There is no single number for what it costs to start a scrap business, and be wary of anyone who gives you one. The money splits into two very different parts: fixed set-up costs, such as a vehicle, a scale, insurance and registration, which depend on where you live and what you buy, and working capital, the cash tied up in material between paying for it and being paid for it. Working capital is usually the larger and the more misunderstood part, and it can be calculated from prices you can look up today. This guide shows how.
We have deliberately not quoted prices for vehicles, scales or insurance, because they vary by location and change, and an invented figure would mislead. Get at least three quotes for every set-up item. The working capital numbers below are ScrapTrade arithmetic on the ScrapTrade Price Index, an AI-generated indicative estimate retrieved on 26 October 2026.
Two kinds of money
| Set-up costs | Working capital | |
|---|---|---|
| What it is | One-off or annual costs of being in business | Cash tied up in material before it sells |
| Examples | Registration, insurance, vehicle, scale, safety gear, bins, storage | The price paid for a lot, plus freight and handling |
| How to size it | Get local quotes | Lot value x the share you pay first |
| Gets recovered? | No. It is a cost | Yes, when the lot sells, unless prices fall |
Working capital, by metal and lot size
A lot's value is the number to know. These are index values for a single lot.
| Lot | HMS 1 steel | Aluminium extrusion | Copper 2 | Copper bare bright |
|---|---|---|---|---|
| 100 kg | A$40 | A$263 | A$968 | A$1,167 |
| 1 tonne | A$399 | A$2,633 | A$9,677 | A$11,669 |
| 5 tonnes | A$1,993 | A$13,164 | A$48,385 | A$58,346 |
| 20 tonnes | A$7,970 | A$52,654 | A$193,538 | A$233,384 |
Read the table as a menu of businesses. If you can only commit about A$1,000, you can finance a 100 kg lot of copper or several tonnes of steel. If you can commit A$10,000, you can finance a tonne or so of copper or about 25 tonnes of steel. If you want to buy a full 20 tonne container of aluminium or copper outright, the figure is in the tens or hundreds of thousands of dollars.
The cash cycle: the formula that sizes your budget
Working capital is also driven by time. The longer money is tied up, the more of it you need to keep deals flowing.
Working capital needed = value of each lot x the number of lots in progress at once.
A lot is "in progress" from the moment you pay for it until you are paid. The shorter that gap, the fewer lots are in progress and the less cash you need. An invented example shows the effect. Suppose you handle 5 tonnes of aluminium extrusion a week, worth about A$13,164 a lot.
| Days from paying to being paid | Lots in progress at once | Working capital needed |
|---|---|---|
| 3 days | About 1 | About A$13,164 |
| 10 days | About 2 | About A$26,328 |
| 21 days | About 3 | About A$39,492 |
The lesson is that speed of sale is as valuable as margin. Three ways to shorten the cycle:
- Sell before you buy. If you line up a buyer first, you are rarely holding stock. The buyer requests show what buyers want now.
- Use escrow and quick confirmation to shorten the wait. On ScrapTrade, the buyer's 5% deposit is held through Stripe and released to the seller once the buyer confirms receipt, or after 24 hours pass without a dispute. See how ScrapTrade works. Longer shipments take longer, because transit time is outside the platform's control.
- Work on commission. An agent does not buy the material, so there is no working capital in stock. See How Scrap Agents and Brokers Make Money.
What to budget for, item by item
Use this as a list to get quotes against, not as a list of prices.
| Item | Depends on | How to size it |
|---|---|---|
| Registration and advice | Country, state and structure | Ask an accountant and your regulator |
| Insurance | Activity, vehicle, premises | Get quotes for public liability and vehicle cover |
| Vehicle and trailer | New or used, load size | Match it to your lot sizes |
| Scale | Capacity and accuracy | Choose one that handles your heaviest item |
| Safety gear | What you handle | Gloves, eye protection, footwear, as a minimum |
| Storage or staging | Volume, how long you hold stock | Start with none or a little |
| Fuel and running costs | Distance and frequency | Estimate per trip |
| A cash buffer | Your risk tolerance | Hold a reserve for rejected loads and price falls |
Three starting budgets, described, not priced
| Starting point | What you spend on | What you do not need |
|---|---|---|
| Agent | A phone, internet, travel and time | Stock or storage |
| Collector | Gear, bins, a scale, a way to carry | A business, a yard, or a large cash float |
| Small trader | The set-up items above and working capital sized with the formula | A yard |
For the trader row, size working capital first, then fit the set-up items around it. People often buy a vehicle and then discover they cannot afford the stock to fill it.
Do not forget the price risk
Working capital is exposed to price movements. A 10% fall on a A$48,385 lot of Copper 2 is about A$4,839. A buffer is not optional. Reducing the time you hold stock is the best protection. See Can a Scrap Business Make You Rich? for the risk in more detail.
Frequently asked questions
How much money do I need to start a scrap business?
It depends on the model. An agent needs very little, a collector needs some gear, and a trader needs set-up costs plus working capital sized to the metal and lot size, as shown above.
What is the biggest cost?
Usually working capital, the cash tied up in material, not equipment.
Can I start with a few hundred dollars?
You can start as a collector or an agent. A few hundred dollars finances a small lot of copper or a few hundred kilograms of steel, though results will be small.
How do I need less capital?
Sell before you buy, shorten the time between paying and being paid, handle lower-value metals in small lots, or work on commission.
Should I get a loan?
That is a personal financial decision. Prove the model with small deals first, and take advice before borrowing.
Sources
- ScrapTrade Price Index, scrap.trade/market-prices, retrieved 26 October 2026. AI-generated indicative estimates, not quotes. Lot values and cash-cycle figures are ScrapTrade arithmetic.
- ScrapTrade, how ScrapTrade works, for the escrow deposit and confirmation window.
Figures are indicative and as at 26 October 2026. The cash-cycle durations are invented examples. ScrapTrade operates a marketplace and has a commercial interest in the scrap trade. This article is general information, not financial advice, and does not recommend borrowing.