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 Eckhart all right we’re back Bulls versus Bears March 2023 I think that one of the questions we ended with last month was do you think we’re at the top of the market for the year little did I know because I’m just guessing like everybody else that uh that we would be in a position now where maybe this Market’s starting to heat up a little bit um Chad Mr Ella Brock thanks for coming back again and uh bringing your awesome charts and uh your awesome attitude and let’s get this party started man right you ever maybe you’re a kid or maybe you were a kid that had like a teddy bear or something you snuggled with all the time that just over the years just got beat up and rugged you know yeah I stuck on my pillows at night I mean I got 10 pillows no matter why

it’s like how many pillows do you need I’m like more more I feel like I’m just a beat up beat up Bear right now I mean yes everybody has their day in the sun man and uh I’m hopeful the way that well the way that let’s talk through briefly the way the 22 ended it came in like a bull I mean it came in hot you know obviously the whole Russia Ukrainian kicked off I mean that Lit the markets on fire the Fed was printing more money than than uh and then Kleenex was putting out toilet paper or whatever you want to however you want to say it and so it was it and it ended it ended not pretty right so it doesn’t really matter how you start I mean I’ll take the win at least it feels like out the gate it kind of has to do with sometimes how you finish but how did 22 finish you know it’s very uh bear-worthy yeah yeah well you know and we did did give a we gotta give us a little bit of credit a lot of people felt like 2023 would

be a year of volatility and boy oh boy does it feel like Marge is going to deliver a lot of volatility oh man I’m ready I’m ready to go through it I saw for those of you that don’t know Chad puts out um his Bulls versus Bears points even before this conversation I saw it on LinkedIn this morning so go look if you don’t have you ever found him on LinkedIn go find him and then look up best scrap ever correct yeah best crap ever either on LinkedIn or bestcrapped ever.com not selling anything it’s giving out information yeah he’s giving out information and you’ll see some of that on this podcast as well but you know he puts those points out early and at least gives you something to none while you’re trying to negotiate um your scrap cell for the for the month so go check it out all right let’s hit it all right so the first chart I’m going to share here is the the crude steel production and I’ll tell you why I’m sharing this okay yeah so if we’re looking at this chart for those that aren’t that

aren’t seeing it is I mean we’re still 100 000 tons off uh by per week uh weekly tonnage of of good steel production year over year both 2022 and 2021 and so how we’re all went nutty the last you know 15 20 30 days since we talked last and it feels like the big question I had was well where’s the demand like where’s this coming from how did we not see this but when I look at when I look at this jar I’m like oh like we’re a big jag off last year so we are still slower it’s not like it’s it’s not like our this demand is still keeping up with last year no we’re off quite a bit right well especially you start looking at 21 like that’s especially 21 like August I mean danger the end of the year that’s it there’s a significant difference on crystal production you know the last half of 21 or the middle you know third quarter 21 versus where you’re at today yeah so that’s where I’m I just feel like we got to keep that in mind that we’re still pretty far off uh

last year so so meaning meaning we could have more demand I mean the demand picture could get continue to get better before and we got a lot of room to go before we even get close to 22 or 20 21 levels okay and what and what is like if you ran those charts comparatively like let’s say 1674 versus say roughly 17.50 um and so it’d be like you know 1.6 versus 1.75 whatever that is is is wonder what the pricing the spread on the you know the HMS price or the bushling price is um but if you’re a month over month compare those yeah that’s that that is a great question I mean there’s got to be some correlation with demanded price of course right obviously yeah but and even the margin I mean margins would be a whole other steel mill margins would be a whole other really interesting chart but yeah it’s definitely you know I think we’re in a supply-driven market I think it’s you know I’ll just let you say it it’s graph’s tight there’s no scratch the scrap flow is shitty good luck trying to

