oh 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 another episode of bulls versus bears um i’m gonna i’m gonna shy away from just hiding over in the corner this month i don’t know the the bulls have much legs just to stand on going into june but we’re gonna give her hell um back here chad and uh chad’s gonna make a case why he should be able to buy scrap cheaper this month than he than he did last month so here we go good job i see you guys nice nice yeah good to see you i see you uh setting the stage your uh your linkedin look at all this preparedness premiere prepared scrap you know and look all this unprepared it’s all gonna go away because glasses are going down hey man at the end of the day i just go by what i see right like i’m like i look

at the pile i’m like i got a few tons i gotta move in june after that i’m looking at like what’s gonna come through the system and i’m like good thing i got in the tire business because there ain’t no scrap out there you know turn the faucet off they ain’t moving in june all right just spread some tires you know i love it i love it man good to see you again yeah good to see you i feel like there you know i’ve been wrong i feel like everybody’s been wrong in this market through their crane russian deal like you know i’ve talked to guys that were really really good in the market and even they’re saying like i don’t have a crystal ball anymore right it’s broken and and i feel like the mindset of the of the scrap dealer or the steel mill you know that’s always a big big um big aspect but but really when the when the market was run up the mindset of the scrub dealers was really really important and today i feel like with the overall market being down the settlement about inflation the scrap

mar the actual uh stock market taking a big hit right we’re starting to see slowing on on on purchasing metrics and on gdp so where where is your mindset at i mean do you feel oh man this is just short-lived we’ll bounce right back or what are your thoughts i think it’s i get a couple thoughts um first of all you know like you said last month china is the 800 pound gorilla you know and there’s that’s never been more true than it is today their ability or inability or whatever to get that economy fired back up their willingness to throw money at the problem or whatever that’s going to look like i think is going to be a key metric you know moving forward for at least what the export market looks like demand side looks like that being said you can see the the whole russia ukraine deal i mean it’s still dragging on um and i don’t know that that plays as much of a role as it might have people really anticipated on the scrap side food side’s a whole different deal like that’s something that people are really

gonna have to keep an eye on um scrap side you know it’s not as big of a deal right now at least doesn’t feel like it was when it think very first kicked off yeah um inflation side economy slowing i mean it feels like that it’s you know the economy is going to take a break it feels that’s what it feels like to me how big and how long of a break i don’t know i mean the last this last week i mean you saw the stock market come ripping back like it like people and that could just be a bear market rally or you know people are like okay they’re gonna stop these you know half point raises after they get once to get to september october whatever like they’ve been talking about and i don’t know i don’t have all the answers but i feel like it’s probably smart to make sure you’ve got a little liquidity in the system and get yourself ready in case it does last longer than one then i kind of think it will but well on the overall market it sure does feel like this this

rally this week you know is it is that a really a rally is it just a dead cap bounce there’s the volumes associated with this rally is our our week so yeah you know i would fight a vote today i’d be more on the dead cat bounce than i would to say this you know we have a new lower low and let’s we’re going to turn around here but time will tell i feel like it never hurts to have you know be lit you know to a certain extent with you especially if you feel like the market’s going to get choppy on you but i also feel i feel some sort of confidence in the fact that if you’re going to be in anything like if you’re going to hold anything holding commodities at this point in the game there’s worse things you could be holding right i mean i wouldn’t want to be a guy that’s a home builder and trying to now i got to liquidate 30 houses or whatever i feel like that deal is gonna you know tighten up real quick um i there’s a few other you know choice

investments i probably i’m not a big stock market guy so i don’t you know i don’t i don’t live and breathe that world i watch i pay attention because i think it has you know some it plays a big role in what we do but i don’t i don’t get too too worked up about stocks um other than just paying attention to what’s going on well you uh you talked about china and that’s one thing i’ll uh i’ll share a chart here i love it and so can you see the steel rebar chart yes sir all right so i mean this one i’ve like we talked about last month they turn the they turn the spigot off right we’re seeing that in the base metals world uh now when they turn this back on if i right now i mean you could say okay we’ve dropped a lot i think i think month over month they’re down nine percent okay yeah so with that being said whenever they whenever they stop i’m i’m watching i i think on the on the bullish side if i had to admit one there would be if i

