Scrap Life Podcast – Bulls vs. Bears (February 2025)

Brett: Welcome to Scrap Life, a podcast focused on the hustlers, grinders, operators, and business owners who live and breathe the scrap metal industry every day. Here we go—Bulls vs. Bears, February 2025. Crazy how January’s already gone, and February’s here. Last time we did this, we were anticipating an inauguration on January 20th. Now, a few weeks later, we’ve got a lot to unpack—tariffs, a strong dollar, foreign trade, imports, and exports.

I brought on the smartest guy I know when it comes to all this—Mr. Chad Ellerbrock. What’s going on, my man?

Guest (Chad): Hey, Brett! How are you?

Brett: I’m good! Just doing what I do—trying to keep the lights on. Watching all these executive orders, tariffs getting put in place. People are getting a little squeamish. And hey, I own enough crypto and other investments that I got whacked over the weekend, but I’m a pain equals future gain kind of guy. Bring the pain because I know the gains are coming! How about you?

Chad: You know, I had to put my blue shirt on today just to poke some fun at you! I’m excited to talk about the charts today because we’ve got a lot of macro events that could affect our industry. Should we start with the overall market or dive right into tariffs?

Brett: Let’s deep dive right into tariffs first—hot-button topic right now. A lot of people want to discuss how it’ll affect our industry. What can you tell us?

Tariffs & Market Impact

Chad: So, as of this recording—Monday, February 3rd—there isn’t a ton of detailed information yet on the exact U.S.-Canada-Mexico tariff situation. However, here’s a general snapshot I pulled from The Iron Press over the weekend. It shows all the imports the U.S. takes in on average.

One of the major routes is U.S. scrap exports to Turkey—about 300,000+ tons per month. On the flip side, Canada exports roughly 200,000 tons of ferrous scrap to the U.S. monthly. Of that, around 60,000 tons is prime scrap, and 140,000 tons is obsolete scrap.

With a 25% tariff, that scrap just got a whole lot more expensive. The big questions are:

Will the Canadian market lower prices?

Will U.S. mills just pay the tariff?

Will this make domestic scrap more valuable?

What’s your take?

Brett: It could go either way. If U.S. mills can buy domestic scrap at only a 15–20% premium, that’s still cheaper than paying the tariff on Canadian scrap—unless Canada drops prices. And let’s be real, export markets outside the U.S. are still tough for scrap right now.

Chad: Exactly! And for mills in Detroit, Indiana, and Ohio, this really matters because they rely on scrap from Ontario. So what happens now? If I were a steel mill today, I’d be looking at alternative sources:

Clean shredded scrap

Scrap substitutes (pig iron, HBI, or DRI)

Brett: And pig iron prices are actually down, right?

Chad: Yep. Last month it was $446.50 per ton. This month, it’s dropped to $422.50.

Brett: That’s interesting, especially considering that scrap yards are running lean due to harsh winter conditions. Steel mills have been keeping inventories low, and service centers have been cautious because of market volatility. Now we add tariffs into the mix? This could get wild.

Market Trends & Optimism

Chad: Exactly. Right now, steel scrap feed prices are up about $15 per ton. It makes sense—scrap availability is getting tighter, and mills are going to need more. If order books start filling up, we could see a big pricing jump in the next couple of months.

Brett: That’s what I’m hearing too. Some optimism is creeping back in, and spring is historically a strong season for scrap markets. If that happens, we could be looking at a serious price run-up.

Chad: Yeah, the big question is: Will steel mills panic and start aggressively buying, or will they wait it out?

Brett: If you’re a steel mill buyer today and your inventory is low, you’re in a tough spot. Hot-rolled coil (HRC) prices at $740 per ton already feel low, and demand is only going to push that number up.

Chad: Agreed. If trends hold, we’re breaking into bullish territory.

Stock Market & Inflation Outlook

Chad: Now, let’s talk broader market trends. We’ve hit frothy levels in the stock market, largely driven by the Magnificent Seven—Google, Tesla, Meta, Nvidia, etc. The top seven stocks make up 40% of the S&P 500.

If they take a 10% hit, the whole market drops. Just look at Nvidia—after China announced Deep Seek AI, Nvidia dropped 16% overnight, wiping out $600 billion in market value. This morning, the market is down 600 points.

Brett: Traders will rotate out of the Mag Seven. But where do they go next? Industrials? Commodities?

Chad: Could be! And Dr. Copper is up. Last month it was $4.07 per pound—now it’s bouncing around $4.25. That signals some real optimism in commodities.

Brett: Copper is essential for AI, infrastructure, and industrial growth. There’s still a ton of upside.

Chad: Yep. Meanwhile, inflation has ticked back up, but if Trump’s administration cuts spending and fraud, it could stabilize.

Brett: I don’t think inflation will be as big an issue as people think. Other countries are dealing with 10–15% inflation. If we rein in government spending and fraud, we could offset it. It’s like running a scrap business—if you stop the leaks, you don’t feel the pain as much.

Chad: Exactly! Cutting waste strengthens the economy and the markets.

Final Thoughts

Brett: At the end of the day, scrap businesses thrive on resilience. Uncertainty is constant—tariffs, wars, inflation. You name it, we’ve seen it. That’s why my favorite mantra is chop wood and carry water—stay steady and keep grinding.

Chad: Couldn’t agree more. In this business, out of every 10 years, you’ll get two great years, five break-even years, and three tough years. The key is positioning yourself to capitalize on the good years and survive the tough ones.

Brett: Amen to that. I think we’re setting up for a strong February. Hold the line, everybody—good things are coming!

Chad: Thanks, Brett. Talk soon!

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