find some you know there’s just no flow I don’t know what to do there’s no flow I took a picture and sent to my buddy this morning I got three inches of snow on my outside of my driveway this morning tell you what there there was an ice storm in Michigan last week there’s just no flow yeah it’s about to make scrap flow like three inches of snow all right well let’s let’s start with some bull points that way I can at least you know maybe get come up with a bear point to feel okay about myself later in life so okay so let’s let’s jump in so iron ore not up a lot but it is up three percent so you know what really this tells me is that China’s they’re they’re they’re coming along right they’re not going gangbusters but they’re not slowing down either so and I think you can always see that in iron or demand so that’s that’s always a chart that I think is important to see what it’s done month over month and I feel like they’re just scratching the surface because if you read the if

you read the news lately I mean they are trying to they’re just starting to discuss their own stimulus plans right like where we’ve already been through probably three different stimulus plans here here in America I mean they’re just starting to discuss like what do we gotta do to get this economy stimulated and rolling I mean they’re kind of coming up with a few different you know you know they’re just starting to roll that stuff out right I mean we haven’t even seen what it looks like if they really want to put gas on well on your point uh I think Elon Musk is in a little bit trouble at least you know CNBC had a great article a day they were talking our great newscast they’re talking about uh on on Chinese social media there was a lot of pressure um on Elon to basically you know where you eat don’t go to the bathroom and basically the idea is that you know he’s talking about Wuhan theory about the virus starting in Wuhan right like kind of on purpose it’s not a theory Chad just so you know was they tried to say

that that was that was like I mean remember when like the Fox News and other you know the right conservatives are trying to say that from like the gate and they’re like oh that’s BS you that’s don’t ever don’t listen to that now all your left-leaning people are like well actually maybe it did come out of a ladder like you don’t say it great great we just lost half our podcasts I understand what you’re saying all right all right so let’s go to the next one here so pig iron so anyways back real quick back I’m sorry to cut you off but sorry but not sorry yeah I wear my American flag hat with pride um I uh I was when what they’re basically saying right is like be careful of of promoting articles that are you know where because he’s like basically the a big portion of his Tesla sells are in China right in this big production and you know a lot of his production is going on there correct yeah yeah and a lot a lot of room for their growth and so basically they were saying hey is you

know we’re talking to governments we’re talking to investors we want people to invest in China we want people like kind of on your note that they are trying to drum up business again and you know Elon Musk put out some uh some hate right now is is really against their agenda kind of what you’re saying and that that China really wants wants people to look at investment again so why is hate just like reporting the news anymore like you know is what we’re hearing like I’m not like just hey here’s the news yeah you know you know I agree and that’s I mean I think why I like following the scrap Market when I’m you know twisted like that is because there’s a lot I mean that’s why I like these charts because we all have our theories but the other day what the charts say it gives us some data points so yeah and that’s that’s why I like I like when you’re when you put them up just because it gives anybody wants to see him you know you can come check it out yeah all right so pig iron so I

think this is a good point because well when the Market’s going down right yeah scrap substitutes prices become less relevant because you know they have there’s there’s less demand out there so you can put some pressure on Supply right and so but when the market turns you really got to keep keep eye on this because if Austin which I we might have here right so pig iron prices are up there are 506 to 535 brought through our brought To Us by our friends at Davis Index right yeah yeah so five six percent so that that tells me that if whatever the scrap Market is going to do if we if bushling goes above that which you know who knows right um there’s a lot of excitement out there if it does that’s when you’re gonna see a lot of imports come in yeah on the Scott substitute side and right now if you look at this if you look at those numbers year over year uh Scott substitute Imports are down and so I don’t I don’t think there’s going to be from what you know the data’s in rears we don’t know but

right now it doesn’t feel like there’s going to be a landslide of vessels of pig iron coming in to to put a cap on the scrap Market which is good really probably as much it’s it’s probably really good for like the bushing you know Market you know the cut grades are what they are you know but they’ll get they’ll get a ride the wave as well yeah absolutely all right so what so this is this chart is just unbelievable to me so we’re looking at the U.S Midwest domestic Hot Roll coil steel uh Futures chart yeah and I mean we’re up 35 month over month we went from 785 to you know close to eleven hundred dollars so you see that blip after 22 it goes about what is that like May 22 and then it crashes down right for the last half of the year last year right see you’re wearing my bear hat for me yeah dead mountains huh dead cat bounce that’s that’s if it is so I and this is this is me I shouldn’t say it’s out loud but I it is what it is I have a

