HMS 1 & 2 Scrap: A Buyer's Guide
Most scrap disputes are not about fraud. They are about a contract that said 'HMS 1 & 2' and nothing else, leaving two parties with two different pictures of the same cargo.
The two grades, plainly
HMS 1 is clean wrought iron and steel scrap at least a quarter of an inch thick, free of coating, prepared to furnace size — typically no larger than one and a half metres by half a metre. HMS 2 is the lighter material: thinner sections, galvanised and blackened steel, tubing. HMS 1 melts denser and yields better, which is why it prices higher.
What 80:20 commits the seller to
An 80:20 contract means eighty per cent HMS 1 and twenty per cent HMS 2 by weight. It is a commercial convention, not a law of nature: 70:30 and 90:10 both trade. What matters is that the ratio is stated, that the method of verifying it is stated, and that a tolerance is agreed. A contract that simply says 'HMS 1 & 2' has agreed nothing.
The contaminants that stop a cargo
Closed containers of any kind, because they explode in a furnace. Oil and grease above trace levels. Non-ferrous attachments. Concrete, wood and dirt, which are paid for as steel and melt as nothing. Radioactive material, which will get the whole consignment quarantined and can close a mill for days. Every serious contract carries a radiation-free and explosive-free certificate, and every serious yard screens for it.
Structuring the inspection
Inspection is where a scrap contract becomes safe. Nominate a surveyor by name — SGS, Intertek, Alex Stewart, Cotecna, Bureau Veritas — and give them access to the yard before booking, not on the day of loading. Require photographs and video of stuffing, weighbridge tickets, container and seal numbers on the report, and a radiation certificate per container.
Structuring the payment
The classic scam runs on advance payment against photographs. The classic defence is a letter of credit that pays against the surveyor's report and the bill of lading, or a split where a percentage is released on the signed inspection report and the balance against copy documents. If a seller refuses any independent inspection, that refusal is the answer to whether to trade with them.
Before you sign
Check the ratio, the size preparation, the tolerance, the surveyor, the radiation certificate, the weighing method, the load port, the shipment window and the payment trigger. Nine lines in a contract prevent most of the disputes that scrap buyers spend years learning about the hard way.
Where these rules are published.
The bodies that set the grades, limits and contract forms referred to above. Links go straight to the issuing authority.
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