welcome to a scrap life a podcast solely focus on the hustlers Grinders operators and business owners who live and breathe the scrap metal industry every day we are the original recyclers no suits required just guts and hard work here is your host Brett Eckhart all right um another scrap life podcast and this one I’ve been kind of working on for a while and I had the pleasure of listening to John gross speak at the last misery roundtables conference I don’t think he even knew I was in the uh audience I kind of snuck in at the last minute after I left the scrap Expo but I really wanted to hear what he had to say I wanted everybody to say for a few reasons a a vast amount of experience B um I met him on LinkedIn and he’s he is the author of The Copper journal and I was just following what he was saying and I felt like he was he was providing good information and and I just I was like man I I’ve always prided myself on on surrounding myself with uh smart people so here I am I

finally got him to sit down and talk to me welcome John and thanks for uh coming out thank you so you know I’m a big proponent of LinkedIn I feel like there’s a lot of opportunity available there for for business owners managers um you name it especially entrepreneurs that are trying to get information about what’s going on and picking the brains of people that have been there done that and when I came across your stuff on copper I was like who’s this John gross little did I know you’re pretty well known in the industry but at this at the time I was like I want to kind of see what he’s got to say and you were posting some historical charts and this is what what copper looks like inventory wise yeah yeah I saw it I ended up subscribing to The Copper Journal so in a I want to get your kind of past and history and kind of explain to people how long you’ve been doing what you’re doing and kind of your history of the copper market and I guess I could tell the story but I want to hear you

tell a story so give us a little history John well uh I’ve Had The Good Fortune to uh have worked in the in the metals industry and primarily in Copper for uh more years than I care to relate but I’ll say I started with a company called Amex and they owned U.S Metals refining company and this is uh back in 1972. U.S Metals refining was a secondary copper smelter that was operating in Carteret New Jersey it was the largest secondary smelting operation in this country and I can tell you that there was there was no better place to learn the business overall because they were involved with importing copper bringing in scrap bringing in cathode and blister and anodes from South America uh they had a precious metals Refinery they were very deeply involved in hedging so you you learned all aspects of the business uh in that company uh I was with them for uh 10 years or something like that and um went on to work for Hudson Bay Mining and smelting as manager of trading and precious metal sales so that brought me to the more of the commercial

side of the business from the administrative side and um from that point I thought I could go to work as a Futures broker and I went ahead and did that it was in 1984. and if there was any one worth time to become a Futures broker that was it because we had a very terrible bear Market at that time in an even so I did that for a period the market turned down and that wasn’t going anywhere I joined the wire and cable company as their manager of procurement and ultimately the company became the one of the largest uh wire and cable manufacturing companies in North America so real quick when you join the wire and cable company John was was did they hire you for your background on understanding um the copper market and you know the movements of where it was going and so they could basically get ahead of any big price action and from for their manufacturing process that that particular history is very interesting because I did not have the background in wiring cable that I can tell you yeah well it didn’t sound like it it sounded like

you’re just more of a Commodities analyst and which is something a point I want to come back to but I want to hear you know why why they felt value in the knowledge yeah so this this is interesting um if we go back to the early 1980s period uh bear Market copper producing companies were in terrible shape Phelps Dodge uh was not only a mining smelting and refining company uh they had uh wire and cable companies that they owned they had breast Mills that they owned but when they got into the 1983-84 period uh they they were in deep trouble they were on the verge of bankruptcy and they decided to sell off the wire and cable operations and the Brass Mill operations and other other parts of the company and the fellow who was president of the wire and cable division man named Harry shell he led a management buyout of two of the power cable plans from Phelps Dodge he was born in Yonkers New York and went out in Duquoin Illinois that was the beginning of a company called Cadillac Corporation so when they were part of Phelps Dodge Phelps

Dodge supplied all the copper that they needed there was no need for anybody within the wire and cable division to be involved in the market the parent company took care of it but now Phelps Dodge was on the the cablec was on their own and they didn’t have anybody on board who had experience in metals industry and that’s why they brought me on board which you would think you would think that you know even though with the Commodities I mean I guess were they more heavily weighted on the mining side and getting hurt on the Commodities versus because you think being vertically integrated like that which it sounds like that’s what they were their own ability to mine smell produce an end product um you would think that they would be able to weather a bear Market or a you know a down a downslope in Commodities better than really most people right well that’s what one would think but we have to go back to that time period as well uh because the Environmental Compliance was just coming to the fore oh and helps Dodge had to spend hundreds of millions of dollars

to get within compliance there were other operations uh osako had a smelter out in the Northwest that was shut down because they simply could not afford to bring it into compliance uh and and there were other things going on there were Union issues that they had to deal with so there was a number of things in any event uh what started out as those two plants that was the beginning of Kadlec ultimately became 16 Plants across North America wire and cable so they they were one of the largest consumers of copper and aluminum in the uh in the industry what would that what does that volume look like at that point you know and uh roughly speaking you say one of the largest consumers um is that a 10 million pounds a month a month is it a hundred million like what is that volume on that we were in Texas we were doing on the order of um 10 000 tons a month of copper and probably 15 a thousand tons a month of aluminum wow so every penny counts yeah yeah where was that material coming from as a manufacturer of cable

are you bringing it in um and you know and draw and basically like pull in the wire yourself or you bringing it in and I mean what is that what is that process look like and where was the where was the copper and aluminum coming from was it domestic was it being imported from other countries was it a combination at that time it was the on the copper side it was primarily domestic okay and you had you had quite a few Rod Mills at that time that you don’t have today uh you had more producers in the market making copper than you have today but but part of the the interesting um aspect of of managing the metals for them um was yes we needed to buy a copper Rod to get it into the plants to draw it into wire so how did you get the copper Rod you could bring in Copper Rod directly from A supplier or we could go into the market and buy copper cathode and deliver that to a rod Mill and bring that rod in or we could take scrap that we were generating and sell it

or give it up to a scrap dealer take back cat food send that to a rod Mill and make the rod that way so depending on the economics at the time you know the loose changing but those are the possibilities that you had wow yeah I mean that sounds like I mean that’s a lot of moving Parts yeah that’s a lot of copper you know and one thing I took away from that Israeli Roundtable meeting you know which I thought was fairly interesting and uh I think it was uh Tim stress that brought it up and but it was and it is kind of cool but it’s sad but I feel like there’s going to be a re-emergence hopefully but just the amount of domestically produced copper you know in during that time is mind-boggling to people that have been around for been around the industry for decades to think to think that a lot of our domestic needs copper wise at that time was was actually produced cathode and everything else was produced domestically compared to today which is very little correct well um the United States historically has been an

importer net importer of copper right uh but what has evolved now we’ve been in declining Trends on the production side and consumption side in the US for a number of years uh our uh input or excuse me our inputs of copper refined copper represent almost half of our domestic consumption oh wow that’s a that’s a pretty nasty number yeah it is and don’t really think about it yeah it’s actually scary yeah um but the point that I made I think at the entry meeting is that we have companies that have announced plans to build secondary smelters in the U.S we haven’t had a secondary smelter in this country in over 20 years right and the first company made their announcement probably two years ago and I guess other companies thought that was a good idea we ought to do that too it’s always that way right I mean it’s like the me too yeah I I I agree yeah I in my mind I believe that the United States is and I say this relative to Copper it’s on the verge of a turning point where the downtrends that have been in place

on consumption and production are going to begin Rising going forward and it is the secondary smelters that are going to contribute to that increase in production now having said that you’ve got three major copper mining properties that that are just stopped in their tracks right now because of legal requirements environmental implications social implications that uh if if they were allowed to go forward then the United States would be in much better shape in terms of being more dependent on domestic production rather than influence of metal so okay yeah so give me so going back to your history so you go to work um for the the cable manufacturer and now your your job is what on a daily basis uh it is it is managing the overall procurement of the metal for 16 manufacturing plants in North America it is the disposal of scrap whether it’s outright sale or total conversion for all of those plans it is managing the price risk exposure for inventory as well as firm price sales and that that’s another fascinating aspect of the business because there were two major divisions that they had one was the utility division

