welcome to a scrap life a podcast solely focus on the hustlers Grinders operators and business owners who live and breathe the scrap metal industry every day we are the original recyclers no suits required just guts and hard work here is your host Brett eart all right we’re back November 2023 I can’t believe we’re already the last two months of this year it feels like the year just started but here we are I got the man the forever bearish Chad ellot Rock and I’m gonna stay on the bull side this month because there’s no scrap out there um scrap life Bulls versus Bears volume number 452 let’s get this party started what’s up Chad I noticed you’re wearing an extra thick jacket is that just for show today or are you trying to say it’s so cold out there no scrap flow or what’s going on dude I’m telling you outside um on our end it’s a little bit chilly last few days and this I’m saying this in in all thankfulness that we’ve had a beautiful fall in Idaho we’ve had weather I mean spring was wet here but you you’ve had an

awesome fall and then the last couple days it has started to get a little cold on us but it looks like I’ve never like I said I was telling somebody earlier I’ve never paid more attention to the weather I feel like I’m like 80 years old than I have this last few months because of construction and you never you don’t realize how much you pay attention to the weather when you’re like trying to pour concrete and asphalt and build you’re like okay okay what’s the what’s the weather situation look like this this week you know what what can we get done what are we have to delay and so nice thing is it’s going to warm up a little bit the rest of this week um potentially a little bit of rain but generally speaking we couldn’t have asked for better fall weather to get this this some of our projects to the finish line so you’re telling me scrap flows have been just amazing all nice WEA which that’s what’s even scarier to your point that as good as the weather’s been with minimal scrap FL what’s going to happen when this gets

really cold I’m telling you I know what’s going to happen and it’s going to be guys like you in the steel mills calling and saying hey you guys got any scrap over there you guys want to sell and be like not at that price Bud oh come on there’s all kinds of bearish news out there let’s talk about theal Jones dusto average doesn’t it just feel like the Market’s hanging here just we’re in a I will say this have you seen the price of uh Hot Roll coil lately oh hey we’ll get there we’ll get there no need to jump ahead it feels like it’s the opposite of this but we’ll go there here soon so you know as this so this red line is the 200 day moving average and you know what they say nothing good happens below the 200 day moving average and that’s what we’re seeing here so so looks like all so if you’re a stock Trader which I guess I’m not so I don’t have to necessarily worry about it but it feels like that’s not a good sign moving forward so maybe we should buy buy the

vix the volatility index well it definitely feels like you know we’re in a downtrend right now so maybe times will turn but doesn’t feel like a lot of I I’ve did listen to a couple earnings calls over the last month or so and it feels like there’s not a lot of um positive projection out there yeah it’s I think that it’s people those initial interest rate raises right you don’t really feel those for a while and I think those are starting to kind of the cumulative effect of the interest rates you know where they’re at and staying there I think those are going to start wearing on people and those take time just like low interest rate takes time and then for all that free money to hit the system it took time for inflation to really ramp up I think the opposite is true right if it takes a little while for us for people to really feel the pain of of high interest rates like when they need to go buy that new car they need to go buy that new whatever and they relying on financing to get things done then

all of a sudden you’re going to really feel that pain because people are going to push that stuff off they’re not going to buy it yeah the the Repo Man should be busy again I would think exactly all right so what do you what let’s let’s talk about another bearish chart here you know every everyone says steel and crude oil are linked together and this this chart we’re showing it’s down 7% month over month around 91 bucks to 84 what do you think does anybody know that there’s like two Wars going on right now like in the does anybody realize like that that that’s happening that it’s trading it’s trading oil I mean I don’t know I mean to me it feels like this chart’s a setup does I mean you’re you’re much more of a Trader than I but I mean what do you feel like the the future of the price of oil looks like well on the on this side to again we have the red line the 200 day moving average and it’s every time it gets close you know the last two times it’s it’s well one two three

but four times we’ve we’ve bounced off of it so yeah you could argue that the trend is going more likely to go up than than down but but I would agree I mean you got the US it feels like they’re doing you know I think we’ve uh the US did a deal recently with Venezuela to release some oil it’s it’s like you know we won’t we won’t do deals with terrorists unless you know it benefits us so well yeah and ultimately like what about the Strategic oil reserves like that are that have been you know pretty much decimated over the last year and a half I mean ultimately nobody wants to talk about that but I think but it’s I mean I can’t believe that there’s that many electric cars out there that they don’t need oil anymore that’s a whole another topic of conversation yeah so let’s let’s keep moving here steel production rates you can’t really tell from this chart they dipped um shown a decrease of I think we’re around 75.7% uh last month now we’re around 74.1 not a you know around two one and a half percent

drop and we we’ve seen a lot of shutdowns so it’s like they almost orchestrated orchestrated it what do you what do you think I orchestrated is a is a great is a great word for for for that situation of like hey one know how we put a floor underneath these prices we just stop making the right I mean we all have a convenience maintenance ERS at the same time so that we can you know work on stuff but I don’t know over here in the like the Northwest we have I mean new cor um in Utah they had put a new furnace in so their Buy has been slow um I heard that you know Cascade steel mill is going to do some maintenance this month so I think strategically every where it’s it probably makes sense at some point if you’ve enjoyed fairly healthy margins on your finished goods then if you’re not enjoying those healthy margins anymore and you’ve got the bandwidth to take up some outages and whether you’re going to install a new furnace or do much needed maintenance because they’ve probably been running pretty hard the last couple years

just trying to you know put hay in the barn you know which I don’t blame you that’s that’s exactly what I would be doing right so so I mean I feel like like you said that there’s it’s strategic to a certain extent and just probably necessary but it’s that chart if you look at it I mean in all reality if there’s the the production side and you’re still making you know it’s it’s it’s still I mean relative to previous years it’s not a terrible looking chart I would agree but you know we’ve seen we’ve seen some shutdowns we’ve seen some production rate dips and this is a pretty I always say like anything over six weeks like just go bu scrap right on hot roll and and we went from what was it five to six weeks we’re at last month we’re over over eight weeks now or at eight weeks so that that that to me is a a strong correlation um of what what’s happening and when lead times jump like this obviously there’s what what’s going to follow and that’s that’s price and so and we and we’ve seen that let’s

see here go to this so regardless of what’s driving it you know if your lead times are that that long and I still think that that’s that’s still a positive indicator Am I Wrong Chad no I I to me anything over anything over six weeks is a very positive indicator and you can see that I mean we we went on Hot Roll we went from around 700 bucks to to 864 bucks a 24% increase yeah and so that’s a big jump and and I know a lot of Steel guys and scrap guys don’t think these moving averages have anything to do with anything but we’re kind of pausing here right at the 200 day moving average so it’ll be interesting to see how how we how we move forward but but with that being said the I go I’ll go to the next chart here so we’re looking at Hot Roll we just talked about that but the Futures chart on Hot Roll is still very optimistic so it’s showing 960 so we still got another it’s saying another $100 between between now and January interesting and what do you think that what do

you think on your in your opinion can be the most attributed to what’s pushing the Futures chart well I I think you got long lead you got longer lead times it almost felt like this year we we thought I I feel like as a Trader we always think whatever happened last year is going to happen this year right like it doesn’t matter what what happened last year how anomaly it was and last year it was anomaly we had Ukraine Russian war pigar go crazy q1 went berserk on scrap on scrap substitutes and then we just bled the rest of the year through literally through even through the fall this year it felt we didn’t go up as much in the first quarter but we did have a pop you know you a lot of lot of Mills and service centers bring down inventory late last year you created again a a short a tight supply chain line all the way through the process first quarter comes everyb tries to buy big run up in pricing and then not as much but we’ve seen kind of a slow decline all this year in 2023 and