hard time writing my tongue um I told my guys on the steel side because I buy a lot of steel pipe right um for uh our for Treasure by pipe and and I said hey like because they’re jacking our price up too because it said you know that that price comes out you know off the cold roll price and and I said buy what you need because I saw this happen last year and I was like don’t buy into it I said don’t load up the truck thinking you’re gonna get 2021 pricing that it’s going to go to the Moon you know I say I said I don’t see it now it comes up and levels off great I said but I can see this thing do going the same way you know see you know you know what we say in the scrap business the trend is your friend yeah and while we’re going up you know if you look back since 2020 uh you know mid 2021 the trend is your friend and that baby’s still going down yeah and I heard John gross say it before in the relating to the

Copper charts he’s like you know as it as the market picks back up steam he’s like it it it it does give you some good bounces but the highs are lower and by that yeah it’s going to come back up but you’ll never reach that you know if you’re if it’s trending down you’re never going to reach that 15 100 100 price again right you never hit you’re gonna get to 2 000 or whatever like I think you’re gonna get to maybe you get to 1200 and then when it once it once it hits the top you’re gonna set lower lows which means below 6.50 I think you know yeah yeah and I don’t I think you know overall feeling is still 2023 a lot of volatility so I think no one knows I think when you when when people are expecting a volatile year I think everybody gets a lien just like what you said let’s not load the boat on pipe right let’s just buy what we need and move on and so you’re just seeing a lot of companies buying what they need keeping up that pipeline very tight all

throughout the supply chain and I don’t think we’re with I don’t think we’re through the supply chain woes yet no no and I don’t know no one knows what what hats on drop next right like I didn’t I wouldn’t predicted six dollar eggs you know last year right but here we are so makes you want to buy some chickens though sound like my wife all right back so on on the topic of Hot Roll yeah this is a chart that I think is is one of the most important indicators out there when it comes to demand because we’re all we’re all really in the dark unless you work uh for one of the major steel mills right and so um Argus does a great job they have a lead time chart and in baseball we’re looking at month over month Hot Roll yeah it was somewhere around five weeks now around six to seven right and why I think that’s such a big deal is is because when you’re a scrap buyer and your steel mill is sold out for the next six weeks that means the next month they went that next Max

buy they want you to cover they want you to cover because you’re locking in your margin right yeah and so it’s like just go out and buy scrap don’t miss it you know because yeah whatever today whatever we have our sale locked in but we don’t have our our raw material locked in so that’s why I think I want people to like understand the point you just made and because the reason we’re doing this we do this podcast is as as as as recycling companies and steel mills and the scrap consumers like everybody that’s involved in the chain like you have to know like why we do the bulls and bears is because you got to know you understand the lead times understand the importance of you know like I said every whether my so my my problem is a lot of the Mills where I’m at they’re they’re melting rebar so their rebar Market’s different than say the hot World cold will like the coil Mark so I’d have to find a balance in this chart versus what what’s going on the rebar and the construction side right but the importance to understand

is if you’re getting strong lead times or longer lead times and that means like just what you just said that means Mills are locking in a sale price right now at at six and a half what you know right six and a half weeks so they have they they named that male melts just for an arbitrary number 50 000 100 000 ton a month they need to be able to lock that much scrap down so times like 1.5 right six and a half weeks a month and a half worth of Supply however you want to do the math knowing that they have to be able to at least cover that let alone if they want to carry any inventory or they feel like the price movement or trend is going to keep going so when you’re negotiating you’re having that conversation just understand what your meals are melting understand what they have what their demand picture looks like so that when you have a conversation you can have an intelligent conversation about all pieces and components right because you you both you don’t need you don’t want the mill to take the L

because they need you need them but you also want to negotiate yourself into a strong price because you’re having to compete against other people selling to that meal so just understand the reason the whole reason we do this podcast is just for you to be informed and be able to make an educated decision on what you’re doing with your material well and to your point about your rebar comment the reason I focus on Hot Roll if you look at eaf capacity in the U.S the Big Kahuna on any product they’re making is is coil right Hot Roll cold roll coil yeah and so yeah you have increments of like obviously there’s rebar and plate and all different Mills throughout the country but the Big Kahuna when it comes to capacity and demand is Hot Roll so I couldn’t agree with every anything more than you said right there that’s awesome I think and everybody is different like if you’re close to an export Port you need to pay attention to what’s going on the export side and the strength of the dollar and what those markets look like if you’re close to domestic

