting the best partner and maximizing the value of your scrap metal is part science, part art. 

The tender document must make the technical details — quantity, quality, and type of scrap, and logistical elements such as storage — crystal clear. Equally, given how price-sensitive the market is, you must position your scrap in a way that makes it as attractive as possible to potential buyers. 

So how do you get both elements right?

With tender season around the corner, we've put together our top tips for preparing a compelling tender that enables you to secure the best value for your metal scrap. 

Here's a look at:

• The key elements you should think of before putting together a tender document
• How you can use technology to make the tendering process simpler and more straightforward 

Preparing metal scrap tenders: 4 critical factors you must consider ahead of time

It sounds obvious when you think about it, but what most metal scrap buyers want above all is a reliable supply of good quality scrap. So, to attract good buyers with competitive offers, you need to be as transparent as possible. 

With this in mind, alongside operational details like pickup requirements and payment terms, there are four key areas you must consider when preparing a scrap metal tender:

• Volume. How much metal scrap will you be able to supply?
• Quality. What grade is your metal scrap? 
• Value. How much is your metal scrap worth?
• Duration. How long will the tender last?

Evaluating scrap metal volume

Unless your organization regularly produces a large volume of metal scrap — because you manufacture electronic components, aerosol cans, or automotive parts, for instance — it can be challenging to work out how much you'll be able to provide during the tender period with complete certainty. 

That said, it's still possible to predict your supply with a fair level of accuracy by looking at your current production. 

"Your last year's volumes are a good starting point," says Metaloop's Head of Growth and Operations Patrick Gallit. "Once you have that data to hand, get as detailed as you can."

Look for patterns potential buyers will want to know about. 

Do you have seasonal spikes or dips in production, for instance?

You should also consider how different scenarios might impact your supply of metal scrap. 

For example, are you planning to begin production on a new product? Or could changes in your market's supply and demand dynamics force you to increase or decrease production? 

Grading metal scrap

Needless to say, the quality of your metal scrap will have a significant impact on price. 

Higher-grade metals fetch higher prices because they require less processing to meet buyers' specifications. 

Lower-grade metals, on the other hand, fetch lower prices, because they're more of a risk for the buyer. They'll need more processing and, even then, might still not be fit for the production line.

ISRI, the Institute of Scrap Recycling Industries has detailed guidelines on how to grade ferrous and non-ferrous metal scrap. 

How you store the scrap is also important. 

At the very least, you should separate ferrous and non-ferrous scrap. But, if at all possible, you should separate your scrap by material. This lowers the risk they'll react with or contaminate each other and become unusable.

Or, worse, cause a fire. 

Benchmarking metal scrap prices

The scrap metal market is notoriously volatile, and supply chains can often involve several middlemen. So, to evaluate whether the offers you receive are fair and negotiate effectively, you need to have a solid understanding of current market prices. 

It's common practice for scrap metal prices to be linked to official indexes. 

The most widely used index for non-ferrous metals is the London Metal Exchange's price index. For the pricing of ferrous metals, the industry typically looks at BDSV (the Federal Association of German Steel Recycling and Disposal Companies).  

Metal scrap tender duration: How long should you contract with a metal scrap partner for?

The length of your agreement with your chosen metal scrap partner is probably the trickiest bit of a metal scrap tender to get right.  

"Foundries and steel mills want to secure a long-term supply, so they can plan ahead," explains Patrick Gallit. "But, when you sell metal scrap, tendering for too long creates the risk you might miss out on better opportunities. 

"In essence, you're making a choice between having the flexibility to move your scrap based on where the market is going right now, and the security of a regular commitment."

So how do you strike the right balance?

Gallit thinks it depends on your circumstances and priorities. Specifically:

• How much metal scrap does your organization produce?
• And do you have the capabilities to handle regular tendering in house?

If your organization doesn't have the resources and know-how to review your tendering arrangements every few months, a long-term tender might make more sense, especially if you also produce relatively small volumes of scrap metal. 

If, on the other hand, you produce a large, predictable volume of metal scrap, and your top priority is getting the best price possible, shorter tenders may be the best way forward. 

If you're unsure, Gallit argues that tendering for a year is a good middle-of-the-road option. 

"From a negotiating perspective," he says, "You have more leverage as a seller if you tender for at least a year, because you're positioning yourself as a reliable supplier. You're still losing some flexibility in terms of optimizing price, but a year is short enough that the trade-off may be acceptable."

Security and flexibility? It's possible, with Metaloop

Done right, metal scrap tenders attract qualified buyers and guarantee you'll sell metal scrap for a specific period. 

The flipside is that the process of putting together and issuing the tender, evaluating bids, and agreeing terms with your chosen buyer is time-consuming and resource-heavy. Plus, if you tender for too long, you're trading away some of the flexibility you have when selling metal scrap based on current prices. 

But what if you could get the best of both worlds? The security of guaranteed purchases from qualified buyers, and the flexibility to optimize your revenue?

This is exactly what Metaloop's all-in-one solution is designed to do.

Where the typical tendering process means you enter into a fixed agreement with a single buyer for a defined period, Metaloop's match-making technology continuously looks for the buyers who are willing to pay the most competitive rates. 

Our global network of partners enables us to find buyers whose material specifications are the closest to your scrap's type and grade, from the markets where it's in highest demand. This means you can get better prices than what local dealers might be prepared to offer. 

Better still, alongside optimizing your pricing, our partners also offer value-added services such as storage, processing, and compacting.

With Metaloop, a company that produces about 10 to 20 tons of scrap a month increased revenue by 8%. And another client — an automotive parts supplier — increased visibility and transparency, and was able to achieve better prices while eliminating claims. 

How much more could you get for your scrap – and how much time, effort, and headaches could you save — if you used our portal too?

Want to learn more about how we can help you take the pain out of the tendering process and fetch the best price for your metal scrap? 

Find out more or book a free, no-obligation chat with Patrick Gallit: