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 all right BS versus Bears August 2024 the man the myth the legend Chad brox sitting in front of me you know break down how good this Market is and maybe the tide is slowly turning I don’t know maybe we found the rock bottom and we’re chipping along I don’t know I think that’s probably why he’s here to tell us uh what’s going on but for for uh the man that needs no introduction Chad let’s go man good to talk to you even on a Sunday you get church out of the way yeah you know it man you know it love it good for you man well I I feel a little bipolar talking about the market there’s a lot there’s there’s a lot of be points there’s a few bullish points on here too so it’s going to be a good yeah I saw I saw the LinkedIn post uh from the best RP Ever I Saw The Bull points I

saw the bear points and I was like oh this should be a should be a good conversation today it’s not going to be totally one-sided there’s a there’s a fair amount of push and pull going on yeah so let let’s let’s dive in macro uh macro to micro as always do the thing you know one thing I will say is feel like feel like the the scrap guy or gal has been telling me for some time hey industrial counts are down scrap slower right Y and I feel like the Magnificent 7 has has kept the market up right and I feel like this week especially we’ve seen a lot of profit taking I think if you delete AI out of the stock market I think we would already be in a recession right but but if with and if you looked at whether it’s Nvidia Intel all those stocks are down huge this week so I think be for for clever purposes we’d be in a recession according to the stock market yes like I feel like we’ve already had exhibited some recessionary um signs right we got take the stock market out

of it I mean one thing about the scrap business as we’ve discussed before is we are like kind of the the first barometer of the the manufacturing business of the economy as a whole and if and if our flows are off 30% or whatever that number is then especially on the commercial side then that means manufacturing is down 30% like that’s just what it is you know and you you have maybe some of these tech stocks that are floating the market but the reality is the general economy the manufacturing economy the stuff that really generates the GDP right I mean if it’s off then yeah it’s it’s uh you know we’ve been we’ve been feeling it for a while so it looks like the the Market’s starting to uh to catch up to what we’ve been talking about exactly so we’re looking at a Char of the Dow Jones and and that’s down obviously this week and then and also here’s another point is the the fear and greed index and so we went from 54 last week up to now we’re at 33 and and again meaning leaning towards more more fear and

so I just feel like you’re you’re seeing this over this this thought process over and over again whether it’s Amazon saying hey people are buying cheaper products and less right John Deere slowing down you’re seeing less of of that kind of that Middle America equipment person um they’re trying to charge more because their equipment charges more and their interest rates are higher and and they can’t right and so I really think things are are are coming to ahead even even to the the stocku World Knowledge which in from a commodity standpoint isn’t the worst case scenario if we get some rate cuts and if we get some uh some general consensus that you know we we’ve hit a we’ve hit a point that we need to um get these rates back down to a manageable level for people to kind of reinvest whether it’s in equipment reinvest in vehicles or homes or businesses or building again you know and like I said I I feel like just like they waited probably too long to raise rates I I feel like we’ll probably wait too long to lower rates and and it’ll I mean it’s

just how it goes right so we’ll probably feel a squeeze much quicker than we’ll actually be able to enjoy the rate cut well if if you I mean I think if they slow down inflation right like like you you would want to be more cautious than not right because if you would cut too quickly and start inflation again like you’re just kind of starting all over right so I I think I think it’s gonna be easier to wait too long and then make instead of like uh quarter basis points cut a half right so that’s I think the Market’s saying like there’s like a over 25% chance uh the Market’s going to be cut here September a a quarter of basis point so there’s already some some people thinking that they’re going to start cutting here soon as like September 17th or 18th whenever that that chat is but but I think if if I was in that chair I would I would wait and I would cut a half a basis point when it’s when we know things are are on the way down vers have the chance of inflation com back I

I think that you know they may surprise the market in September right at yeah a half I mean just versus say a quarter in September and a quarter in December they may just say okay if we get a half right out the gate let’s see how we end the year and and it’s so hard to know with it being an election year like what is like there’s so many strings getting pulled right on so many levels behind the scenes that we have no idea right a lot of so that that’s what is going to be intriguing or at least the very least interesting from my standpoint election year Market slowing down you know it’s the you know the the existing president pulling out of the race and yeah it’s it’s gonna be wild man I think it’s be a wild finish to 2024 well to kind of on that on that point let’s just let’s just talk about in the last 30 days since we’ve chatted right there’s been a uh a new the hot swap right on Biden Harris there’s been Trump assassination temp uh there’s been we’ we’ve gave high range High