Go real hot roll meals like whatever you got to pay attention to that and just understand the Dynamics it’s not a one for one across the U.S like there’s a lot of moving Parts well I always get a kick out of uh you know what scrap worth someone else is willing to pay right yeah yeah some for some some reason it seems like uh scrap guys forget about that when they’re selling but when they’re buying they sure know how to they sure understand that hat right wait what’s the other guy playing nothing yeah okay me too all right back let’s jump back to Steel here so uh this is another point it’s the US deal Imports we’re looking at uh year over year uh what we’re done we’re down 14.4 percent this number right here right and so it’s it’s comparing percentages 2023 verse 20 22. to me that’s a big deal because that means remember we’ve seen that chart earlier about our crude seal production you know all significant you know my mind significantly year over year we have All Imports also off a significant amount every year so why we

have a surprise in demand you know hindsight’s always 20 20 but I mean you can see that even if we had kind of normal demand out there um they even not you know delete 2021 to 2022. yeah you can see why why here we are on this on this upward trajectory because it may be just maybe like it just feels more upward because say even the second half of 22 was pretty rough right so yeah it feels like you’re moving up but maybe you’re just kind of getting back to where that should have leveled out or could have leveled out so you’re not necessarily going to see a huge Spike maybe you just get some sort of normality back into the market is that kind of where you’re going with that no I mean yeah I would love to see a more more normal Market but it just you know I just feel like because the supply Chain’s so tight and and whether it’s a steel Market or the scrap Market one you know one of the old adjective adjectives in the scrap business is you know we always overreact up or down right

yeah and you know hindsight feels like we overreact on the downside now here we are probably you know over the next 60 days I’m sure we’ll react on the upside and so it’s just it’s just the joys of the game yes yes all right so let’s let’s uh stop talking about steel and how the demand is so nutty all sudden let’s switch to scrap yeah so we’re looking at the 80 20 uh heavy melt turkey price and in this one uh even a couple I mean I was talking to people uh consumers night and I was like oh yeah I think this number’s gonna drift down to that 400 bucks you know obviously they had that earthquake and there’s just they’re just trying to figure their themselves out here and we went down a little bit and boom We shot right back up so month every month can I ask you your opinion on this go ahead month over month the changes month or month where you know at the beginning of February around 4 15 today we’re somewhere in that you know 426 it will change tomorrow I’m quite sure of it uh

so we’re we’re up you know two and a half three percent so in your opinion I mean obviously everybody has kind of heard about that earthquake and you know the amount of Devastation is caused and you know it was the biggest earthquake they’ve had in like 100 plus years right um and and basically did I mean a crazy amount of uh structural damage to buildings Bridges you know just just infrastructure in general and I was having this conversation yesterday with somebody and we were talking about you know what does that do for the steel the man and I was like I genuinely think that maybe the long tail of it is going to drive some steel demand but in the short run I feel like there’s just a lot of just clean up and I mean every time about months of just or reorganizing and trying to you know dig out and figure out what the next step is so I don’t see that like to have a real short-term impact on the scrap side what do you think well we haven’t seen rebar sales go go nutty and there’s a couple aspects