right and utilities uh are not taking chances on prices they’re going to say give me the average price for copper and aluminum and and that’s it when you get into the uh contractor Market the construction Market that’s a whole different ball game yeah because these people take a view of prices uh they have opinions on what the market is doing or what it’s going to do and they will firm up prices and and we will we will supply them with the firm price metal and so you are hedging that in the market and and managing all of the risks associated with that it was a you know it’s like it’s one of these situations where I should have paid them to let me come and do that because I loved it I could only as you as you described your job you know I was sitting there going oh my goodness I have my my job is so much easier on uh on on a lot of fronts than trying to manage all those moving parts um well it’s great fun but but the the value in that and this is kind of where

I want to get to right is is you’re when when you put out information you’re dealing with a guy that knows his for lack of a better term when it comes to Copper obviously at that time I don’t know how much aluminum on your was on it was on your plate as well but from a Commodities and understanding the cycles and understanding what’s going on you know and this is one of the reasons why I want to do on the podcast and this is one of the reasons why I subscribe to The Copper Journal is I came across you I came across your information and I’m like hey it looks legit it’s it’s and I one thing about my podcast is nobody pays me to do it I’m not a shield for some other products like I talked about that I use right like I had Constantino from cinebogen on the podcast because I run Cinnabon it’s like that’s what it is you know and so well I started um I subscribed to The Copper Journal because I wanted information so I could make better decisions to run my business and basically feel like

I had you know information available to me I I liked what you put together but that’s basically you’re you’re getting a guy who’s got a pretty vast amount of experience in Commodities specifically copper so can you run us through you’re going through we are going through a few charts and this is something I feel like um people had isary um at the round tables may may have gotten may not have gotten but you and I were just discussing the Bulls and the bull cycles and bears bear Cycles in Copper I think you if I recall and I’m not going to uh gonna I’m Gonna Let You discuss it but I feel like we’re there’s been 11 of them is that correct 11 bowl and bear Cycles well they’ve been there have been uh 11 bull market Cycles bull markets major bull market Cycles and 10 major bear Market Cycles we are currently in the 11th major bear market right now and one thing I one thing I appreciate about you as well is you’re not here to predict prices like you’re just saying here’s the information take it for what it is use it

to you know make the best decision you can moving forward with your business correct yeah exactly yep so do you want to share the screen if anybody’s going to watch us stay on YouTube or whatever and just kind of run us run everybody through some of the information we were discussing here yep I think I think the the audience the people listening the people watching will get a ton of value from this and and just to pre kind of Prelude you know this conversation is I I don’t hedge myself I look for Quality information so I can make the best decision possible to run my business if I feel good about it I I trade if I if I feel good about the price I sell if I feel good about the Buy price I buy if I feel good about the hold I hold I’m only on the I’m always on the hunt for Quality information so I can make the best decision for my business at the time if it’s a cash flow need we’re a seller we’re trying to Lo put some money in the coffers if we’re good if we’re

in a good position I feel like the Market’s got room to run I’m I’m not afraid to sit there and gamble on the material the information that John provides is just giving you the information of the markets and allowing you to make a good decision in your business that you feel good about this good for your business and that’s it so I’ll let you take it away John you know so um a number of years ago uh that the question arose in my mind of what what might we learn if we looked at the price of copper on a daily basis going back uh to 1970. yeah and so what we’re looking at here is a spreadsheet in this column with the shade here the comex close we have the closing prices uh going back to January of 1970 daily basis so you got about 13 200 price points in here and this spreadsheet feeds the charts that we will take a look at in a moment um so let me just go to a a very broad brush summary of the market uh individual Bull and Bear markets and explain how the summary

is laid out and use that as a jump off point if you will to look at the individual charts so the first bull market that we have began in January of 1971 at 43.90 the market Rose to 1.39 in May of 74. he had a 95 Cent gain or 217 percent the bull market lasted 824 days or 3.3 years now the approach the approach here in the study is that you are at all times either in a bull market or a bear Market it’s one or the other when the bull market ends at 1.39 the bear Market begins same price same date the market fell to 51 cents in January 75. so you lost 88 cents or 63 percent and that lasted 179 days or a little bit less than a year you retraced you retraced I mean a good chunk of that from just shy 44 cents all the way back to 51 and it took you 824 days to get there but only a 179 to get back to day near to the bottom and is that the case have you noticed that when you’re comparing bull markets

