Approaches to Value and Factors Considered in Metal Related Inventory Appraisals

A common misconception is that, if properly stored, metals do not have a shelf life. An inventory appraiser must consider the gauge, size, length and types of metal being appraised. For instance, 24 Gauge sheet metal will become brittle if not used within five years of being slit and coiled. Therefore, this inventory would likely be sold as scrap in a liquidation scenario which would garner a much lower recovery as a percentage of cost than selling as a raw material or finished good.


Another misconception when valuing metal inventory is that the LME (London Metal Exchange) and AME (American Metal Exchange) are good indicators of the current market price for the metal being appraised. These publications should be used to analyze trends only.

Every geographical region has a relative scrap price from local scrappers which must be considered as a base recoverable rate when lending on metal. Often times it is much less than what is reported by the LME and AME as a national average.

Glossary of Terms


Things to remember

  • Understand the operations of the Company.
  • Be familiar with regional and/or seasonal market fluctuations.
  • Understand the nomenclature and unit of measure.
  • Determine the best market for each type of asset.


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Metal Industry Glossary

An analytical technique used to determine the equivalent elastic moduli of pavement layers corresponding to the measured load and deflections. In the iterative method, layer moduli are selected and adjusted until the difference between the calculated and measured deflections are within selected tolerances, or the maximum number of iterations has been reached.
Long steel products that are rolled from billets. Merchant bar and reinforcing bar (rebar) are two common categories of bars, where merchants include rounds, flats, angles, squares, and channels that are used by fabricators to manufacture a wide variety of products such as furniture, stair railings, and farm equipment. Rebar is used to strengthen concrete in highways, bridges, and buildings
Steel that has properties made up mostly of the element carbon and which relies on the carbon content for structure. Most of the steel produced in the world is carbon steel.
Metal sheet that has been wound. The metal, once rolled flat, is more than one-quarter mile long; coils are the most efficient way to store and transport sheet steel.
The term usually refers to hot rolled steel (although it can be cold rolled steel) that is roll formed [or ‘bent’] cold into angles, channels or shaped / corrugated sheet. The word ‘cold’ refers to the forming process, not to the type of steel that is used
Sheet steel that has been pickled and run through a cold-reduction mill. Strip has a final product width of approximately 12 inches, while sheet may be more than 80 inches wide. Cold-rolled sheet is considerably thinner and stronger than hot-rolled sheet, so it will sell for a premium (see Sheet Steel).
Processes steel into a more finished state, such as pipe, tubing, and cold-rolled strip, before selling it to end users. Such steel generally is not sold on contract, making the converter segment of the mills’ revenues more price sensitive than their supply contracts to the auto manufacturers
Process to uncoil sections of flat-rolled steel and cut them into a desired length. Product that is cut to length is normally shipped flat-stacked.
Cold Rolled or Black Plate to which a coating of zinc is applied by electro-deposition; used for applications in which corrosion resistance and paintability is a primary concern.
Metals that consist primarily of iron.
Category of steel that includes sheet, strip, and tin plate, among others. Produced by passing ingot/slab through pairs of rolls.
Free on Board Pricing – Phrase that explains whether the transportation costs of the steel are included. “FOB Mill” is the price of steel at the mill, not including shipping.
Steel coated with a thin layer of zinc to provide corrosion resistance in underbody auto parts, garbage cans, storage tanks, or fencing wire. Sheet steel normally must be cold-rolled prior to the galvanizing stage.
Steel is run through a molten zinc coating bath, followed by an air stream “wipe” that controls the thickness of the zinc finish.
Zinc plating process whereby the molecules on the positively charged zinc anode attach to the negatively charged sheet steel. The thickness of the zinc coating is readily controlled. By increasing the electric charge or slowing the speed of the steel through the plating area, the coating will thicken. Electrogalvanizing equipment is more expensive to build and to operate than hot dipped, but it gives the steelmaker more precise control over the weight of the zinc coating. The automotive manufacturers, because they need the superior welding, forming, and painting ability of electrogalvanized steel, purchase 90% of all tonnage produced.
The thickness of sheet steel. Better-quality steel has a consistent gauge to prevent weak spots or deformation.
A general term given to rolled flanged sections that have at least one dimension of their cross sections three inches or greater. The category includes beams, channels, tees and zees if the depth dimension is three inches or greater, and angles if the length of the leg is three inches or greater.
Steel with more than 0.3% carbon. The more carbon that is dissolved in the iron, the less formable and the tougher the steel becomes. High-carbon steel’s hardness makes it suitable for plow blades, shovels, bedsprings, cutting edges, or other high-wear applications.
A coil of steel rolled on a hot-strip mill (hot-rolled steel). It can be sold in this form to customers or further processed into other finished products.
Structural sections on which the flanges are tapered and are typically not as long as the flanges on wide-flange beams. The flanges are thicker at the cross sections and thinner at the toes of the flanges. They are produced with depths of three inches to 24 inches.
The process by which a leveling machine flattens metal strip, coil, or sheets by bending it up and down over the interrupting arcs of upper and lower sets of long, slender work rolls. Machines generally employ 17, 19, or 21 relatively small diameter rolls whose deflection under load is controlled by additional back-up rollers and a rigid frame.
Very thin steel sheet that has been temper-rolled or passed through a cold-reduction mill. Light gauge steel normally is plated with tin or chrome for use in food containers.
A metals trading center for the Western World. The LME also determines the metal price for aluminum trading for current and future delivery.
Classification of steel products that includes bar, rod and structural products, that are “long,” rather than “flat.”