to that uh the government has rolled back some of their their rebar tariffs because they want people to have access to rebar when they go rebuild and so there’s that but but it kind of cracks me up because when I heard about the earthquake I mean your next reaction is there’s an earthquake steel to me I mean people gotta where are they gonna their house does fall down where are you gonna live right I understand it’s not the whole country right we’re not talk you know there’s an earthquake in Idaho we wouldn’t be talking about what you know that in Ohio but yeah I mean it’s a it’s a bigger component I think it’s like 30 percent of turkey’s steel capacity was somewhere in that that area that earthquake so it’s a big deal and like happening in like Arkansas or Chicago or you know yeah like in the US so okay but the initially I I just feel like I keep going back to uh when I took uh technical analysis for stock trading like if you ever watch a stock uh after hours when the earnings call is yeah like the first

reaction is a hundred percent always the the wrong reaction like it’s like like you know if I I was uh I I have some Disney stock and so when Iger got announced as the new CEO like their earnings call it went down and then it went to the moon right and it was like you look in this chart turkey earthquake down and then it pops up you know and it’s not as exaggerated but like the premise is the same right yeah 100 the wrong reaction so it’s kind of funny to me yeah and that’s what I say you know I don’t know like what that timeline looks like but I I think it’s like four six months away before you can even determine whether that’s a driver or not you know I don’t know well I know when covet happened in the US I thought you know I thought for sure steel demand would go down like when when Kobe like I’m talking more to you know 2020. and I remember buying scrap in March it was exceptionally hard because we still had the demand we weren’t slowing down yeah but here are but

our but our stock suppliers were slower of course right yeah and so it was like it was just a struggle you know and so that’s where I’m always like my first reaction I’m always like almost throw it out of the door because I feel like there’s so much room for error there but the pricing and going back to that real quick is the pricing did get kind of crushed for a living because I remember like the probably the second third third quarter of that year like I mean it like the second quarter I mean once once it started going down though I mean it was just death I mean but it wasn’t decked by like a thousand little cuts it was like dagger dagger to the point where you’re like Jesus really I mean because the steel mills were closing I mean everything was like and everybody you couldn’t really there’s a lot you could even do with the scrap right it was just kind of the flow was the flow and and they had really got a lot of homes for it for a couple months and then it turned right back I

mean then it just went well it’s always to me that’s what always is so fascinating about any supplied man-driven Market is you take 10 of demand out yeah it feels like 30 it’s gone right oh yeah same thing on the spice side you take 10 off Supply out it feels like 50 I mean it feels like times like it’s all gone you know and so yeah I just feel like that’s that was that story all right are we done with the bullpoints what do you think dude I mean if you’re done I I feel I’m feeling pretty good I I I genuinely think that you didn’t go over the dollar at all I mean but the dollar has been ripping again today we got a little bit of relief you know March 1st I mean at least you know just because and that’s really because overnight Chinese data came out and essentially their Market was a little bit stronger than maybe somebody anticipated and it looked like you know they’re kind of starting to get the train rolling again um so if we could just get some relief in the dollar I just

feels like Commodities are set to go they got they got some run like some Runway but as long as the dollar sits where it’s at today it’s gonna be tough you know sounds like a lot of good things are coming online that’s what I like to hear that’s the plan man we’ll see no no in in into that point I mean especially when you’re you know non-ferrous driven like your operation you really got to have a good good grasp of the dollar you know I’m always looking from a ferris perspective if the dollar changes you you can somebody some mostly time see it in the turkey price right yeah so it’s kind of baked in for me but uh for your for other than the non-ferrous grades you know it can definitely impact it so while we’re talking about non-ferrous let’s I do got a question for you you want to talk about copper Dr copper doctor no I want to talk about nickel okay so nickel is down you know this is this is a metric ton so it’s like 30 000 all the way down to 25 000 down