don’t know if this is in june or july or august but whenever the covent thing stops in china and and they go back i mean they’re down i think 10 on production year every year so that’s it’s significant right and so whenever they turn turn the game back on i feel like that’s going to change base price base metal prices non-ferrous prices and that could potentially change the mindsets of of us of the typical uh steel miller scott scott vendor in the umass yeah the other thing to take into consideration too chad is you know the the dollar at a 20-year high compared to you know whether it’s the you know the um japanese yen or the or against the euro or i mean even the canadian currency for that matter right like yeah i mean when the dollar is this strong i mean it has some good and there are some good things if you’re on the import side if you’re import and you’re buying then yeah it’s good to have a strong dollar right but if you’re live and die in the commodities business especially commodities that are traditionally exported

heavily like scrap then it’s not it’s not good for that’s not good for the scrap either right when because all of a sudden now these other countries that are big importers big consumers they’re able to go find cheaper scrap other places and able to you know buy it cheaper than they would be able to buy it from anywhere in the u.s so that basically takes that player out of the market and your face to deal with um your domestic steel mills and what does their consumption picture look like what’s their risk appetite look like and and you start going down that road you’re doing publicly traded companies big conglomerates who are very risk-averse and who are like yep we’ll just take the take the price down and we’ll live with it and if if it comes roaring back next month we’ll figure it out then but there it’s like you know usually one two months the outlook isn’t very far it’s like you know protect the house of cars today i i love it you’re just walking right into all my my bearish points this is great so i i i get

it i’m i’m uh you know i i try and see it from both sides but i think the price of scrap should be up in june so let’s let’s talk about one of the things that the us doesn’t import right big guy and so like if you’re looking here you’re going geez pig iron is down 87 a ton that’s 13 yeah i don’t i don’t talk about percentages but i do think this is uh an odd month right so i was looking at this i’m like hey down 13 okay they’re down like like russia’s pigs supposedly like in the 600s already right yeah obviously india changed their tariffs on their exporting of big iron so that’s that changes some things right so you could see some basing here i don’t think that but there’s a chance right with our section 232 we really are in our own little island and when and when you think about um you know when so i’m thinking about that and then you look at demand right it hasn’t fallen off yet like it’s still month over month it’s almost identical right around that 81 82 but but this

chart is not not identical so this is this is the one i think is the true driver and so if you look at hot roll month over month we are what do we do we went from 1382 down to 1200 that’s 13 percent yeah so so i’m going okay let’s just say scraps 500 bucks right just generic speaking what’s 13 of that oh it’s it’s kind of that yeah you know there’s 70 another 70 bucks give or take right yeah so that it’s funny to me that you know you’re seeing in publications like the am like you know we’re down 50 to 70 and you start looking down these metrics you’re like ah figure iron’s down 13 oh hot rolls down 13 oh you know china’s rebar is down nine percent so it you start putting their dots together and you can you can at least come up where with okay i could see that would be the initial talk right well but my thing is is i want to go like my i want to go back to like rough historical margins right like yeah okay it’s come off 13 like that’s you

know you’re on on the new steel side that’s xyz price but what’s what is screwed up and this is and this is why i think there’s such a distaste a lot of times from scrap guys to domestic steel mills is and and i get it i mean there’s no need to pay any more than you got to pay for the iron right right but if you’re if you’re they’re basing their purchase price off loaded ship price off the coast right not necessarily what their margin is for what they’re selling their new steel for whether it’s rebar coil beam octg whatever it is right yeah so they’re like well hey the price loaded ship is you know 450 like that’s what it is like that’s what we’re paying and you’re like well can i get a can i get a price quote for like what’s the hot roll coil price today you know like what was it like last time scrap was 400 you know and you start looking at that way you’re like how much money is in it like how much money do you have to make to like to keep to take