M sections (Bantam Beams™, Junior Beams™)” open=”no”]Light footweight beams primarily used in the construction of pre-engineered housing. These beams are produced in lighter footweights, usually six to ten pounds per foot, than traditional structural products.

A group of commodity steel shapes that consist of rounds, squares, flats, strips, angles, and channels, which fabricators, steel service centers, and manufacturers cut, bend, and shape into products. Merchant products require more specialized processing than reinforcing bar. A category of light long products comprising steel bars shaped as rounds, squares, hexagonals, rectangles, flats etc used mainly as support structures for building, construction, machinery. Merchant bar is to be distinguished from reinforcing bar (which is used to reinforce concrete) and from engineering steel (which often ends up moving rather than being stationery)
Often also referred to as soft steel.  Carbon content generally under 0.25%
Ratio of the end-of-period inventory to average monthly level of sales for the period.
An alloying element used as a raw material for certain classes of stainless steel. Nickel provides high degrees of ductility (ability to change shape without fracture) as well as resistance to corrosion. Approximately 65% of all nickel is used in the making of stainless steel
Obsolete steel scrap grade, at least one-quarter inch in thickness and in sections no larger than five feet by two feet. Much of the metal comes from demolished buildings, truck frames and heavy duty springs. Mini-mills are primary consumers of No. 1 heavy scrap.
Technically a tube is used to transport fluids or gases. However, pipe and tube are often used interchangeably in steel lexicon, with a given label applied primarily as a matter of historical use.
Sheet steel with a width of more than eight inches, with a thickness ranging from one quarter of an inch to more than one foot (see Sheet Steel).
Refers to the well-established phenomenon of cyclicality in international steel price movements. Although no cycle is ever identical, this cyclicality has in recent years been characterised by price swings from peak to trough of 25% or more, and by a periodicity (from peak to peak, or trough to trough) of approx. two years
A commodity-grade steel used to strengthen concrete in highway and building construction.
Round, thin semi-finished steel length that is rolled from a billet and coiled for further processing. Rod is commonly drawn into wire products or used to make bolts and nails. Rod trains (rolling facilities) can run as fast as 20,000 feet per minute — more than 200 miles an hour.
Any of the mills in which metal undergoes a rolling process. These include the slabbing mill, hot roll mills, cold roll mills, SR mills, and DR mills.

Any operating unit that reduces gauge by application of loads through revolving cylindrical rolls; operation can be hot or cold. The elevated temperature rolling mill is the Hot Mill and is capable of reducing the gauge of a slab 92-99%.