long range missiles to Ukraine meaning the US did yeah you know Iranian are the Hamas leader got killed in Iran right like lot of big things and I think you’re seeing it like we’re looking at the Copper chart right it’s down 7 and a half% from 442 to 409 yeah on that point I think like if you’re a scrap person like if you can buy right like you’re probably going to get some upswings but you’re gonna have to sell every time it goes up because it’s going to go right back down like me and you talk about Bitcoin right yeah that stuff is going to be wildly wickly volatile and you know that so if you can take your profits quickly and be disciplined to buy where you when you know historical Trends have like leveled out bottom like if you look at this chart right then they you might be able to to win on that that volatility yeah it feels like the trend is definitely on the the downhill side and I was reading something the other day they talking about Chinese warehouses have you know the the highest uh highest volume

the highest capacity that they’ve had or capacity or whatever that the the largest volume of material in those warehouses in three years right so which tells you that they’re not melting it you know they’re not smelting it they’re not you know using it um producing it um it’s going right into the warehouses which means there’s not as many buyers so you feel it’s a combination of we talked about this a month two months ago and the market ran hard and then it’s steadily you know falling off and I’ve said four bucks probably before we get back to five and I still believe that you know that to be true and it’s just maybe you get even lower than that um but at 375 I would be a buyer yeah a buyer but also you’d have a quick trigger finger too right I mean you know because then if you did get a pop to four whatever you’d be you wouldn’t be sitting there waiting for 450 you know like okay I’ll take the I’ll take the win where I can get it and you know I I’ve heard it said before you know $4

copper is still you know good copper you know but there’s a lot of inflation that’s taking place you know to to bring $400 copper to where it’s at and I still think that in the long run like I say the medium the long run run I mean copper is a good spot to be it’s going to be a necessary commodity a necessary entity moving forward whether it’s AI or you know just a stronger electrical Grid in general um it it nothing replaces copper they’ve tried for years with aluminum and certain applications but the reality of it is like copper is a shining star and and you know I think what’s crazy to think about and I was listening to this statistic the other day and they were talking about Africa and they were talking about the average like like maybe it was I don’t know who I was talking to but they were talking about the uh like the average age you know uh in Africa is like 18 17 19 something like that and they were projected you know to outpace in the next say 20 years they were projected to outpace even

India in population I mean just wild numbers so I mean and that’s a d a definitely a third world you know mostly a third world country that’s going to have to build infrastructure that’s going to have to do a lot of things in order to um be viable from a industrial standpoint right well in time I mean in in generically speaking anytime you have volatile markets silver gold copper these these Commodities tend to be more of a safe haven right like typically if we’re in a recession you see inverted Diesel and gasoline check right like yeah like you see there’s some indicators right we’re we’re seeing all those indicators so you know I I just feel like if you’re on the on the non-fair the metal side it’s going to be volatile and if you’re can live with that and be okay with that and be quick to take a sale when the prices are higher and then if if you start seeing some basing like here’s another chart right nickel you can see we’re kind of right back to those 22 levels right and so you say okay there’s some consolidation here

probably probably have some downside but there’s some there’s some upside upward potential too if we we got to get some hopes and prayers aka some some rate Cuts right so so I I I like uh I like taking a little bit of risk when things are lower on the on the non yeah when you’ve got more upside you when your copper sitting there at five five and a quarter you’re like 520 you’re like oh there’s only one way yeah it’s going to go to Six I’m like I wouldn’t hold I wouldn’t wait i’ I’d try to make her go away the pro my problem is and this is just me being really honest like my problem is is all sell into a rally and maybe sometimes too quick is you know I you know I I’m a big proponent in keeping stuff moving right um especially on the non-fair side and so sometimes I’ll sell into it too quick and probably because I’ve been burnt before by trying to hold hold on I’m trying to take my lumps but so I miss sometimes like the peak you know I missed five copper you

know I missed 520 or 518 copper because I sold at 475 485 I was like oh my goodness like I’m I’m trying to take advantage and then you know watch it go up another 40 cents or you’re like well geez I could have just been a little more patient you know but you know I’d rather sell into it than try and you know get on the other side of it we’re going have to teach you stop losses you know if it if it drops 2% you’re out right but you just got let that baby go I don’t know I’m just trying to keep that going out the door so how does all this relate to the feris markets this month well I think so one one as a buyer I get all excited when I see copper nickel some of these these these Metals go down because towards the end of the year every small siiz scrapyard says I’ve had a good year I’m gonna sell a load of copper I’m done selling Ferris right I know the shredders will be hungry for shred feed December January I’m I’m good I’m not going to

