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Scrap metal trading, the backbone of the global recycling industry, has long operated in the shadows. Prices are opaque, information is asymmetrical, and success often relies on personal networks. This lack of transparency is not intentional, but a result of decades of trading based on relationships and verbal agreements.
However, technology is changing that. Digital platforms like Buddy are bringing transparency, helping sellers access more buyers at better prices, and making it easier for buyers to find reliable supply. Buddy, a digital trading platform “built by the industry for the industry,” has helped recyclers in North America expand their buyer networks and achieve better prices.
Buddy co-founders, Lisa and Stu Kagan, shattered 7 persistent myths about scrap trading, emphasizing how technology is reinforcing relationships and improving business outcomes.
The Origins of Opacity
The scrap metal market relies heavily on relationships: a recycler typically trades with only 2-4 core buyers. When the market fluctuates, they have to call around for prices. Although indices like Comex, AMM, or LME are necessary, they do not provide the full picture, lacking transparent, real-time, and transaction-validated indices for the value of secondary materials. This leaves recyclers heavily dependent on price signals from their own buyers.
Technology is leveling the playing field. With real-time, transaction-validated data, recyclers no longer need to call for prices; they already know. The conversation shifts to higher-value issues: terms, volume, and how to develop the partnership.
7 Myths Debunked When Technology Is Adopted.
| The Myths | The Current Reality | The Role of Technology and Digital Platforms |
| 1. Opacity is unavoidable. | Opacity or lack of clarity in scrap trading is due to fragmented networks and limited visibility, coupled with information asymmetry. | Digital platforms aggregate price and demand signals, bringing confidence to the seller’s options (e.g., seeing 5 bids instead of just 1 or 2). |
| 2. I already have the best buyers. | Current buyers are not always offering the best price because the market fluctuates quickly. Your buyer today might be at a market disadvantage tomorrow. And they might not offer you the best price tomorrow. | Transparency ensures relationships are based on mutual benefit, not blind dependency. Diversifying buyers is necessary to test the market. Technology can help you find potential new partners. |
| 3. A few strong relationships are enough. | The market is never static (tariffs, shipping disruptions, etc.). Your partners might face unexpected challenges. | Technology expands the circle, ensuring recyclers always have a place to sell their scrap without diminishing the value of existing relationships. |
| 4. Technology erodes relationships. | Transparency actually reinforces trust. When both sides see the same data, expectations are more easily aligned. | Technology strengthens relationships by aligning expectations and turning the transaction into a “digital handshake.” |
| 5. Negotiation is only about price. | Negotiation also includes material quality, logistics, payment terms, and trust. | Transaction-validated data helps sellers build a reputation for quality faster, allowing new buyers to confidently offer competitive pricing without waiting years to establish trust. |
| 6. Personal instinct is sufficient. | Scrap trading lacks a true system of record for transactions. | Technology creates a live system of record by collecting transaction data (material quality, buyer feedback, comparison to market trends). Data is the foundation for better decisions. |
| 7. Change is difficult. | Modern platforms are designed to be intuitive, simplifying the process of listing, comparing, and finalizing a deal in just a few taps. | User-friendly applications are designed to save time, making change an easy benefit. |
From Opacity to Clarity
Opacitiy was once viewed as inevitable, but technology has proven otherwise. Digital marketplaces bring transparency, competition, and standardization that are changing the way business is conducted.
The shift toward transparency is not about destroying relationships, but about reinforcing them. By removing unnecessary uncertainty, technology allows traders to focus on what matters most: trust, service, and long-term sustainable growth.
Online business models, such as being free for recyclers to list and sell, while charging a small fee to buyers ($0.25% – $0.5% of the transaction value, or an annual fee), are gaining traction. This structure ensures that buyers on the platform continue to compete aggressively, benefiting sellers.
Ultimately, the myths dissolve, and a clearer, more resilient market forms – one where relationships remain strong, prices are transparent, and recyclers enter every negotiation with confidence.
According to: recyclingproductnews.com and collected from the internet.
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