Scrap Cost

What Drives Cost Per Ton in Scrap Processing and How to Quote It

The money view of scrap processing: what actually builds your cost per ton, how to structure a quote, and the estimating errors that erase margin.

Cost per processed ton in a scrap yard usually splits into five buckets: labor 18 to 30 dollars, equipment and fuel 12 to 22 dollars, freight 40 to 100 dollars, quality and melt loss give-back 15 to 45 dollars, and yard overhead 20 to 35 dollars. On a mid-grade heavy melt load that stacks to roughly 105 to 230 dollars per ton of cost sitting between what you pay the seller and what the mill pays you. If your buy price plus this stack exceeds mill payment, the load loses money no matter how good the tonnage looks on the scale.

Labor is driven by how much hand sorting a grade demands, not by headcount alone. Use the Scrap Sort Labor calculator: a crew of 4 at a fully loaded 31 dollars per hour sorting 14 tons per hour costs 8.86 dollars per ton, but drop to 7 tons per hour on a dirty mixed load and it doubles to 17.71 dollars. Fully loaded means base wage plus 38 to 45 percent burden for taxes, comp, and benefits. Quoting off base wage instead of loaded rate understates labor by a third and is the most common margin leak in a bid.

Machine time is a rate times a burden, not a flat fee. Take shear or baler cost from the Shear/baler Throughput calculator: if the machine carries 190 dollars per hour of ownership, fuel, wear parts, and maintenance, and runs 61 effective tons per hour, that is 3.11 dollars per ton. Book it at nameplate 90 tons per hour and you would quote 2.11 dollars, understating by 32 percent. Torch work is worse for margin: the Torch Cutting Cost calculator routinely shows 90 to 140 dollars per ton on oversize structural, so oversize should carry a size surcharge in your quote.

Freight is often the single largest line and the easiest to underquote. Run the Scrap Freight Burden calculator per lane. A 22 ton load at 74 dollars per ton and a 16 ton light load at 103 dollars per ton off the same truck differ by 29 dollars purely on density, so quote by payload, not by grade name. Pair it with the Truck Scale Capacity calculator to confirm you are legally loading to the axle limit; leaving 3 tons of payload on the table on a 22 ton target raises your per-ton freight by 15 percent on every haul.

Melt loss and contamination are money give-backs, not physics footnotes, when you quote. A 4.5 percent melt loss on material you buy by gross weight means you pay for 100 tons and the mill pays you for 95.5. On a 340 dollar mill price that is a 15.30 dollar per ton haircut. Layer the Contamination Penalty output on top: a 12 dollar per ton quality penalty plus a 3 percent tonnage deduction can strip 25 to 30 dollars per ton. Estimators who quote off the headline price and ignore these two lines routinely overpay sellers by 8 to 12 percent.

Margin against a moving commodity has to be quoted as a spread, not a fixed price. Use the Commodity Price Margin calculator to hold a target dollars per ton spread over an index like busheling or shredded, because a quote written as a flat number goes underwater the day the index drops 20 dollars. Yards that survive downturns lock in a spread of 55 to 90 dollars per ton over processing cost and re-price weekly, rather than committing to a fixed buy price that a two week price slide can turn negative.

Overhead has to be absorbed per ton or it disappears from the quote entirely. Divide yard fixed cost, scale operators, front loaders, insurance, permits, and site lease, by throughput tons. A yard with 190,000 dollars monthly fixed cost moving 9,000 tons absorbs 21.11 dollars per ton; the same cost at 6,000 tons jumps to 31.67 dollars. Low volume months quietly inflate real cost per ton by 50 percent, which is why turns matter to the quote. Watch the Yard Inventory Turns figure, because slow throughput spreads the same overhead over fewer tons.

Build the quote as a stacked worksheet, not a single guess. Line one: buy price or index minus spread. Line two: loaded sort labor. Line three: machine and torch per ton. Line four: freight burden by payload. Line five: melt loss and contamination give-back. Line six: absorbed overhead. Sum the cost lines, compare to expected mill payment on payable tons, and require a floor spread before booking. The three errors that kill scrap quotes are base-rate labor, nameplate machine speed, and headline commodity price. Each one flatters the estimate by 10 to 30 percent, and stacked they turn a profitable load into a loss.

Published 2026-07-01.