sell any I’m not gonna sell any shred feed yeah and guess what they’re always right the shredders are always hungry December January and they can always liquidate it and they’ve got a couple extra bucks on cash flow because of the copper let them get them through those 90 you know 60 90 120 days whatever it is yeah this year that ain’t the case if you missed it you know they’re probably just the opposite you probably bought some copper because they’re not selling full loads of of straight copper right they probably bought some copper when they spent too much now they’re upside down and now they got got the decision do I sell my shred feed which is because I need cash flow or do I take the lump on the copper and sell the copper yeah either either way I think I think they’re gonna sell the shred feed and I think that keeps the the market the fair side I think it keeps things thin throughout the the chain so I don’t think Ser steel service centers have a lot of inventory I don’t think steel mills want a lot of inventory I

don’t think scrapyards want a lot of inventory right and so to me this this creates a situation where the whole supply chain becomes super thin and you is if we get any kind of pop on demand you could see the market go higher if you if you keep seeing these stagnant markets and that’s where this like bipolar Chad comes in because yeah it feels like the markets are heavy but at the same time it feels like we’re getting ultra thin throughout the supply chain well yeah just not I mean I don’t know I mean you travel around and it’s not like there’s just an abundance of scrap at the yard still you know I mean I think everybody for the most part is trying to keep m iial moving I think your export yards might be the exception especially on the west coast just because there’s been you know it’s there’s not as many options as there once was you know to export Ferris off the west coast and if there is I mean it’s you know that the pricing has been uh challenging I think um so that kind of makes the West

the West Mills you know be able to buy a little bit more they maybe a little Fuller um so maybe maybe that makes it a little more challenging for us maybe move scrap sometimes but that deal always changes you know that deal can change on a dime and I I do wonder I think you know the East Coast I like they they’ve been able to move their they’ve been able to export their scrap you know fairly easily sometimes but not at the price that they would prefer right and so then I think the domestic Mills have been able to control the market I feel like they haven’t in a long long time for an extend Ed period of time right I think it’s they’ve had a lot of control over this domestic scrap market and I don’t see that changing anytime soon do you well so or you not even agree well so I I one I think the East Coast I think so I’ll I’ll tell you hot roll today and is is 480 fob China Hot Roll coil right that’s insane uh we’re you know we’re just we’re at 40 scrap nothing

too long ago right they can in they can CH uh turkey can import turkey bill or Chinese billets today at 480 delivered that’s wild so how you buying 380 heavy melt you’re not so I think the I think the east coast is going to be in for a long haul the only thing that’s surprising to me is is pig iron pig iron is still in the 470s right it’s just hanging in there and I think I think the the big boys have been trying to beat this price down and clearly they’re in the driver’s seat because you got 380 bushling you got bushling $100 under pig iron which isn’t like not historical um so yeah I’m with you they’re they’re beating things up now well they have they have a tremendous amount of control right now right I mean the domestic steel mills have I mean they they’ve been a then the driver SE and for an extended period of time too I mean it’s not like they’ve had a couple months where you know but I feel like they for an extended period of time the domestic steel mills have had you know

their way with this Market yall scrap dealers had your way with the market for several years we give us like a month if we get one month of winning we’re like yeah yeah and then then we it goes away so I I know better you know but but on this chart please take note that look at look at the import levels right this is a great chart by August but you can see Imports are coming down on of pig iron because the pricing is so high and so that’s important to the scrap guy because while successfully beating up Prime as we’re slower but just one little uptick in demand they the the Mills typically have the Dr hbi pick iron kind of hammer and I think with this big disconnect that that hammer is just not there’s no validity there yeah so all right so let’s talk about I mean the real the real big elephant in the room right is demand like we’re talking about China not doing well we’re talking about um the whole world turkey is obviously going to have to change a reference um between scrap and billets what what’s

happened in the US well the good thing is um us steel Imports are down 24% from June to May so that’s great news right uh the bad news is is this black line right here is the the the man lead time for hot roll it just jumps from three and a half to four weeks three and a half to four weeks three and a half like so it’s not moving and so we’ve seen some upward pricing and I’ll show you that chart later but you’re not seeing a lot of it’s not like oh hot rolls bottom every service Center’s out there like load the load the boats right yeah it’s like maybe but the big reason I mean the big reason could be for the lack of of imported material on a volume basis could be the demand is still sluggish like whether it’s domestic demand import demand demand as a whole is sluggish which is why you see shortened lead times and less Imports which goes back to our original how we started this conversation of the on the manufacturing side on on the scrap side we always recognize a recession before maybe