care of your domestic suppliers right and it’s like it’s like it’s like you don’t buy any any scrap at all you have no idea what it’s like to buy scrap that uh your competitor’s shipping point right yeah exactly hey and this is why i’m saying like i understand it it doesn’t mean that you don’t get questions i get it it’s like politics right like i i’m not big on politics but i understand why politics are what they are i understand why joe biden wants to give every student loan holder ten thousand dollars right before midterm elections like i’m not saying that like hey i’m not saying i’m trying to buy votes or i’m or not but i mean i was born at night it just wasn’t last night and i guess my thing is is you can say yeah the price of coils off this month you know hot roll coils off this much or whatever so we gotta take scrap down that much and you’re like you don’t have to right you just know you can because there’s no other good option for it the the dealer so you you might as well

right well i think i think playing into that i think i think the mar the market has been really regional you know i think there’s discrepancies in pricing 20 40 bucks which is i mean usually it’s 10 maybe 20 across the us which so i think that’s abnormal uh and i think it’s it’s really grade by grade so when i look at the market i’m like oh man there’s a lot of heavy metal a lot of p s in most markets right but shredded and primes might be a different story you know so it’s like what what’s gonna how is that to change and we already have these like you said the big margins on the steel we have these deltas between prime and and cut grades that are wacky so there’s not a whole lot of normalcy in today’s market no you said it’s super regional are you shipping to the west coast are you shipping the east coast are you shipping the south are you shipping the midwest do you even have access to any good export you know capabilities or you know it’s it’s very regional it’s very you know depends

on what your it depends on what your logistics capabilities are i mean realistically right like i was i was hoping you’re gonna bring that up that’s one thing good about downward scrap pricing less scrap moving better performance at the steel middle exactly exactly well at the end of the day i’ve talked to a couple steel mills now everybody feels like they’ve got a decent amount of inventory right on the scrap side so it may take like a few months to chew through that but if you drop if we drop the price on our end i mean like i was telling somebody earlier today i said hey six dollar diesel right it’s we’re knocking on the door it’s coming i mean it’s i mean if you ain’t there you’re real close right now right yeah so six dollar diesel and 500 iron ain’t a bad thing six dollar diesel and 300 iron it’s a very different game right like at some point you’re gonna be like i mean hey what can you even pay for it on the incoming the inbound side knowing that you got to process it and ship it and so at

that point it’s like even on the scrap processor side like your your inbound price your purchase price is gonna have to be lower than and then say in the past with two dollar diesel yeah so you got to kind of figure out what that number is and then what is that going to do to actual like volumes in the short term right now most yards probably depending on their logistics situation have probably a decent pile of prepared material you know whether you’re a shredder and you’ve got finished red or you’re a steel mill and you’ve got you know a pretty good inventory but if at some point as long as your consumption rates hang fairly close to where they were last year or within reason you’re going to chew through that scrap right and then what’s the re what’s the replacement cost going to be and i think that’s that’s the bullish side of me saying i’ll give you june you can have july but at some point if if the demand stays reasonable then you’re going to come talk to me come august you know well i think we don’t live in a

bubble right and i think if you’re still service center today you probably have some higher cost inventory and you do not you want to get rid of that and so you’re not so yes utilization rates are flat but i think lead times like so looking at lead times right we’re slowing down here month over month so there’s no doubt that until i feel like i’ll i’ll get uh i’ll i’ll take my bear hair hat off as soon as hot roll levels out at least stabilizes yeah well and i think ultimately like that’s i mean it’s your job to buy this crap at the as good of price as you can and still keep the customer right like without pissing them all the way off you know it’s my job to sell it as high as i can and not paint the relationship by telling you to go pound sand so it’s like there’s like a there’s that middle ground in there somewhere but as long as the export market doesn’t exist as a scrap dealer you’re beholden to the steel mill and this is going all the way back to like 2020 it feels

like right like yeah i mean where the export market just it wasn’t even an option well i mean yeah i mean you’re look you’re talking 600 billets you know russian billets and yeah 750 rebar in turkey and then you’re talking 1200 hot roll in the us i mean it’s it’s just there’s we’re on an island in the u.s and obviously the section 232 is keeping us on that island but but at some point you know i don’t know it feels like gosh what a different world we live in than you know three four or five years ago when these tariffs really didn’t exist you know the global trade was really wide open versus now yeah which i mean good job for the steel mill lobby to get that deal done and you got you know for all the good things or whatever you know that that trump did or didn’t do whatever depends on your outlook right like one thing’s for sure the tariffs um have played have played a significant role in to uh the domestic steel mill’s ability to you know keep material here at a good price still stocks aren’t