I think everyone in back their head was yeah we’ll just be stagnant to down for the rest of the year then you have the um UAW Automotive strikes again that feels like okay yeah just the same Playbook as last year but then all a sudden it felt like we had a lot of lot of steel mill shutdowns all at the same Time created some a sense of a bottom all a sudden that lean Supply supply chain tightened very quickly Le times went pricing went and we’re quote unquote bottoming here in October versus January which is interesting but notoriously I mean if you look at like not just a one-year history but notoriously November December were are usually fairly good months on the scrap side right I mean if you just going back you know 10 20 years I’ve always heard that you know November and December are good months just because Supply gets a little bit tighter on the scrap side and then if you have a year like where we’re at today which you know it’s hard it’s hard to argue that supply has been tight since maybe like 2020 like coish

type you know bumps in the manufacturing process but you know 20 2021 2022 has been was decent on the you know supply side people you know the demo Market was was was pretty strong the manufacturing Market has been pretty strong up to this point but you’re starting to feel and see some of those like the demo Market is you know slowing down a little bit you know and your big big demo jobs your uh the manufacturing site is starting to kind of slow down a little bit um and so it feels like that has played a played a role on the supply side which then makes you wonder you know is is that going to be good for scrap going in November December which are notoriously good months if is if there’s the supply lacks well and and and furthermore on this chart you can see on the I mean there’s a Tale of Two Worlds here right like in the US we’re at you know the Futures market for January is at 960 in Europe same product it’s at 650 so could could there be ational Supply Prime you know bushling available overseas

that could come our way I would think the answer would be yes yeah absolutely I mean and that’s what you kind of have to guard against to a certain extent as a domestic supplier right of prime is prime travels a lot easier you know when the spread because when the spreads get that wide you know what I mean it feels like that’s when you’ll see an influx of it so you kind of if you’re a seller of prime or that’s kind of what your specialty is then you got to be kind of really weary of like what that number looks like I think yeah I would agree and U Imports also so you think okay we got to have a lot of Steel Imports and year of year we’re we’re actually declining I think we’re down 12% year-over year on us steel Imports so now this data is lagged that’s August this is looking through data through September so we don’t have Octobers but but either way it’s probably not a big huge change so that’s telling too well I think like it’s it’s been a I was looking at a chart two

or three days ago and they’re showing like kind of China’s um trajectory curve like coming through Co and like obviously they feel like you know the us maybe Europe is kind of on the downhill of the of the hill of the slide they know kind of crested and like coming off versus China is just on that beginning to to climb whether that’s true or not you know I think it’s one person’s take you know put a bunch of charge together but if it truly is you know and and that which then tells me the reason the reason why you know your your us steel Imports are coming off is because some of these other countries the US included like we’re going to maybe manufacture a little bit less so we maybe need a little bit less steel from other countries especially we’re getting the supply domestically that we need at a reasonable price what and I think there was a news today that the Chinese government said they’re going to give like 1 trillion yen Teala Steel sector to help kind of boost things which is I don’t know the conversion maybe $240 billion

dollar US dollar equivalent yeah and so all those factors I would think that is just another indicator that yeah things are slowing down internationally yeah which means here comes the helicopter money yeah and so I mean and here’s another so next chart we’re going to look at is um what which I think is telling is the turkey of us origin scrap 8020 or heavy melt right and so the one the one I think is interesting is the gry line here this is the fairis number one heavy melt New York delivered export yard yeah and that went that went down month for month 280 to 26750 and so you it’s it feels like things are are firm in the United States but exporters are still cutting pricing well and part of that what we can still attribute to a strong dollar right you’re starting to see some relief like lately but it’s I mean I mean in the long run we still have you know compared to the Turkish L and some of these other currencies Ian we still have a really strong currency which then for us I mean is there a is there