other people do um that are say stock market driven versus like real world like in the trenches driven and that’s a demand um tail yeah and so let’s switch back over to the bipolar side let’s look at this chart this is the hot roll domestic pricing it jumped from 670 to 700 right so positive news is this a dead Cal balance is this realized you know I think the the lead time chart kind of tells us everything we need to know right yeah but but it’s good news and and Brett I really want to highlight another great chart by Argus is look at this spread between hot roll and bushling like these poor steelos they can’t make any money just look they can’t make any money cred you know trying to keep the lights on those poor guys you know I just I can only imagine how how tough it is Ian you see you see that tiar like working its way down my eye if you can’t see it it’s there I promise you it’s it’s there and this uh so this chart here too is the hot roll December um indicative curve

and it’s at 791 and it’s higher than 700 of course but you can see it just continues is to go down so I I don’t know lower highs and lower lows is what it feels like to me boys and girls get a little Spike and then back down back down we’ll be below 780 this month yeah yeah so right I mean so yeah if if a guy you know if a guy owned a pipe company you know a friend of mine owns a pipe company and they buy a lot of steel pipe and you know my friend told me to ask this question he said is now a good time to buy more pipe or should I gota just wait and see where this thing goes well asking for a friend yeah well I’m not an investor so this isn’t investing advice but I would say you’re we’ve if we looked at the hot roll chart which I’m sure I got here somewhere like you you you got to ask yourself here here’s the chart right like let’s look at this one so if you would say okay one so 23 late 23 now

this time we’ve kind of bottomed at these levels right you look to the left we’ve seen some consolidation what you also got to say is not too long ago in 20 we got to down to $500 Hot Roll so how bad does Demand right if is if we see inflation rates cut get cut in you know 45 days and people take that as you know we’re all going to be turned around in the world then we probably maybe we have bottomed that at $700 Hot Roll But if demand is way it’s looking the way I’ve been hearing from the scrap guy for the last you know six eight months nine months whatever then then demand sucks and the world is falling apart and we’re going to see it Go lower so well and keep in mind 2020 as it came down that was covid and there wasn’t a lot going on everybody’s taking their cesta everybody’s everybody’s half the people wanted to be essential and half the people were happy to not be essential out there taking some time off but you know I think obviously you saw how hard that thing bounced which

is crazy um I mean like un unrealistic like like not ever seen before but um so I feel like more of that chopping along that 700 you know unless something turns unless something magic turns and they turn on the helicopter money again and get the rates lower we could be fighting this battle for a while yeah and I I just think back to the the poor old steel mills I mean whether whether you’re making hot roll or drilling oil or what whatever you’re doing is inflation’s real right like if your conversion cost was I I remember when I got in the business so you can make a ton of Steel conversion from scrap to Steel is 180 right now it’s three supposedly 300 right well if you’re selling hot roll for 700 you know you can’t be you can’t be spending $4 or $500 on scrap in making money right in fact you can’t even be spending 400 in making money so that’s where we’re in this weird time you know Pig IRS at 470 hot rolls at whatever number you want to call it today 670 700 630 you know I’ve heard a

huge range it doesn’t compute and I feel like these steel modes are under pressure you got Big River coming online high bar coming online you more capacity it’s going to keep beating up these prices right everybody wants to you whether you r a shredder or a Shear you got to keep so many tons going through that that thing to to cover those fixed costs steel mills are the same way and so you just have all kinds of pricing pressure and until let’s be honest the new cor world are trying to just knock out the b so until the blast furnaces flip the switch off it’s gonna be I just don’t see how a market where there’s gonna be a lot of like oh wow hot rolls on fire and the only way that the scrap the the US domestic scrap guy sees any relief in my opinion as more capacity comes online and as they drive the the pricing down is if the export Market can somehow find some some strength because that’s the only way that you’re going to be able to keep the domestic guys quote unquote honest but I’ll tell you

this if China’s got four what was it delivered Billet 480 480 Billet yeah 480 Billet delivered that’s still it’s going to be and I don’t think to be fair China’s conversion costs are not $300 a ton right turkey’s conversion cost rebar not $300 a ton so let’s be realistic in the US it’s just expensive to operate for reasons we won’t get into here because that’s a whole another show but uh but the reality of it is like it’s still it’s it’s not being done for free so and if if China’s delivering Billet to Turkey for 480 then there’s a lot of room to come down in the fair scrap markets if you’re not uh on your game so it’s it’s gonna be it’s GNA be a challenging I think I really really think I’ll take the up money I’ll take the sideways money whatever that is this month but it feels like that you know you look at that chart I mean just look at that 2018 to 24 chart that you have up look at the second half of every year it’s down every Year from 18 to this year the second half