going up at all right no no and you know what at the end of the day at the end of the day in the scrap in the scrap on the scrap side if you haven’t made money in the last two years you probably should get in like another business another industry like if you i mean at some point you should you know you should say hey you know you’re gonna have to take your lumps at some point right yeah do i necessarily think that lumps are uh necessary i don’t know i guess that’s that depends on uh the day depends on if it depends on when you ask me if you ask me at five o’clock on a friday if i’ve had a couple after i’ve had a couple beers i might be a little more forgiving well i feel like i feel like when typically when the steel mill i i remember other than that very very early in my career the steel mill was not doing well that’s the time i was working for a large steel mill and then and one of one of the scrap vendors told me hey when

you’re not making money being being the large steel mill i’m not making money when you’re making money i’m making money so it’s not it’s not me versus you this is we gotta this is a we in the whole industry right so yeah there’s like i said it’s like walking that fine line in there to where you know you’re buying it where you’re making good money but you’re able to pay me enough that i can you know make good money right you know i mean i think that’s when everybody’s when everybody’s winning that’s usually when everybody’s in you know is smiling but uh but yeah i honestly you know i could see us having a couple months here that could be you know a little rougher but yeah me what goes around comes around i mean that that knife cuts both ways it always has let’s know you know yeah let’s talk about another rough chart yeah so we got 80 20 turkey what we’re looking at uh we’re down 72 bucks month over month i think it’s around 5 30 4 58 kind of depending who you’re talking to right again another 14 percent

so back to that back to that similar percentage that’s that’s an ugly one but uh i mean ultimately that’ll show you that’s that that’s a big piece of that strength the dollar do you know um plays a big role in especially with the lira i mean if you think i mean people talk about inflation in the u.s right i mean we we’ve had you know some pretty some pretty good inflation over here but if you look at what those guys and what they’re facing in turkey from an inflation standpoint oh they’re getting creamed yeah you know and and i you know i can’t blame at the end of the day you can’t you can’t you’re getting the same amount of scrap for a lot more money you know like yeah and there’s something’s got to give you know well i do think it does feel like i think was it yesterday or maybe day before that they try to cut like turkey scrap buyers try to cut pricing they actually raise the local price i think around 10 15 a ton so that might end they got some sales off at like a

300 margin or whatever so so i i mean that’s to me that’s a good sign it feels like there could be some stabilization we might at least stop the bleeding here for for a little bit but and who knows like i don’t think anybody’s here to predict the future other than you know like maybe a couple days you know to where june’s going to be but even then you know you’re just going to have to make you know i think that real operators will operate and i think whether you’re a steel mill or a scrap processor like right now if you these big swings is when you make your hay right you know you make your hay because you’re a good operator or you’re not or you’re efficient on your on your melt shop and you know your operation side and get material through the system logistics and on the back end or it’s the same thing on scrap scrap side you know if you if you if you’re if you’re a legit operator then right now you can sit around and complain about or you can go to work and figure out how

to make it go you know so i yeah i i think you have the nail in the head this until we start our sell export tons start moving up the coast in large volumes it’s going to be hard to really turn this ship around yeah and and that deal can change on a dime we’ve seen it before right i mean we’ve seen i feel like i’ve seen this movie before i i mean i feel like i’ve been down this been down this road so i get it and it and it’s not gonna happen overnight you know china doesn’t just turn the light switch on and and go or the dollar doesn’t just come across crashing down overnight and you know creating major inflation um at least we hope not you know i like there’s there’s got to be some walk let’s walk it back down um but then again you know i i i’m if you would have told me a year ago that the dollar would be or even let’s say two years ago when we were printing printing significant amounts of money that the dollar would be as strong as it is

today i would be like there’s no way right yeah i mean now it is we printed a ton of money but so did everybody else so everybody else right so everybody else got on that bandwagon so you know it’s i don’t think that i don’t think a lot of it’s changed you know i feel like people still view the dollar at this point as still a safe haven currency and if you’re jacking up interest rates people can you know get a little return on their money plus if they’re if they’re if their currency is getting creamed then where what better where better to put your money yeah and that’s that’s the real that’s that’s the harsh reality of us but you know when we during the covet do we need to print all that money yeah did we probably avoid a recession maybe even a depression yeah probably so did it do its job yes but the intention was prior to help the the person on the lower class or the middle class and the reality is all it did was if you had assets they’re worth a lot more today yeah you know

