welcome to a scrap life a podcast solely focused on the hustlers Grinders operators and business owners who live and breathe the scrap metal industry every day here is your host Brett eard here we go March Bulls versus bulls I mean Bulls versus Bears with the man Chad who’s about to piss all over my parade I got a feeling this uh this month but I’m going to try and keep it positive I’m going to try and keep uh keep our you know as poor scrap guys trying to keep our head above water but this could be a rough one I’ve got a feeling and that’s why Chaz got that chesh ired cat smirk on his face about to lay the wood on us but we’re we’re going to put up a fight so what’s going on Chad you know BR I’m just smiling ear to ear I got I got 22 bull or bear points and only one bull points this is going to be a great saw that I saw that post I Le did I was like one you got one one bull Point that’s it like I feel like you didn’t try

as hard as uh as you could I feel like there’s you know there’s a couple bull points in there we’ll talk about it so yeah let’s do this thing let’s go all right well you want let’s just jump right into it so I I think we gotta start out maery right as we always do but to me it feels like or I guess what I’m hearing is is some parts of Europe and China are really facing a recession and and part of that being China is is you can see that in the iron or pricing U we’ seen iron or fall from $135 a ton down to little under 125 and that’s that’s to me this is a great indication of what’s going on in China and steel demand fair fair it does feel like they are still trying to figure out I mean their stock market’s been getting crushed right they’re still trying to figure out kind of what stimulus packages they can put together that are actually gonna stimulate stimulate something right I mean they yeah like they’re swinging the bat and not lots Landing um with any of it but you

know they their stock gets pumped the market gets pumped for a day and then the next day it dumps right and so yeah I mean it’s the the good old China GDP pump right of just building and construction and consumers much steel and aluminum and as you possibly can and I I don’t know if that that uh that deal is really working or is attempting to work out right now I think the I think the whole real estate market I I think we had a post back and forth on LinkedIn I had some data about the real estate market in China you’re hey stimulation coming yeah it’s coming it’s like a the check’s in the mail the checks in the mail it’s coming like don’t worry you’re going to get paid I swear what do you know let’s grab saying the checks in the mail that’s like one of the 12 scrap Commandments if you ever seen that one of them is the checks in the mail the load didn’t look like that one it left you know few of them yeah I love it well with cheap iron or you know what that

means Brett that means pig iron must go down right cheaper inputs yeah we’ seen pig iron fall from 475 down to 460 and and I have a feeling it’s going to go lower what what do you think now this is a big component on the prime Market which feels like has a kind of pressure it feels like you I feel like you’re probably in the right on that one um which is going to put pressure on bushling right it’s gonna put pressure on Prime so if you’re you know in the in the prime Market if that’s your Market I feel like you’re you’re gonna might feel some feel some pain in come March but we we’ll let you tell that story because I feel that uh that I don’t want to be the bear of bad news here I’m the bull here well China’s demand wouldn’t be the only thing that could take the pig iron and scrap Market down it would have to be our local demand in the United States and this this chart is look at this black line you see lead times just just not very long ago December yeah

they’re over they were eight nine weeks today three to five three weeks which is I mean we’re we’re dropping down to that three week you know even slightly lower right lead time which we haven’t seen in a little bit you know I think that whole you know coming out of you know the the year destocking you know but maybe depends on what March and April bring you know from a consumption standpoint um I still hear a lot of people talking about you know the feds and some of these the money actually coming to roost for some of these you know larger infrastructure projects depending on how far those are along and what those look like as far as from a lead time standpoint to get them approved and whatever else I we could see some steel demand the automotive sector does feel like it’s still you know lagging like that you know interest rates I think have a have a pretty big bearing on that as well so I mean you know you’re not going to get the automotive demand that maybe you you you would like to see so yeah it’s that’s it’s

going to be a tough go which if you got some negotiation if you’re actually on the new steel buying inside I know some people listen to this podcast that are actually trying to figure out their new steel buyers or they’re combo right so you’ve got some wiggle room negotiating price if the lead times come off like they have yeah for sure and I I think this is we haven’t seen three-week lead times and you know I don’t think what does it look like September of last year so that’s that’s been it’s been a while and I think that puts puts the buyers back in the driver’s seat for sure yep all right so with lead times diminishing you got to think well what is pricing doing and so we’ve seen pricing close $1,100 on hot roll at the beginning of the year today we’re somewhere around sub 800 so that that’s why I you know you think about it let’s just say it’s a $300 conversion cost I’m gonna take a picture of this yeah so I because I buy I do buy some uh I’m about to use this at least