a motivating factor for you know um for for us to ship you know for them to buy from us when they could maybe buy from from somewhere else um but uh that that tells you you know to a certain extent I mean where you know was would we be a strong export country for them probably not I don’t know yeah so we have done I think like eight eight vessels or eight cargo vessels this this month which is it’s pretty it’s little above average normal volumes and so that that’s telling that they’re still selling you know and these poor steel mes over in Turkey Brett look look at this margin chart I mean they’re around 200 bucks now there there’s no way they can make money at that yeah there’s no way you could make money that in the United States with all the red tape that we we have to we have to do to make anything but over there it’s probably pretty good margin for them right but nothing like 2022 when they’re at 350 I mean you know kind of reminds me is are the are the the steel mills similar

to the um the uh Automotive exacts where it’s like I mean everybody’s got to make their 22 mil a year so they can you know feed their family well well I I really do think rebar man should be weaker you know you think about the Israel U Hamas War potentially that you know Israel buys a lot of rebar and so this would be a direct impact to Turkey there so well I mean and what comes I mean I I always say War creates a demand for scrap right either in the short term or the you know medium term because it creates a lot of Destruction it creates a lot of in order to do that in order to create you know the necessary equipment needed to fight a war whether it’s guns or tanks or whatever that all requires steel it all requires you know scrap and so it’s it’s it’s not the the ideal way of of generating demand in my opinion I’d rather just be like production because the econom is good but you blow up a certain amount of buildings you’re going to need more rebar you know you need a

c certain amount of Steel for tanks you need a certain amount of you know whatever for guns I mean I think that there’s there’s some correlation there as well see see I I can’t negotiate with you I mean you you just turned my lack of demand into creating more demand so I’m glad I don’t have to trade with you that’s what I’m here for I me it’s coming it’s coming all right I got one last very bullish chart for you I think you’re gonna really like this one and so we’re looking at the bushling uh Futures forward curve and this is another reion where somebody is is pretty pretty bullish out there and so we’re looking at this January the bid the ass for example is $500 and so I was looking at this chart I look at this chart quite a bit and a few weeks ago uh I guess so what was it two months ago bushling dropped 50 bucks a ton and this Futures Market was trading like at 470 and I thought man that would be and I knew some guys that were holding bushling because they didn’t like they

didn’t like the down 50 yeah and so I was like man I don’t know I would probably HED some of my bet sell some at 470 and you know half half what you got in the ground and it’ll just be a good offset right and I don’t know if anybody I talked to was convicted to do that but here clearly I was wrong because it’s tired today but but that usually um there’s some pretty sizable players playing in this market so do they know something we don’t know we’ll find out well and I mean what kind of a bet does it take to move that market 30 bucks right I mean it’s kind it feels like to a certain extent that steel Futures you know bushing Futures it still feels fairly thinly traded right so I always people ask me about like you know the pgms a lot what do you think about this what do you think about that and I’m like you know Platinum is you know is a you know very commonly traded material versus say like a rodium which is very thinly traded so one one cell you know that’s

a decent size moves the whole thing right a lot and then like it definitely makes you wonder if there’s somebody out there pushing that market for their own interest or if there’s really that kind of demand potential or that pricing power potential out there not to be bearish because I not I believe that this chart is correct but well that mean this would indicate we got a 100 bucks to go on Bush Ling between now and January and and my experience has been that my friends that do trade uh Futures they’ve I don’t think have been rewarded for it because they feel like they’re always on the wrong side you know if you’re Hing your bet it’s one thing it is what it is um but as a speculation it doesn’t feel it feels like the the person with the vi on the other side is some of the major steel mills or or a major steel mill and and they’re ones that are seem to know a little bit more than most you know and so that that’s that’s why I think it’s another reason why this hasn’t really picked up a lot