incomes have gone up incrementally right and so 100 it made so well the intentions were good but the reality is is we’re just not seeing that in the actual market dude it goes back to the old and uh and i’m and i’m just going to put this out there and it is what it is but i feel like no matter what and i i i’ve heard people say this before you could give you could start everybody back at zero right put everybody at zero tomorrow nobody’s got any assets nobody’s got any money and you put the same group of people out and say all right go figure it out within reason within a small margin the same people are going to have money and the same people are going to be doing what people do today right i mean and i think that it just comes back down to how you use it how you spend it what you do with it um you know do you live above your means below your means whatever that whatever that is and do you buy the right at the right time or do you buy the

wrong at the wrong time do you buy a tire shredder or not i don’t know well i gotta have something to do while these prices of shred some tires you know clean up clean up idaho for a while and um you know just put our you know let the let everybody put their foot on the brake and we’ll just kind of coast it around and see what happens well i do got one bullish point for you i feel like we the one we kind of hit on with crude steel production still being fairly flat right and the other one was if you looked at imports steel imports march to april it’s actually down 11.7 percent which i was pretty surprised by so as much as we are on an island and our pricing is obscene for the rest of the world on steel yeah the imports are actually moving move lower at least from from uh from our staples whoops i thought that was fascinating and to piggyback on that point you also have more steel mill capacity coming right in the next two years so which is which in in the short

term and really in the long term it’s a good thing you know it’s good from uh from a scrap processor standpoint because that’s that many more mills that are going to need fed you know and and most of it’s you know um scrap consumption you know versus say pig iron or whatever um so i feel i feel like that’s a good thing and it’s not like that’s not gonna happen tomorrow or next month but the next couple years it bodes well for the industry um i believe it bodes well for you know the you know the scrap processor that’s the collector that’s out there you know accumulating processing the material and prepping it for the steel mill um so long run i think that that’s a good thing which is going to probably will even maybe even put more of a drag on imports right i mean the more you can domestically produce um as long as they get rid of those 232 tariffs we’ll be all right because then at least give us an option you know that makes sense so well i feel like i’ve hit you with a lot of bear

news so i do want to leave i do want to leave i got one last comment i want to get your thoughts and i was listening to a podcast called all in on podcast and so it’s a panel of a few billionaires mostly venture capital investors one of those guys is really bullish on eb battery materials i think lithium you know global all those things right and though they’ve taken a beating just like gold has just like copper has just like you know i think we’ve seen like zorbo prices that’s one thing we didn’t mention but that’s down 11 like if you’re selling shredder feed today you got to think like the shredders are gonna want to increase they’re gonna have to make up that mark they’re gonna have to make up that that loss right right so but what are your thoughts i mean do you feel like these some of these base metals predominantly even the ev battles do you think at some point these we i i guess you feel like we’re getting close to the lows on those grades for the year or do you feel like we still got

i definitely feel i feel like there’s it’s a supply demand thing right you have a significant amount of demand at this stage people are trying to figure out how to make a battery-powered car right and by make it i mean produce it at scale and the the the amount of lithium the amount of copper the amount of aluminum you’re going to need to make that really happen it bodes well for you know the recycling industry now the the bigger problem i see on the lithium side is and eventually you know we’ll figure out how to recycle those batteries we’ll figure out how to extract that material back out and put it back into the value chain right yeah but right now the issue you have is on the mining side it’s there’s so much red tape there’s so much regulation around you know being able to go extract and get that material in its raw form that you’ve got a significant significant demand and whittling supply or you know supply that isn’t going to hit in for years right just because of the amount of regulation red tape it actually takes to get