to Bear markets does it move down faster than it moves up in your without just as a as a brief and just as a question in in these 11 bull market and bear Market studies yeah the way the way I look at it and I think the way it should be looked at and this is what history tells us it takes time for bull markets to grow there are markets on the other hand sneak up on us suddenly and they were vicious right and you’ll see that in the trunk but in this first Bull and Bear Market we had a net gain of 7.2 cents uh and the entire cycle lasted about four years one of the most important things that came out of this study and I only learned this by going through the exercise and laying out the numbers like this it says column we call the give back the give back says that you gained 95 cents in the bull market you lost 88 cents in the bear Market so the bear Market took back 92 percent of the bull market gain and that is that is critically important because

when you go down that column you see that the bear markets take back the vast majority of the bull market gains okay so you can just go back and forth down this sheet and where one market ends the other one begins when we get to the bottom uh the first through 10th bull market lasted a total of 26.7 years their markets lasted 23 years the bull markets had total gains of 12.72 cents bear markets had losses of eleven dollars so copper had a net gain over 52 years of 1.68 and I got to tell you I was surprised when I saw that because just I I thought the number would have been a lot higher which number did you think would be higher John I thought that the net gain between the Bull and Bear markets would have been a lot higher than a dollar 68. almost like a uh like a steep Mountain where you climb up a little bit and you come back down you climb up but you’re still climbing correct yep yep okay so uh in terms of the average give back for all of these bull

markets we’re looking at 93 percent the the current market and then I say we’re in a bear market now it began at 4.92 cents we had a low close back in July of 321 so if I just go by those numbers we have given back 61 percent from using that low price now the market has recovered from that low but we are still as I perceive it in a bear Market so if history is our guide then this give back is going to begin impacting current market so let’s say if it gives back on average just looking at the charts yep throughout the bear Market if it once it gives back 93.3 percent what does that put the price at um you don’t want to hear it if the price if the price Falls to three dollars you give back a 68 yeah right if the price Falls to 275 you’re 77 percent so I’m not predicting this I’m simply saying yeah no no I I’m just like I said and that’s one thing I like about you is you’re not up here trying to sell people on your ability to predict

a market you’re just saying here’s the cleanest best information do with it what you want you run your business accordingly which is exactly what I use your information for yep and you know you predict on your own what you want but here’s the info and go from there so if we just uh take a look at a few of the bull markets and a few of the bear markets to put this whole thing into perspective and I say again the the important thing here is the approach to identifying and isolating the individual Bull and Bear market so the first bull market that began in January of 71 at about 45 cents the market Rises it comes down it rises again comes down but the point being that it held the initial low point and then when we get into 1973 we get into a series of higher highs and higher lows until the market gets to a point where it cannot go any higher and that’s the end of that bull market the second bull market we’re still back in the 70s you begin here at about 50 51 cents you move up you

come back down you move up you come back down you held the initial flow point and here you get into the higher highs and higher lows until the market cannot go any higher that’s the end of that full Market very full Market late 70s early 80s same thing is occurring higher highs higher lows in this case the market came down to the red line it held went on to make a new high could not go any higher and that’s the end of that whole Market so if we then look at Bear markets and it’s going to be just the opposite in the early 70s the copper was up at a dollar forty it came down to the dotted line which was an approximate two-week low this green line is 100 day moving average very simple calculation it hits the red line and it just continues falling until it gets to the point where it cannot come any lower and that’s the end of that bear market so here copper had a high of 1.39 the low of 51. it lost 88 cents so 63 percent sorry because the noise out there the