I I’m going to try and get some Advantage out of this program all right go ahead so see you think about that you got to ask yourself okay if steel mills are selling hot roll 800 bucks and we already know Automotive demands down we already know blast furnes are going want to want to chase those sales right then all right if it’s to cost $300 to convert a ton of scrap to steal you got to say at least now now you’re sub 500 right and so and and steel mills don’t want to be doing these things for free frat you know we you know Ste guys you guys canot work for free you can’t make $1,000 a ton you interested in working you know a we can’t make we can’t make 600 ton we just can’t turn the lights on yeah so so that’s where I feel like yeah it’s not not going to be good over the next 60 days but but time will tell yeah I think it will um it it this thing can turn in a hurry right um but like said in the past I mean what this

year really reminds me of the 156 right it really reminds me of really 2016 election year 15 was kind of rough the end of 15 and then 16 was just man it was just death by a th000 cuts and this could be one of those years where it’s just cut you know 510 here like it really has the ability to play that that play that self out so maybe you don’t get a big dramatic drop per se but what you might have a tough time finding is maybe some better markets or more markets or even in available markets for your material um uh so and and it might be just a game of you know the price is the price if you’ve got a good home for your material yeah yeah it feels like for sure that’s going to be one of those months where liquidity is key and you know and to provide even more bearish news on this H Futures are lower too for April at 788 so it doesn’t no it doesn’t feel like speculators are are thinking things are going to get back better there are being some bets had

for June and July but but overall it feels like the next uh 60 days are going to be no bueno which June and July are traditionally like we talk about your summer months where heats up and the flow slows down so that could just be maybe people feel like we’re going to run into some flow issues if we keep getting price cuts you know traditionally you get a little bit better scrap flow March and April um at least over here now I haven’t really seen the ramp up you know I mean the snow’s melted you know we’ve got a little bit more scrap but we still it’s not like anybody whoa whoa we can’t just well past that you said how is your scrap flow our scrap flow is you know not great it’s terrible we we need more scrap and that’s what’s going to really hamper but it still goes packed down to demand I mean you maybe you’re not your scraps not flowing but if it’s if the demand lacks then it’s the double-edged sword now you got a lot of people fighting over a little bit of scrap which means

you get margin compression on the front end and you know sales price compression on the back end and it makes for a it makes for a tough go well I I I believe everything you said there except about scrap flows because on LinkedIn we’ve seen Adam Whitman got out 1133 trucks just to one mil in one day I feel like Flo the day before the market closed on a down month because that that contract was about to close right like everybody knows how the business works and that’s one thing you got to appreciate about owning your own Fleet of trucks right now the details of that you know how that worked whether like all 113 lows were delivered by um by upstat own trucks or not but I’ve seen pictures of his Fleet and when people ask me how important is it to invest in the transportation side of your business right I’m like dude you have to invest in it because there’s no way that you can move that type of volume where it needs to go in a day or right like if you don’t have the ability to control your trans

Transportation I mean no outside brokerage is going to get you that many trucks like nobody can come up with 100 whatever end dumps like not in a you know so you it’s it’s going to be probably a mix so he Adam in my opinion and and Upstate or kind of a poster child of why owning you know a good portion of your transportation is so vital to your business because then you get markets like this where the Market’s trending down you know you have XYZ amount of tons under contract to steel mill and most people know this right like whether it’s 100,000 ton or 10,000 ton or whatever that is and the mill doesn’t give a if you leave 5,000 ton on the board right because you didn’t get it delivered that contract is getting cancelled like sorry bud renegotiate so that’s when you’re like nope I got these trucks like we’re going like that shit’s going to get delivered and you know kudos to kudos to him for for getting that deal done and that doesn’t necessarily like don’t go get it twisted here like don’t tell me that that

means the scrap flows up that could have meant like he could we could have been down for maintenance we finally got some going and now we got to get it pounded through the system because we got to fulfill the contract that doesn’t mean scrap flows up go go piss off my leg and tell me it’s hey bro it’s your story you tell it how you want you’re damn right you tell yours I’ll tell mine and we’ll let the listeners figure out who’s who’s right who’s wrong all right let’s let’s keep let’s keep going with the bear point so I just want to Circle back just let’s Circle back to some more bear points yeah and just repeat you know Shanghai steel rbar it’s down 3860 to 37 66 just just just want to make sure everybody knows yeah which are weak a little which is a minute like little bump bump in the system all right so I got here’s is my greatest point I got two more points I left the the one bull point for the last yeah let’s let’s talk about 8020 turkey heavy melt it’s down 32 bucks Brett from

422 to 390 that’s not good no no that’s not that’s not great on the East Coast for sure that’s not that’s not what you’re looking for that’s not going to help you negotiate with the with the domestic steel mills if you’re over there and that’s your primary um export Market how big of a player is turkey going to be moving forward for the like the US market I mean considering the the currency devaluation that I mean the I mean is is turkey still I mean because I and I’m asking this because I don’t know the answer right like I’m not trying to set you up how big of a player is Turkey in the negotiation of of fair scrap off the you know Midwest and East Coast yeah so these are very I mean they change all the time they could be wickly off but but my guess is we trade around four and a half to five million tons of scrap in the United States every month about a million and a half tons are going to go export both East Coast West Coast container container vessel all that of that what is

