Metal Monday August 23, 2021 with Nick Snyder and Brett Ekart.
Play the youtube video and follow along with the text below.
Nick Snyder:
All right, Metal Monday. We had a weird week last week.
Brett Ekart:
It was a doozy.
Nick Snyder:
Copper got its kicked, but today has been much, much better. And it recovered a little bit on Friday too.
Brett Ekart:
Yeah, I think...
Nick Snyder:
Was Thursday that blood bath day? What day was it where they just got killed?
Brett Ekart:
Thursday it was for sure. Friday wasn't very pretty on the PGM side.
Nick Snyder:
But copper recovered a little.
Brett Ekart:
Yeah, the base metals were just hanging around, but Thursday was the day when you just want to... When I start the day and then about midway through, I'm like, "Well, there ain't nothing good happening today. I might as well just go home and wait about until tomorrow."
Nick Snyder:
I think it was 2012 when things were really good, but then they just started going like this for like a year.
Brett Ekart:
It was 14.
Nick Snyder:
Was it 14?
Brett Ekart:
It was 14.
Nick Snyder:
It was 14. I was scared.
Brett Ekart:
And 15.
Nick Snyder:
It was death by a thousand...
Brett Ekart:
Thousand cuts, is what I always say.
Nick Snyder:
So it's refreshing to see a little recovery today and...
Brett Ekart:
We'll see, yeah.
Nick Snyder:
It's natural in a healthy market, if you see it up consistently for six months, I think you got to worry too.
Brett Ekart:
Yeah. Everybody would like to see $4.50 copper again, right? $5 copper like what we keep preaching, but ultimately, it has to take a break at some point. You just hope the break doesn't turn into a long-term sell off. So obviously, I always said, if I was trading metal futures for living, I probably wouldn't need to just sit here and talk about scrap every Monday or run a scrapyard. But I think we have a pretty good feel for what we want to do with the commodities that we intake.
Brett Ekart:
And I was reading a quote the other day, and I really liked it. And this is my take on it, right? So everybody has their own way of doing it. And obviously we have really good contacts within the hedging side, but we don't hedge. And that being said, we hedge with physical material, right? So we've always said we'll hedge by accumulating material and we feel, if it's a soft market, then we'll hold, and that's our hedge. When the market's screaming up, then our goal is to process it quickly and get it out so we don't necessarily have to hedge it. We just get it production, get it out. And then as the market comes off, then we sit back and hold. But as a commodities trader, you can be essentially two things. You can be a broker, which is basically, you don't ever take possession of the material, right? You buy it for a dollar and I buy it from you for $1.05 because I got a buyer for $1.07. I just take that chunk out of the middle.
Brett Ekart:
So you never really take possession because you're selling it as soon as you're buying it. In our situation, I feel like we're more true commodities traders because we're actually taking possession of the commodity, whether it's platinum plating, rhodium from a converter, or copper wire or aluminum or nickel in the form of stainless. And we're truly trading that commodity. Sometimes you win. Sometimes you lose, but then the only way to really get the true upside is to take physical possession of it and try and ride a wave one way or the other. You can argue 10 different ways of doing business and somebody can tell you that that's not smart. You've got to take your profit and move on. Well, at some point, yeah, I agree. You so need to take your profit and not get greedy, but you also have to be willing to take physical possession of the material and look for that upswing. So that's how we play it on our end and right or wrong, that's our...
Nick Snyder:
It gets scary because February, 2020, we closed the deal to buy a very... What was it? 120,000 pounds of copper?
Brett Ekart:
Yeah.
Nick Snyder:
We closed the deal, we locked them in. Then the corona stuff started happening in March and everything took a shit, and it got ugly. But we honored our quote and we had to hold til the market got back to where it was. And we didn't make a killing on that, but we held it, and we moved our other stuff and adjusted accordingly. And that's where the risk is. I'd say 95% of the scrap yards are doing similar risk.
Brett Ekart:
Yeah.
Nick Snyder:
Because there's not a whole lot of hedging going on out there.
Brett Ekart:
And we have a lot of relationships with brokers and that's just a whole different business model than a scrap metal recycling. You see a lot of scrap metal recycling companies as they expand and they expand into the brokerage side. Well, I have a lot of guys that I do business with are brokers and they really are just brokers. Because I think that the actual scrap metal recycling facilities are more commodities traders because they're actually taking physical possession, processing it, either packaging it, repackaging it, whatever, and then selling it into an open market. Versus brokers, it's relationships. It's the front end, the consumer on the back end, the front end, who's processing it. It's just a different business model. Respect for everybody doing it on both sides. But I prefer to be on the trader side.
Nick Snyder:
Yeah. I like it. Well, any, next week...
Brett Ekart:
On days like today.
Nick Snyder:
On days like today.
Brett Ekart:
Versus Thursday, when you're like, "I'm out. Fuck, I'm going home. I'm going to call it a day today."
Nick Snyder:
Any rumblings on iron yet?
Brett Ekart:
I haven't heard anything, to be honest. I don't know. I don't know what to... Every time I think I've got a feel for it... I feel like it's a sideways market, is what it feels like to me.
Nick Snyder:
It will be a few weeks out on that, but we'll keep everybody posted. Shout out to my brother-in-law Chucky. He bought me this in New York.
Brett Ekart:
Yeah?
Nick Snyder:
I love it. It's my new favorite cup.
Brett Ekart:
Well, that's a good. It fits your personality.
Nick Snyder:
Mm-hmm (affirmative). Yep. Everyone cheer up.
Brett Ekart:
Yeah. Have a great day.
Nick Snyder:
All right.