of the year is down whether it was covid whether it was before covid whether it was 2018 the last half of the year and every one of those charts is down we’re I mean take it for what it is maybe this is the year that breaks the trend but we’re on the second half of the year and you know the positive guy of me like to say yeah thing’s going back up but I think if you got tons it might be worth you know keep I’m moving well and if you look at we look we can check out the turkey chart here so on this chart you got the top blue line is turkey pricing per gross ton heavy M next one is New York delivered export yard and then that’s the gray one and then the light blue one is uh feris scrap number one heavy melt delivered National Consumer in the US per gross ton and so you can see is that between the ferris some scrap us consumer national average delivered and where turkey’s at there’s a there’s a gap historically than we’ve seen in the last 18 months right yeah

and so is our Fair heavy melt price going to come up in the US or is turkey price going to come down to get back to kind of average right what’s your guess well I think I I think I answered that one with the bill cost God dang it I’m tired of listening to your all right so I but I do have some positive news here all right let’s go let’s end let’s end on a good note and and this is probably the the most positive one and that is is we’ve been beating up the the the offs slate market right the one thing I I kind of alluded to as a bullish point is like hey there’s a huge de Delta between pig iron and bushling today right yeah and and this is right here if we’re looking at the bushling futures um this is August so this is this is this month yeah and what you know late last week we seen the price prop from 380 to 420 and and like and a a few contracts not just like one or two I mean this was like I think is close

to 8,000 tons so that I find that compelling and I feel like whenever lead times come back I feel like there’s you know we don’t know what the Market’s going to do but risk to reward you would say where where’s more risk and where’s my reward and I think we’ve seen a little pop here so this this is your your good news on the day you feel like just your opinion do you feel like that’s people Trading the market like just pure Traders or do you feel like that’s people hedging a certain amount of their supply like it’s a true hedge yeah so I mean typically I will tell you um I’ve talked to a lot of Traders and talk to um I’ve pretty much talk to a lot of the folks in the market that participate in this except the the big agencies of the world right yeah and there’re and the Traders pretty much are always wrong right and so because the other the other side of that is the big steel bills and so I will tell you is when I do see especially like higher like there’s no a

lot of volumes traded here you know F so number it says five on the the most recent one that’s five Lots five times 20 that that’s 120 tons that’s not you know 100 so it’s nothing right um but when you when you do see 100 contracts trade or you know in this case there’s like eight you can kind of see you know over the time but but it’s like okay is that who’s on those trades and it could be someone that sold some hot roll who says hey I have I made some money I want to just lock in my I got my conversion cost I just want to lock in 8,000 tons 5,000 tons just to help cover my position just in case the market goes higher right or just in case I can’t buy that could be the case right um or could be some speculation out there but but I I don’t know that answer I just tell you that this this does seem to speak volumes in in the prime world and so could it could it be somebody just taking a position just to try to push

a narrative that that scrap is finally done going down and you should buy Hot Roll I don’t know it could be yeah I mean because at the end of the day if if you make the trade and and it ends up being a good trade but it also if you’re also in the business of selling hot roll or if you’re also in the business of you know producing bushling it could have a dual effect right if you win you could win it on both sides so I mean I think that might help help the cause yeah so we talked a lot of mixed results today but one thing I’m abs certain on is shredded and Prime scrap trading at the same level is is not sustainable cut grades are going down or primes going up and this chart will kind of help you which which one’s going to happen first yeah I mean it’s do your research people listen to the podcast do your own talk to your talk to the people that uh that you know you you you do business with that you trust but pay attention I mean Argus does a

great job putting those charts you know putting them out you know if you the tools are there right to use it’s just a matter of getting on there and trying to think through what’s going on um but you always do a good job putting them together Chad so I always appreciate having this podcast and for those of you that got something out of it send it to somebody else that’s got to trade some scrap this month or get you know that could use the information so thanks again man for being on and stay positive out there guys it could be a tricky finish to to 24 but I think you know the the grass is is will be greener someday it’s just it’s a little rough to today well I appreciate your your time today and I look forward to talking again next month all right man have a great month everybody