landscapers are doing their work you’re okay uh second bear Market we saw it here at about 77 cents the market falls through the dotted line the trend line pushes down on the red line and here we get a major correction F of the bear markets have a major correction along the way which we were discussing complete we were discussing earlier that that’s what I mean if you haven’t heard the term dead cat balance or you know a bounce off the bottom before setting a new low the the balance if it never if it never reaches the peak right then you’re still technically in your bear market so you can expect if that thing turns back down again a major way that there’s potential for it to keep going instead of basically a lower low yep so once the correction is complete the bad Trend resumes until the market Falls to a low point it cannot go any lower and that’s the end of that bear Market and here here’s an example of the market sneaking up on you and being vicious that we’re up here at a dollar forty and you just you just

fall precipitously what’s the time what is that on a percentage basis look like um when you look at it and then I say you know from the dollar forty dollar forty one number two basically 85 um what is that that’s like an in a matter of two months one so the uh the high was on February 15th and then you’re at 85 cents March 27th so like a month into month and a half a couple of weeks yeah yeah wow and I’ve been continuing just declining how does that compare to the most recent one um from say March to so I would say March of 22 to you know this last week where we got from 492 to say three three uh 21 is that correct so we had the high uh back in March of this year at 493 roughly the market could not go any higher begins falling pushes down around the red line he has that low of 321. uh the market as of yesterday was 344 and we were up a few things today though the approach here is that when we’re in the then current market we look at

it this way with this approximate 20-week high 20-week low being the red and blue lines but we also look at it in the shorter term with a 10-week high and a 10-week low so we narrow the time frame but the price points are the same here’s your dollar of 493. then let’s get 321 but in using the tighter time frame we have a nearby high of 356 and that nearby low of 331. so those are the parameters that we’re looking at if we see the market begin pushing higher on that blue line then we say well hold on maybe something is changing I don’t know why but something is something is happening which which brings us to what occurred in the last major bull market and if we go back to the first quarter of 2020 when the pandemic started spreading the view the sentiment in the market in all markets was markets are falling everything is falling everywhere the world is going to end we’re all going to die and that’s all there is to it yeah what happened though was that copper stopped falling in March of 2020.

I don’t know why it stopped falling but it did and I’m updating my chart and I see the market beginning to move higher and this is completely contrary to everything that everybody’s talking about and expecting and before you know it we get into let’s call it around September and I’m seeing higher highs and higher lows in here Well we’d have a rising Trend underway right we’ve got a bull market happening we don’t know where it’s going I’m just watching this thing every day and walking with something already so the interrupt you real quick uh when you’re saying you gotta write your your you’re you’re starting to ride basically the Blue Line tighter right so like if you look at those other charts where you’re bumping along the uh 20-week low line right if I’m looking at it I’m sitting there going okay you know it’s if you’re sitting there bumping that you know every week you know you’re riding that blue line Tire which is the 20 week high you know that that there’s potential for it to keep pushing versus if you’re sitting there bouncing along the 20-week low line then

it feels like you know this is just me speculating as well but it feels like you’re you got more of a chance to kind of keep riding the red 20-week low line down versus going the other way correct right and you take that a step further the dotted line in here is an approximate five-week low so the market is falling to that five-week low but it’s recovering it’s not even close to the red line yeah right you go up here you’re up to four dollars and thirty cents you come back down to that dotted line you hold you move up again but even here when you when you hit that red line it held so when we get to this High Point and we’re looking at this at that at that time this way and in the shorter term we’re saying well the market cannot is not going any higher right now it’s coming to the Blue Line the dotted line it’s now pushing down on the red line something is changing I don’t know what but something is changing the market corrects a little bit and then begins coming down

in Earnest so uh this is the longer term view of it and if we looked at it in the in the shorter term uh you get kind of an early warning if you will though ideally you’re looking at the shorter term in conjunction with the longer term because you you want to see how they are relating to each other so this is a a an extraordinary chart actually an extraordinary Market is what it was so we can go back we can go back in hindsight and say well the market Rose because of the central banks around the world putting trillions of dollars into the global economy and that’s what helped the market move higher but that was not obvious in the early stages here and I think to your point and and if you want to click us get us back to uh full screen I think to your point and this is what I want to make clear in one of the reasons I want to talk to bring you on is we all we all run our business businesses differently and we’re always looking for as clean of information as we can

