Scrap metals are divided into two major categories: "ferrous" and "non-ferrous." Ferrous scrap metal primarily contains iron and steel while non-ferrous scrap metal contains little iron or steel. Examples of ferrous scrap include scrap iron and steel recovered from old automobiles, farm equipment, household appliances, structural steel, and anything else that was made from iron and steel. Ferrous scrap itself is divided into two categories - "industrial" and "obsolete" scrap.
Industrial scrap is generated by the metal working industries. For instance, when a piece of metal is cut, or a hole is punched into it, the metal which is left over is industrial scrap. In order to obtain industrial scrap, the scrap metal processor will contract with the supplier/manufacturer. Along with competitive purchasing, the scrap processor must often provide containers or conveyances as well as shipping services at the industrial supplier's plant.
Obsolete scrap consists of old, worn out, or unwanted metal that has outlived its originally intended purpose. The scrap metal processor purchases this "secondary" raw material from the public or industry and then segregates, processes, and prepares the scrap into specific grades. The processor then sells and ships the scrap to a specific end-use consumer who re-melts the scrap into a new product.