Ferrous (iron-containing) material that generally is remelted and recast into new steel. Integrated steel mills use scrap for up to 25% of their basic oxygen furnace charge; 100% of the mini-mills’ raw material for their electric furnaces generally is scrap.
Excess steel that is trimmed by the auto and appliance stampers and auctioned to scrap buyers as factory bundles. This is a high-quality scrap as the result of its low-residual content and consistent chemistry.
Iron-bearing items such as old automobiles; household appliances; farm, office, and industrial equipment; ships and railroad cars; buildings and bridges that have completed their useful life which can be recovered from the junkyard and remelted. The residual impurity of such scrap normally relegates obsolete scrap to the mini-mills (see No. 1 Heavy Melt).
Pipe made from a solid billet, which is heated, then rotated under extreme pressure. This rotational pressure creates an opening in the center of the billet, which is then shaped by a mandrel to form pipe.
A catchall name for an operation that buys steel, often processes it in some way and then sells it in a slightly different form. A service center is distinguished from an end-user by the fact that, unlike an end-user, a service center sells steel, not a fabricated product. Service centers are manufacturers to the extent that they add labor to steel by providing a service.
Rolling, heating, and quenching steel sheets often affect the dimensions of the steel. Levelers, temper mills, and edge trimmers rework the processed steel to match customer specifications.
If the edges of sheet and strip are not controlled during reduction, they must be trimmed parallel by shears. This process may be performed by either the steel mill or steel processor to match customer needs.
Thin, flat-rolled steel. Coiled sheet steel accounts for nearly one-half of all steel shipped domestically and is created in a hot-strip mill by rolling a cast slab flat while maintaining the side dimensions. The malleable steel lengthens to several hundred feet as it is squeezed by the rolling mill. The most common differences among steel bars, strip, plate, and sheet are merely their physical dimensions of width and gauge (thickness).
Fist-sized, homogenous pieces of old automobile hulks. After cars are sent through a shredder, the recyclable steel is separated by magnets. Mini-mills consume shredded scrap in their electric arc furnace operations.
Cutting a sheet of steel into narrower strips to match customer needs. Because steel mills have limited flexibility as to the widths of the sheet that they produce, service centers normally will cut the sheet for the customer.
SBQ represents a wide variety of higher quality carbon and alloy bars that are used in the forging, machining, and cold-drawing industries for the production of automotive parts, hand tools, electric motor shafts, and valves. SBQ generally contains more alloys than merchant quality and commodity grades of steel bars, and is produced with more precise dimensions and chemistry.
Category of steel that includes electrical (see Silicon Electrical Steel), alloy (see Alloy Steel), stainless (see Stainless Steel), and tool steels (see Tool Steels).
Refers to a wide variety of high-quality custom-made tubular products requiring critical tolerances, precise dimensional control and special metallurgical properties. Specialty tubing is used in the manufacture of automotive, construction, and agricultural equipment, and in industrial applications such as hydraulic cylinders, machine parts, and printing rollers. Because of the range of industrial applications, the market typically follows general economic conditions.
Sales for delivery in less than three months.
The term for grades of steel that contain more than 10% chromium, with or without other alloying elements. Stainless steel resists corrosion, maintains its strength at high temperatures, and is easily maintained. For these reasons, it is used widely in items such as automotive and food processing products, as well as medical and health equipment. The most common grades of stainless steel are:
The most commonly specified austenitic (chromium-nickel stainless class) stainless steel, accounting for more than half of the stainless steel produced in the world. This grade withstands ordinary corrosion in architecture, is durable in typical food processing environments, and resists most chemicals. Type 304 is available in virtually all product forms and finishes.
Austenitic (chromium-nickel stainless class) stainless steel containing 2%–3% molybdenum (whereas 304 has none). The inclusion of molybdenum gives 316 greater resistance to various forms of deterioration.
Ferritic (plain chromium stainless category) stainless steel suitable for high temperatures. This grade has the lowest chromium content of all stainless steels and thus is the least expensive.
The most widely used martensitic (plain chromium stainless class with exceptional strength) stainless steel, featuring the high level of strength conferred by the martensitics. It is a low-cost, heat-treatable grade suitable for non-severe corrosion applications.
The most widely used ferritic (plain chromium stainless category) stainless steel, offering general-purpose corrosion resistance, often in decorative applications.
End-of-period material stocks reported by the Metals Service Center Institute (MSCI).
Thin, flat steel that resembles hot-rolled sheet, but it is normally narrower (up to 12 inches wide) and produced to more closely controlled thicknesses. Strip also may be cut from steel sheet by a slitting machine (see Sheet Steel).
Steel product group that includes I-beams, H-beams, wide-flange beams, and sheet piling. These products are used in the construction of multi-story buildings, industrial buildings, bridge trusses, vertical highway supports, and riverbank reinforcement.
Titanium and its alloys have very high strength-to-weight ratios. At normal temperatures, they have high resistance to corrosion. Used primarily in aerospace and chemical processing applications.
The act of processing steel for a fee (“toll”). Owners of the steel sheet may not possess the facilities to perform needed operations on the material (or may not have the open capacity). Therefore, another steel mill or service center will slit, roll, coat, anneal, or plate the metal for a fee.
Unit of measure for steel scrap and iron ore.

Gross Ton:          2,240 pounds.

Long (Net) Ton:   2,240 pounds.

Short (Net) Ton: 2,000 pounds. Normal unit of statistical raw material input and steel output in the United States.

Metric Ton:         1,000 kilograms. 2,204.6 pounds or 1.102 short tons.

Metal shavings formed during the course of metalworking. Also know as swarf.