[0:02]
Intro: 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!
[0:18]
[Applause, Music]
[0:20]
Brett: Bulls versus Bears! December—the last one of the month, the last one of the year, 2024. We’re going to close this thing out right, with only positive news headed into what I expect to be an awesome 2025. Only the best information today—no downside, no bear talk!
Chad: What’s up, man? Here we go—let’s do this thing!
Brett: Chad, it’s December. I actually kind of felt bad for you, so I made up nine bull points. One of them is even the weather—I’m reaching for anything here.
Chad: Wait, what about Trump getting elected in November? That should lead the charge, right?
Brett: Absolutely! Let me tell you, last night at dinner, my son asked me about the best risk I wish I would have taken but didn’t. I told him about a business I could have bought back in 2014 or 2015. It was a great opportunity, but I wasn’t in the right position, so I passed on it. Then he asked me when my business started doing well.
Chad: What did you tell him?
Brett: I said it was around 2015 when Trump got elected. Things got pretty damn good after that. It changed a lot of fortunes for me, my family, and my friends. That’s why I’m optimistic—I’ve seen this movie before.
[2:00]
Chad: That’s a solid point, Brett. Let’s start with that as Bull Point #1!
Brett: Let’s do it. What’s the chart you’re sharing here?
Chad: This is the U.S. steel imports chart. Trump has already been tweeting about bigger tariffs on Canada, Mexico, and China. Steel imports currently make up 23% of all steel consumed in the U.S. That’s a quarter of our steel! If tariffs increase, it’ll make a big impact.
[3:00]
Brett: That’s leverage, right? Trump talks about it in The Art of the Deal. He knows the U.S. has leverage with tariffs because we import a lot of steel. He’s basically saying, “Think again if you think we don’t have leverage.”
Chad: Exactly. Canada, Brazil, and Mexico are the biggest steel importers into the U.S., and Trump is putting pressure on all of them.
[4:00]
Brett: If steel mills are making money, scrap guys should be making money too, right? That’s your saying.
Chad: Absolutely! The 232 sanctions gave domestic steel mills a boost and allowed for new facilities like Big River and High Bar to be built. If mills do well, scrap has a better shot.
[5:30]
Brett: So, what’s the big question we’re trying to answer today?
Chad: Whether U.S. optimism outweighs global pessimism. A strong U.S. helps the world because of the U.S. dollar’s role as the global currency.
Brett: A strong manufacturing base in the U.S. generates more scrap and creates opportunities domestically.
[7:00]
Chad: Exactly. The purchasing managers’ index (PMI) shows optimism in U.S. manufacturing. It’s a step in the right direction.
Brett: I’ve talked to people across the U.S., and they’re optimistic. Equipment manufacturers are quoting more, trucking and lumber are picking up, and people feel good about their jobs.
[8:50]
Chad: The stock market is up 7% month over month. That’s a real indicator of optimism.
Brett: Optimism is great, but we’ll see if it turns into real sales and demand in January or February.
[10:00]
Chad: Now let’s shift gears and talk steel. Why are we importing more substitutes like pig iron during a weak steel market?
Brett: Strong dollar. It’s cheaper to import substitutes than to rely solely on domestic scrap.
[12:00]
Chad: Even with steel mill output rates slightly down year-to-date, we’re not off a cliff. Lead times for hot-rolled steel are stable at five weeks, which isn’t great but not terrible.
Brett: It’s sentiment. Positive sentiment needs to translate into hard dollars—equipment getting purchased, lead times shortening, and demand increasing.
[15:00]
Chad: If the new administration deregulates and strengthens the economy, that sentiment could turn into real growth.
Brett: A strong domestic manufacturing base insulates us from cheap overseas imports like billet. That’s why tariffs are important—they protect us while we rebuild.
[17:00]
Chad: Speaking of tariffs, inflation is a delicate balance. Dr. Copper is down 6% month over month, but it’s holding steady at $4.06. If domestic and Chinese markets pick up, copper could test $5 again.
Brett: Agreed. Nickel is down 10%, driven by lower manufacturing demand globally.
[20:00]
Chad: Export markets aren’t looking great. East Coast scrap prices are down $23/ton. Volumes are also down—it’s not just about price.
Brett: That tracks with the strong dollar. Exports struggle when the dollar strengthens.
[25:00]
Chad: It’ll be interesting to see how the next few months play out. Hopefully, quotes turn into orders, and we see real demand pick up.
Brett: Absolutely. Let’s pull charts mid-January to compare where things stand.
Chad: Sounds good. Stats show a lot but not everything—business acumen still matters.
Brett: Exactly. If steel mills are making money, scrap guys should be too. Let’s make 2025 a strong year!
[28:00]
Chad: Thanks for your time, Brett.
Brett: Thanks, Chad. Let’s get the New Year started right—no need to wait until January 1. Let’s go!
[28:40]
[Music]