18 is this just that because people lost confidence in that or what what’s going on here well I think it seems like lately the the nickel narrative at least last you know a couple years really has been really driven by like the whole EV electric you know electrification of the automobile and everything else and realizing how much nickel is going to be required and obviously um China being you know I think decent you know being decently involved in that market the nickel Mark just like copper and every other damn commodity that the last couple years there hasn’t been as much Demand on the export side so the domestic side’s been kind of been able to drive that bus and then um now I feel that deal can change if the dollar change that goes back to where I feel like the dollar plays a big role in this market and I’m not saying we’re going to get back to 30 000 but it feels like you know talk about a volatile Market lately right I mean just looking at that chart I mean looks like a shark’s mouth right I mean I mean that

there’s a lot of volatility going on in nickel I mean big trades you know big movements a lot of players and I feel like nickel wasn’t really nearly as traded by say future Traders as as it is today like maybe in like five years past or whatever but it’s really become a dominating Factor all the training going on within nickel because of the EV sector and I could be wrong but if that’s what it feels like to me well I just gotta give you a compliment I mean we were we were this close from being Fox News if I thought you’re gonna go down the EV you know never going to happen never going to come straight but you did you stay focused you took you talk only about nickels this is great I love it I’m not gonna say that I I do have some strong points of view on some of this I’ll save those for my for my newest podcast which is Brett just sits around and talks a lot of that’s coming tomorrow but for today I wanted to try and keep it within the white lines if it was

crap you know well let’s talk about oil so oil you know it’s not down a lot but we’re down around three percent month over month you know this is you know oil companies are doing well they’re yeah so it feels like this this Market’s um you know volatile in a small range right and so that that’s been good month over month 77 oil I mean do you remember in years you’re a few years younger than me but do you remember in 2000 and what was it 2008 or seven eight when oil hit like 150. right isn’t that when it was it was nuts and and even that oil at 150 and these guys today are are making record profits at 77 like I’m not good at math like but that like there’s something something’s up right like and and I don’t I can’t really put my finger on it but I mean how do you have record profits at half the oil price that you had no way I mean is it it’s on the refinery level right well you know that’s a great question I don’t necessarily know the answer but it sure

does feel like we’re less reliant on on X you know Imports and so it feels like their their capacities are higher uh so I would say I assume they have a stronger utilization right and and that I mean you know they’re in the Commodities business just like you I mean when you have a big fixed cost after you get past that nut to crack there’s a lot of potential there well and it it sets up to be a real show down the road if you start if you’re not if you don’t if you don’t allow it then to keep drilling you basically take away land leases or you take away the opportunity to keep the the volume available it really sets up for if you think 77 oil today is expensive or you think five dollar gasoline is expensive today if you keep screwing around with it like and not and not letting it and not not keeping a good strong domestic oil production market then that that deal could get pretty sideways on you in a hurry yeah just another another uh you know could be another reason the reason the market could

be volatile this year right yeah for sure well that’s it that that we talked about you know what was the bare point I’m just still dying to figure out all right I I do got one more bull point I guess I’ll I’ll no the bear what’s the what what tell me why this Market is going down crude oil is down three percent we all know we all know oil and steel it’s raining those of you that can’t like see they’re not watching this on video like he did not say that in a straight face that was like he tried his best it’s like when you tell your kid that you don’t drink beer and it’s like that beer is bad for you like alcohol is bad I know Sona yeah don’t ever do it but you’re like trying to not smile like that was the face I just got I mean and you got a nickel being down that just shows there’s there’s some gaps in the market yeah there are some gaps just not in March Bud all right so one one worthy mentioning we don’t really talk about this a lot but

it is in the charts um the CME US bushling futures holy mackerel you know yeah April is at six there were some tons traded at 600 yesterday so that I mean that’s up a lot a lot a lot what’s that like that’s what like a 760 seven up 60 70 bucks I think more than that I think that’s up a lot so I think it’s over a hundred dollars from from February oh February yeah let’s not talk about that yeah no son I don’t drink bad for you don’t ever do it it’s terrible save that to the end hopefully people still aren’t listening uh hopefully they like got tired of listening to me Fox News all right man I think it’s a set sets up pretty well for the scrap uh recyclers out there you know you guys are going to go up 120 140 bucks on new steel we’ll get our 20 bucks and we’ll have to smile about it and uh keep this train moving so negotiate fiercely out there friends um don’t uh don’t take don’t take less than uh you’re you’re actually worth it’s like what you would if you

if I had a daughter I’d tell her this don’t settle for that guy that doesn’t take good care of you all right that’s it thanks Brett have a good one see you guys uh next one foreign