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Scrap Business Profit Models on MSTC


 MSTC enables price-discovered, volume-driven scrap procurement. Profitability is not accidental—it is engineered through the right model selection, cost discipline, and compliance execution. Below are battle-tested profit models MSMEs and traders deploy

successfully.


Model 1: Arbitrage Trading (Buy → Resell)

Who it fits: Traders with strong local buyer networks

Mechanism: Purchase MSTC lots → segregate → resell to mills/foundries

Profit Drivers

  • Accurate inspection & grade identification

  • Freight optimisation (backhaul/cluster moves)

  • Quick turnover to avoid holding costs

Margin Band: 6%–12% (volume-led)

Risk Controls: Pre-negotiated offtake rates; strict bid ceiling

Model 2: Processing & Value Addition

Who it fits: Yards with cutting, baling, shredding capacity

Mechanism: Buy mixed scrap → process → sell higher-grade output

Profit Drivers

  • Yield improvement (reduce contamination)

  • Energy-efficient processing

  • Long-term contracts with OEM recyclers

Margin Band: 12%–25%

Risk Controls: Power/fuel hedging; downtime planning

Model 3: Direct-to-Industry Supply

Who it fits: MSMEs supplying steel plants, foundries, aluminium recyclers

Mechanism: MSTC procurement → direct dispatch to industry

Profit Drivers

  • Contracted pricing formulas

  • Predictable volumes & logistics

  • Compliance-led invoicing (GST-ready)

Margin Band: 8%–15% (stable, scalable)

Risk Controls: SLA-backed lifting windows; QC acceptance clauses

Who it fits: Operators near ports/industrial clusters

Model 4: Location-Based Logistics Arbitrage

Mechanism: Win geographically advantaged lots → lower freight → higher net

Profit Drivers

  • Micro-location intelligence

  • Multi-drop routing

  • Seasonal freight negotiation

Margin Band: 5%–10% (risk-light)

Risk Controls: Alternate transporter readiness

Model 5: Category Specialisation (Non-Ferrous / Niche)

Who it fits: Experts in aluminium, copper, brass, e-waste

Mechanism: Target niche lots → purity-led pricing

Profit Drivers

  • Assay accuracy

  • Export parity awareness

  • Tight inventory cycles

Margin Band: 15%–30%

Risk Controls: Price volatility hedges; moisture loss checks

Cost Stack You Must Model (Before Bidding)

  • Bid Price + Taxes (GST, cess)

  • EMD opportunity cost

  • Inspection & handling

  • Freight & insurance

  • Processing loss / moisture

  • Working capital interest

Leegal Rule: If your spreadsheet can’t survive a 3% adverse swing, don’t bid.