A question we often get is whether it is worthwhile to chop wire. This decision depends on several things, including your location, electricity costs, the current selling price of the wire, and the potential selling price of the chopped wire. You need to consider all these factors to find out if chopping wire could be the right move or if it is better to sell your wire as is.
Here are some key points to consider:
- Risk Tolerance: If you prefer to avoid risks, chopping wire might not be for you. Choosing to play it safe means it is better to skip wire chopping.
- Volume of Material: If you do not have enough material to keep the machine running (like only having a half load per month) it is probably not worth investing in wire chopping. A load is around 42,000 lbs (about 19,050 kg) of scrap.
- Experience: If you are new to buying, selling, and trading scrap, wire chopping might not be the right choice for you. However, there are exceptions. For instance, one of our most successful customers was an electrician who transitioned into wire chopping and made it his main business.
But, if you like having control over your material’s value, wire chopping is beneficial. For example, early on in our wire chopping days, we were approached by a company offering better deals for Cat 5 and Cat 6 wire. After testing this, we realized we were leaving money on the table because we knew the true value of chopped wire.
Even though we sell and use choppers, we do not always chop our own material. Sometimes new chopper owners in the market overpay to increase their volumes and market share. We take advantage of these opportunities when they arise. Still, these opportunities are often short-lived, so we consistently chop a portion of our material to maintain flexibility in selling or chopping, based on market conditions.
In Part 2, we will discuss the formulas for determining if chopping is worthwhile. Information like the price you are receiving for your specific wire (e.g., Telco, Cat 5, Cat 6, etc.) and the potential price you would get for chopped wire (e.g., bare bright) are vital pieces to understanding if wire chopping makes sense for you. In Part 2, we will work through an example to see if the numbers justify an investment in wire chopping.
