A Scrap Life: Bulls vs. Bears (November 2024)
[0:02] Host:
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’s your host, Brett.
[0:19] Brett:
All right, here we go—November 2024! It’s time for A Scrap Life: Bulls vs. Bears. I’m here with Mr. Chad Ellerbrock to talk about all the goodness November has to offer for those of you sitting on some excess scrap metal.
Chad’s going to give you both the bull case—some positive news—and the bear case for the pessimists out there. Chad, what’s up, man? How we doing?
Scrap Market Overview
[0:55] Chad:
I’m doing good! How about you? Is there a lot of scrap piling up in your neck of the woods?
Brett:
No, there’s no scrap here—just dirt and asphalt. All the scrap? It’s been sold.
Chad:
Well, I’ve got two bull cases and four bear cases for you.
Brett:
As long as you don’t ruin our holidays too badly, I’ll let you have November. What’s your take on things right now?
Chad:
The big question is demand. We’ve had a lot of sideways markets this year, and demand has fallen off with them. Do you think this is related to the uncertainty of the election or just the outlook for next year?
[2:00] Brett:
I’ve been saying this for a while now—it feels eerily similar to the 2015 election when Trump won. Back then, everyone thought Hillary was going to win, and when Trump got elected, it felt like the gloves came off, and the markets turned back on.
This year feels similar. We’ve had an interesting four years—not bad from a scrap perspective, but interesting.
Optimism Around the Election
[2:50] Brett:
I think Trump’s going to win, and if he does, I believe people will breathe a sigh of relief. Optimism goes a long way—it gets people spending money, investing in equipment, inventory, and projects. That’s what drives the scrap business.
If Trump allows oil drilling, we’ll see the OCTG market get a boost. Maybe oil prices will come down, depending on global factors. Overall, I’m optimistic.
Chad:
Paul Tudor Jones said it: “All roads lead to inflation,” whether it’s Trump or Harris. That means good news for commodities like gold, copper, and even Bitcoin.
Iron Ore and China’s Stimulus
[6:00] Chad:
Let’s start with iron ore. It’s up 11%—from $92 to $104. That’s surprising because it dipped in September but then bounced back.
Brett:
Did it bounce when China announced their stimulus plans?
Chad:
Exactly. They talked about stimulating their economy, which pushed iron ore prices up. If China follows through, we could see a sustained boost, similar to what happened in 2016.
Pig Iron and Domestic Mills
[7:48] Chad:
Pig iron prices are down $5, from $465 to $460. Interestingly, we’ve seen a pop in pig iron imports recently.
Brett:
Why are mills importing pig iron when bushling is cheaper?
Chad:
It’s about efficiency. Mills are always balancing cost and throughput. When margins are tight, they’ll melt cheaper materials like heavy melt and turnings. But when margins are strong, they’ll focus on efficiency and melt higher-quality materials like bushling and pig iron.
Steel Mill Operating Rates
[10:26] Chad:
Steel mill operating rates are up slightly, from 74.1% in September to 74.7% in October. That’s a half-percent increase.
Brett:
So why are mills sending out cancellation notices?
Chad:
Cancellation notices don’t always mean price drops. Sometimes, mills want better control over how many tons they’re committing to buy. It’s a way to protect themselves in a volatile market.
Copper and Global Uncertainty
[14:46] Chad:
Copper is down 3.3% this month, from $4.49 to $4.34. It’s a reflection of uncertainty—especially out of China.
Brett:
Exactly. If China follows through on its stimulus promises, we could see copper spike back up to $4.50 or higher. If not, it could drop back to $4.00 in no time.
Turkey’s Scrap Market
[21:46] Chad:
On the export side, Turkish scrap prices are down $26 from last month. This puts domestic mills back in the driver’s seat.
Brett:
Exactly. When Turkish prices drop, domestic mills gain more leverage, which is why we’re seeing those cancellation notices.
Hot Rolled Coil Prices
[23:00] Chad:
Hot rolled coil prices fell to $700 in October, but mills recently announced a $20-$30 price increase. Futures are showing signs of improvement, but spot prices remain around $700.
Brett:
It feels like we’re muddling along. Maybe nobody picks a lane, and we just keep moving sideways for now.
Final Thoughts
[24:39] Chad:
If I had to call it, I’d say it’s a soft sideways market. Flows are down, industrial accounts are slower, and demand is murky.
Brett:
I agree—it feels like we’re kissing our sister this month. But I’m optimistic about the election and what’s to come. Ask me next week where I stand, and we’ll go from there.
Chad:
Thanks, Brett. As always, check out the charts and analysis on Best Scrap Ever. See you next month!
[26:26]
[Music]