of steam on volume is because it’s no fun when you like think about last last January or or the January before that where you see a big number you think oh man that’s great I’m selling and then it rips another whatever $100 like we’ve seen in 2022 so yeah where you’re like oh but then but the old saying goes never you can’t go broke taking a profit or whatever that that is sometimes it sounds better in theory when your eyes get wide and you’re like oh maybe just a100 more dollars or maybe $50 more dollars it comes back to bite you in the ass I’ve been there more than my fair share of times but but I still think that you know it this is part of the whole mil consolidation discussion where they have the ability to push that price of of bushling especially down or whatever way they want if they can feed themselves you know right if they’re their own best their own best customer to a certain extent and then if you’ve got export price seen hanging around and whatever then all a sudden you’ve got you you’re kind of

negotiating you’ve got two to negotiate against you know just the LLY old scrap guy trying to uh make a living you know well I I thought they took that out of the scrap guys Playbook there you know you regionally you kind of push the market down yeah dude they they did it to they like know we’re tired of you guys trying to control this we’re going to go buy up most of the big bushing players we’re GNA run this Market if it was only that easy right I know I know I still think that you know us us small mediumsized guys we still got a chance we just got to pick and choose our spots and be smart and deal and find good people to sell to right people that have our best interest that are looking for you know a long-term relationship that want to do business over a long period of time and even though you and I talk to lot to each other a lot ultimately like we don’t have to sell and buy from each other right so it’s a little easier but I think if you can find

you know good consumers for your scrap and be consistent but also keep you know keep them honest you know I think that’s the biggest there’s a there’s a little bit of both in there that that’s required to to be effective you just got to kind of find that balance in there somewhere so what do you what’s your advice for the the smaller to mediumsized um scrap guy they probably had an okay year they’re heading into the winter here you know they probably don’t have a whole lot on the ground what would be your recommend advice for the month of November I think it depends on your cash flow situation like if you’re just Ferris or you’ve got other you know forms of Revenue I think you could probably maybe take a little bit of a flyer you know this and then because the problem is like depends on where you’re at like regionally like we run into Trucking issues we run into Freight issues just because of the weather it’s GNA you know so we try and keep our material moved the best we can every once in a while you’ll see me I’ll

I’ll I’ll put some iron on the ground if I feel like I’m totally getting like the shaft but generally speaking like I try and keep the relationship I try and keep stuff moved just because this business is not what it once was of just see who can build the biggest pile you know you don’t get necessarily rewarded if you put 10,000 ton on the ground but you can only move 3,000 ton a month because of logistics you’re really then you’re kind of betting for three months right plus whatever you can buy in the meantime and I don’t know I as I’ve gotten a little older I like to play that game less and I’m just more like I want to find people I feel comfortable that want to treat me right and just do business over and over make a little bit of money try and keep the lights on keep some food on the table and uh and so my advice is is keep scrap moved because this Market is very you know wobbly it feels like to me I mean yeah that maybe the future does look fairly bright on

bushling but if you’re a small yard you’re probably not a big bushling you know processor either you know you’re probably more of an HMS you know light you know tin you know white goods shreddable material which that you know we didn’t see any zor sh you know shredded charts but you know I feel like that that grade is going to be soft this month I mean potentially sideways is at least over here I don’t see there’s no real nobody pushing that market unless just um I don’t know I just I don’t see that market moving up in November I think both the copper Andor Market were fairly flat month over month yeah I mean which makes sense 366 copper today you know aluminum still hanging on a bucking some change so it’s nothing’s really really you know pushed too hard so we heard to here first we’ll see Logistics is the name of the game especially when the snow is always and and I think what you Riv Rivers freezing up right like in your area oh yeah here we go Rivers freezing up you know TR Planes Trains and Automobiles don’t work when

it’s cold outside so we you know hook up the horse and buggy and get the scrap delivered to the steel mill I’m sure that’s exactly how it works exactly exactly well we did it we nailed it we got her done man all right if uh if anybody has any questions feel free to reach out to uh chat or I and um this full thing will be posted on the this month’s newsletter go through check the podcast out give us a give us a call and until December we’ll talk to you then thanks Brett all right man take care