so we can make a judgment call on how we want to do it I deal with guys every day that are hedgers that’s how they prefer to run it I get it 100 you know do do what you feel is best for your business but when you’re when you turn on the news at night and you got Fox News and you turn on the news in the morning and you gotta MSNBC and you’ve got all these competing people discussing world events you know Wars um everything you know that they could they could possibly bring up that’s going to catch an eye or catch an ear to get you to pay attention you’re still you need to kind of do your best to drown out all that information and get as much quality information as you can so you can make the best decision you can and move on and I feel like there’s a lot of noise in the market and what really caught my attention early with you was you were really kind of pounding the the inventory story home was like Hey guys like I’m not here to tell you what the

price is going to be or should be but and we discussed this earlier but when I started doing these charts it was a pretty tight relationship to inventory and price and that has since gone away and I don’t know how long ago but you you basically like you can’t rely on inventory levels and price action to kind of coincide with each other right um do you want to speak to that a little bit but really to that point and this is one of the hardest things for anybody for all of us to come to terms with that that we we all have opinions on the market what we think the market should do because of this because of that and as you said you get all these news reports of of what’s going on around the world and it it’s very difficult to focus on what the chart is telling us as compared to what all of the news stories are telling us and what sentiment is telling us and and the lesson there goes back to that first quarter of 2020 when sentiment and everything told us the market should continue falling but

the charts are saying hang on guys something’s happening here don’t know what it is but the market is rising and the market was right yeah yeah it was riding the Blue Line like for lack of better right it was riding a 20-week high line a lot tighter than it was on the on the 20-week low line yeah and I think that’s what that’s what I want to get you know that and just the the complexities of our industry have changed so much um and you coming from a from a data analyst trading side you know for a manufacturer too I and I I don’t and I don’t pretend to know who you’re who 100 of your audience is for the copper Journal but I would have to assume that the scrap industry the recycling industry whatever you want to call it has started to pay more attention to guys like yourself out there saying hey like because there’s so much more financial complexity to our industry than just buying a truckload of wire and selling it you know selling it you know to some guy and in uh China or sell into

a wire chopping line in the midwest somewhere right it’s become a lot more complex and there’s a lot gonna be there’s a lot more um need for especially down the road and for the younger um Generations like hey recycling is there’s a whole financial component there’s a whole trading component to it now that maybe it didn’t exist 30 years ago or at least at the level it does today right right but I would I would take that just a step further okay I’m talking about some of the changes going on in the industry and and the point that I made at the history convention is that the changes that are happening that are underway right now as relates to uh copper recycling the recycling industry is right in the middle of the equation I mean that’s The Sweet Spot that’s what I got that’s exactly where they are they’re going to change the balance in the market which is a good thing it bodes well for the future of our industry absolutely and I think that’s the key and what’s one of the reasons why I do this podcast is um it’s I’m selfish

in the fact that a it allows me to talk to smart people much smarter than me on various aspects of the industry so itself is not regard because it goes back to like one of the principles I’ve always sad as my goal has always been to never be the smartest guy in the room and always trying to put myself in a situation where I can learn something or glean some information off um but B because I’ve the other the big piece of reason I do this podcast is to get My Generation the younger generation to know like we’re in a industry that’s going to be absolutely crucial to the foundation of of our country you know and to many I mean to every country out there um recycling isn’t going away it’s only going to become more and more you know important to you know as the inventories deplete I mean the material has to come from somewhere and it’s going to be a combination of mining and recycling right and it’s not going to be one or the other it’s it’s it is going to be a combination I truly believe couldn’t agree

more well I just wanted I like I said I have I put people on the podcast that I I want to hear what they have to say A or B people that you know I use their service or I they the equipment they manufacture or whatever and John you the information you provide me is good I’m happy um I appreciate you coming on and just kind of sharing sharing your thoughts on what you what you’re doing and uh I appreciate your time like if you guys haven’t if you guys want to go check John out he’s at the Copper Journal um he’s pretty active on LinkedIn as well and I encourage you to at least take a look so thank you again John good deal thank you looking forward to getting together one of these days for a cocktail because we’re gonna make it happen you had your opportunity I know I missed the boat Story of My Life next time yeah exactly all right have a great have a great one everybody and thanks for uh for checking us out again