what is what is going to actual Turkey um that could be as high as 7 800,000 tons right could be low as two 300,000 tons so so that that kind of gives you a parameter of what what’s kind of but it’s a huge effect no matter no matter how you look at it because it’s such a leading indicator and so anywhere from like 10 to 15% of the be scrap traded across the country is what you’re saying yeah and I think we maybe 10% yeah and but but more importantly it’s it’s like how and I’ve debated this with other folks how much business is being done on a formula percentage wise versus an actual like you know here’s my price yeah right like and so it just feels like there’s a lot less business being done independently today like a true trade yeah it’s like well the formul did this so we got to do this right and so so I I I think to have a a turkey as a leading indicator yeah yeah it might be small percentage of actual tons being transacted but the impact is it’s it’s quite

large the numbers weighed into to a lot of people’s formula pricing right is what you’re saying like on the east coast and if you’re if you’re like if you’re doing good volume with a XYZ manufacturer or whatever demo you probably depends on how you set your formula up you probably weave in that one HMS um one and two turkey price probably with some sort of domestic meal pricing and and uh and whatever the discount is and work from there yeah if you’re a major steel Mount and you know assuming let’s assume your heavy mount price was competitive with export last month you’re you’re not walking in this month saying oh I’m only going to go down 20 you’re you’re starting at 32 right because yeah that’s export markets could go down even more than that so so what so how about the uh what other export markets are worth paying attention to if you’re on if you’re if you’re on trade obviously on the west coast it’s you know it’s the Asian market Asian markets but what what other markets are uh I mean obviously the what would you pay attention to as a

Trader on the west coast well if if you hear any other like vessel consumers outside of outside of turkey you know the Market’s not good so yeah there you go well that’s that’s a good Insight right like that’s why we do it is if you’re hearing people trading with other people that means they’re trying to find homes for stuff right yeah yeah yeah yeah all right so so let’s let’s let’s wrap this up on some positive news yes yes let’s let’s end let’s end it on some highlights you’re you’re the non-fair guru what’s going on with nickel it’s up from like 15 $15,800 all now it’s like 17,300 what what happened I feel it’s trade driven I feel like it’s you know Traders moving the market I mean I think nickel is easily moved with you know some big block Traders and that’s why I feel like that thing can be volatile I don’t necessarily think that it’s bunch of demand driven right I mean you know what’s crazy we live in this like these trades you know you look at the future trades I mean that’s only going to get

like more in depth and more heavy as as time goes by right the on the feris side I mean it’s not something that my father ever dealt with or you know anybody else never never even played a role in in the business you know but yeah obviously that there’s volumes being you know hedged against that and y y y which we don’t hedge but I mean it wasn’t ever a factor so I think Traders are going to continue to kind of move markets without even having the actual physical material you know at their facility in their hand the volatility will give you some opportunities it’s all good right yeah I mean it’s it’s it’s if you’re a Trader you love volatility right you’re like the more swings the better like if it just stays flat it’s hard to make money yep absolutely what’s your op what’s I mean you’re way smarter than me I mean what do the smart guy think no I think this is one market that that I don’t know a lot about and and you know we had the lme trading issue a couple years ago and it just feels

like how how this Market’s being traded and how this Market’s being tracked you know I don’t know if it’s a a one for one in the stainless Market anymore like it typically has has been in the past yeah but we we’re in agreement on that all right I love it I love it we found something goodness gracious yeah took us 20 minutes but we got there we’re there we’re there good see we we agree well hey it’s been another great month I really appreciate you absolutely man I I love the charts I’m I’m looking forward to April’s charts which which I feel will be a little um potentially hopefully a little more Rosier than than these ones today but the reality of it is everybody like you I mean you got to know your markets you got to know like what what’s going on out there and you know and play the game but know that it’s going to be a I feel this year is going to be a tough go so here we go this month’s going to be you know one of those ones where it’s going to be a grind

um hopefully scrap flows do pick up a little bit and and hopefully we can keep a little bit of margin in in it you know keep the lights on and you know L luckily I I don’t own a shredder yet um so that that marging impression on the shredder side is going to be uh should be a tough you know so if you’ve got some shreddable material to sell you might have a chance if you’ve got HMS or Foundry scrap whatever you might be a little tougher of a pickle or some bushley in this month you might you might be a little position but I mean I guess time time will tell well we heard it there first I I think that’s that’s a great insight and very very true for what what’s really going on in the market today so where’s the bottom where’s the bottom are we when do we when do we get there when do we thing out little little adjective in the scrap scrap business right uh we always overcorrect so I think we’ll we’ll over correct you know sooner than later does it take 60 days does it

take 90 days days I don’t know but but there will be there could be some major movements here as as soon as this month and if that continues in the next month you know it’s not going to take long before we we overcorrect in my opinion which then just but then that’s when you start getting some liquidity issues and people start it becomes you know cash flow right and then yeah well I think I think if you just look at the supply chain and you think about after you know after all this inflation what the what the you know what the Peddler needs what the scrap guy needs it it’s I mean it we start making some aggressive moves down we get there pretty quickly yeah I agree well here we go let’s the roller coaster is is rolling here we go we’ll see what to buckle up put your seat Bel on hopefully you got one of those like over your head harness straps that like let your feet dangle and let’s just see what happens see you guys in h April thanks Brett all right thanks Jeff yeah