Scrap Metal is a component in Crystal Story II. It is very common; it can be stolen it from many monsters and it is a common reward for defeating non-boss monsters. It may also be found randomly in chests and received in bulk as a reward for defeating the side-quest mission bosses. It can also be bought from the third town, Port Breeze, for 100G a piece.
Scrap Metal is mainly used for upgrading Weapons, Armors, Rings, and Pendants at any town's Armory.