through and actually be able to set up a lithium mine so that that’s the same for copper it’s the same for any any other material right that’s why i’m so bullish on platinum palladium and rhodium and because ultimately even if the u.s goes 40 ev you still have all these other countries that don’t have anywhere near the grid capacity capabilities that we have that still are going to have to have transport right yeah so they may want to you know clean up the co2 emissions or whatever they’re still going to have internal combustion engines like what you know and now whether that’s a hydrogen or whether that’s gas or diesel or whatever it is so i’m i’m i’m i’m super bullish on you know lithium but i’m super bullish on platinum playing rhodium because most of your like what is it 40 35 the number whatever you read 35 40 percent platinum playing is coming out of russia right maybe 25 percent the rest of the good jaguars coming from south africa in 100 year old mines that are a mile in the dirt you know i mean in the earth i mean

and and you have a really an unwillingness for anybody to give you a permit to set up another one right so that that all has to come back out of the recycling food chain somewhere so bullish i’m i’m probably more bullish on a company that can figure out how to efficiently and effectively recycle lithium batteries to basically get that material back into the into the food chain because i think that’s you know that’s at some point is where it’s gonna you know you’re gonna need that material right yeah i mean i think that’s that’s a big one so i and i didn’t listen to podcasts i don’t know what that guy’s viewpoints are but i i truly believe that copper is a big one i mean think about what it what it what it takes to set up a copper mine i mean it’s it has to come out of the recycling um chain yeah it i mean at least a good portion of it right i mean and and it’s not like these like second third world countries are going away from electricity like they need electricity just for their house let alone

a car right they’re trying to set up grids and power grids and everything else um so no i i would i would stand to agree with that yeah that’s awesome i i definitely think that’s one thing we can all agree on as you get into the recycling industry whether it be scrap non-fair whatever you can see the the shortage or how much is just being wasted right like when you throw a aluminum can in the trash it goes to landfill you know that can be recycled like and you see it actually being done every day yeah i feel like hey let’s recycle that like there’s a real passion there and until you i feel like until we educate really america like especially america right we’re so bad for some of the other countries on recycling percentages so i talked to to your point chad i had a i did a podcast yesterday with the guy at nigel dove and uh nigel owns vortex d pollution right he came from the uk okay and uh ended up he built his business out of denver but builds basically um oil draining stands and everything else

for for basically everything car processing so whether it’s pulling the motor pulling the wire harness drain the oil gas cutting the converter i mean i mean you name it right that’s kind of his sweet spot he’s built himself a pretty damn good business um but you know he was saying that you know a lot of the regulation around what he builds from the uk came out of necessity right they just don’t have space they don’t have places you can go dig a hole and just bury right so the government kind of came in and said all right we need to this is they just basically regulated it into um effect and said there’s no more like you’re not burying the ship like you got to figure out how to recycle it and he goes the ingenuity and everything that came out of that because it forced their hand and i’m not big on government you know forcing your hand to do anything so don’t don’t get it twisted but the reason that that happened was because they didn’t have a place to put it they didn’t have a montana wyoming and idaho uh big

hole out in the middle where they can just yeah yeah it wasn’t an option um so long story short like you’re 100 correct like at some point there’s that passion that that’s going to be it’s there people are starting to realize and steal for that matter right i mean recycled steel you know the the amount of emissions compared to you know like uh melt and pig iron or whatever like i mean it’s significantly different um on that front plus more efficient right from a mini mill standpoint versus a big blast furnace yeah so i mean it’s all those factors that i mean that make me bullish on the industry as a whole but there is always going to be certain commodities at certain times that i feel like have got you know potentially you know a a strong path forward versus say you know something like iron and steel is not as sexy as lithium right now or you know like some of those like uh rare earth metals right well this is why every everybody describes this should be listen to this podcast we i mean we just put a whole lot of

a bearishness on this whole conversation but you’ve got breadth motivation above the industry about being positive on battery metals this is good i love it we’re trying man we try i mean at the end of the day you can always look at the glass if it’s half four or half empty i just you got to make a choice in life we’re not we’re not just telling you about markets here we’re we’re selling hope exactly opium opium stop on by i’ll pump the tank up for you and we’ll keep you moving you got hopper i love it well thank you so much for your time today man i appreciate you and bulls versus bears isn’t always necessarily us talking that to each other sometimes we make each other’s points but at the end of the day hopefully the end game really is just to give you a little bit of information that what two different sides are seeing and then let you make the decision on however you want to do it i love it all right man i’m gonna stop this