Metal Monday January 10, 2022 with Nick Snyder and Brett Ekart.
Play the youtube video and follow along with the text below.
Nick Snyder:
All right. Another Metal Monday with my main man, Brett. How you are you doing, man?
Brett Ekart:
Doing good, man. Just getting ready. I've seen you pull up that-
Nick Snyder:
Red.
Brett Ekart:
... copper COMEX. It looks a little bit rough this morning but-
Nick Snyder:
This should be done in a little.
Brett Ekart:
... it's coming back.
Nick Snyder:
Five and a half right now, but it was down what, almost eight, this morning? So.
Brett Ekart:
Yeah, take it with a grain of salt.
Nick Snyder:
And some of the other markets, just so everyone knows, anyone can get these apps, like it's Kitco Metals gives you a rough idea.
Brett Ekart:
You're just looking at... You're just kind of trying to give yourself an idea of what the general market's doing. Not necessarily trading off that number. You're just trying, if you just want to see what the market looks like, just go to the App Store and download the app, and you can kind of get a rough idea of kind of how we track it.
Nick Snyder:
Yeah. It's in my routine every single morning, early in the morning, it's about the first thing I opened is to see what I'm getting ready for [crosstalk 00:01:06].
Brett Ekart:
Sometimes I look at it like I'm looking at a car wreck, like, oh, shit what's this thing going to look like? And then sometimes I look at it, I'm like, oh, okay, this is good, good news.
Nick Snyder:
So last week we had a really good run though. Copper, it got to 440. I mean, we're still in the 430s for copper. We're we're still sitting good.
Brett Ekart:
Yap. Aluminum looks strong.
Nick Snyder:
Aluminum very strong, nickel very strong.
Brett Ekart:
Yap.
Nick Snyder:
Platinum palladium are still kind of up and down real volatile. Rhodium's had a real good run, which is going to help some of our converter prices for our converter customers.
Brett Ekart:
If you notice your converter pricing, I mean, obviously palladium had a decent run last week. Platinum's starting to come off, but if rhodium jumps a couple of thousand bucks an ounce, but platinum comes off 50, your converter price on most of your converters actually is going to go up. Because that rhodium number when it gets strong like that, that's really what drove the pricing last year. In the middle of the year that got to 28 [crosstalk 00:02:14]-
Nick Snyder:
May, June, July.
Brett Ekart:
... like when rhodium hit 28,000. I mean the price of converters when that thing was really rock, obviously at that time Palladium was 27, 28.
Nick Snyder:
Yap.
Brett Ekart:
But platinum at that time was still [crosstalk 00:02:27] around a thousand. Like it wasn't crazy.
Nick Snyder:
It was close to where it is today.
Brett Ekart:
But platinum's just the most commonly known medal that people kind of forget how hard rhodium drives that price.
Nick Snyder:
Well, last week we didn't have our ferrous numbers. You get those knocked out.
Brett Ekart:
This week it Looks like they are weaker than and anticipated. So I think that I don't, I mean, I don't 100% know the deal. I know the export pricing has come down, which then allows the domestic steel mills to take some gas out of it. Lead times are shrinking. I did a podcast with my buddy, Chad Ellebrock who kind of... we talked through the bull and bear case scenario. The bear case scenario was a little bit stronger than I anticipated being, but he's pretty spot on as far as him talking to more it down anywhere from 20 to 50, 60 depend on your region, the Midwest, they really are taking it down.
Nick Snyder:
Midwest toward down 50, 60?
Brett Ekart:
Yeah. Some areas for sure. Depends on the grade, especially on primes, on the cut grade stuff. It's not as hard, but definitely coming down. And I think that people are anticipating February to maybe be similar, maybe not as big of a movement, but if they take it too hard down in January and it really stops the flow. My big concern is if you swing the price down real hard, and right now logistics is an absolute mess across the board. Right? And weather doesn't help that cause, but it really comes back down to supply- demand. If the steel mills feel like they're good inventory wise, then they're going to try and drag it down. But every steel mill I talk to, the order books are still fairly strong. So if that's the case, then at some point something's got to give, but if people sell into this market and they take the 50, 60 hit, whatever 20 hit, 30 hit paying on the grade, then that mark, that price could still continue to move down into February.
Nick Snyder:
Did he tell you why really? Like why [crosstalk 00:04:38].
Brett Ekart:
It's just the ability to do it, the price of hot rolled coils came off. So, the steel mills are running historical margins right now, and there's still a lot of room in there. So the price of hot rolled coil can still come off 20%, and they still have a pretty fat margin on the scrap side. Well, if you go and take the scrap down, 10%, I mean, they're only having to give up 10 of that 20, and it's just kind of, it just depends. I mean, I don't know, I say 10 of the 20, but really realistically that's maybe five of the 20 that comes down.
Brett Ekart:
So, that and export pricing is shitty, Turkey they really got smashed at the end of the year, last year. So China is pretty much non-existent because they're trying to kind of keep stuff at bay, get through the Olympics. That's going to be the real tell-a-tale sign. And my book is, does China go at it once the Olympics are done, and really kind of try, and put some liquidity back into this market and drive their economy.
Nick Snyder:
So we might be kind of sitting in limbo until towards the end of summer then.
Brett Ekart:
Yeah. Realistically, I mean, we could be looking at a March market. Unless there's a lot of pushback from scrap recyclers going into February, and the order books are there, then something's got to give, right? Logistically, trucking is screwed up. I mean, we know that, we're in the trucking industry, and in the Northwest and East Coast. I mean, there's a lot of winter storms that are just creating havoc already on top of a tight, tight logistics market, right?
Nick Snyder:
Yap.
Brett Ekart:
And so it's going to be an inventory/supply deal. That's going to only... that could buoy the market.
Nick Snyder:
Okay. Well, everyone just stay tuned and we'll keep everyone filled in when we know more.
Brett Ekart:
All right. Have a great day, great week. See you next Monday.
Nick Snyder:
Thanks everybody.