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 it’s official Bulls versus Bears number one of the year January 2023 here we come and I’m feeling pretty good about where I sit today on The Bold side of this Market I got my man Chad Eller Brock on with me once again to give me all the good news we’re looking at here in the great month of January regardless of what the stock market did today and what the dollar did today we’ll just kind of count that out um what’s going on man how was uh Christmas oh it was it was excellent I’m looking forward to this one I do I do got some bullish points but I got some bearish ones too of course I know you you always have bearish points that’s your job right and I’m here to tell you that there’s no scrap out there and if you’re uh if you

if you got some um bandwidth you’ve got some cash flow or whatever then January and you were able to hold through December into January you’re probably gonna do okay this month um and maybe even next month so we’ll get this party started I mean that’s the first question you gotta ask everybody’s so excited how how bad are your flows just let’s just get this over with there’s yeah I always are never good I don’t care if it’s beautiful outside and the price of HMS is 500 there is no flow um but no in all reality and this is speaking strictly regionally like the Northwest you know Rocky Mountain we’ve been just we’ve had a pretty rough December weather-wise which I think is translated really across the country I mean I know the South the Midwest I mean every buff I mean the new everything the whole the whole country guy has got hammered pretty hard I think last week the weather was pretty decent weather-wise but a leading up to that week man it was a couple weeks of uh pretty rough weather probably really for us started early early December which

in scrap if the price is coming down and the especially off of you know we’ve had a good run last couple years the price is down and the winners smacking you in the ass man it’s there’s there’s nothing nothing increases scrap flow like those two uh those two items so flow for us realistically is like I said I think previous month like we’re like 30 percent you know or something off right if I was just as a betting man without looking at the numbers in the last six months if you would have said there’s no flow I thought I would I guess there’s a story there but but I guess for December I would believe you that those were truly that’s why I’m asking I’m just asking for a little belief here I think talking to a lot of Mills I think water performance has reflected that also so that makes sense gotcha I mean I mean this is the first month that I haven’t delivered all the tons um that I committed to into one of the steel mills in a long time um and I just and that was mostly just like

accessibility weather Trucking um just it was tough man it was a tough tough go this month absolutely what and when you think about this inventories whether a shred feed or or what the Mills have it feels pretty tight throughout the system would you agree yes yeah I think there’s just not a lot of scrap out there right now and I think that’s I don’t know that the market is super strong on the demand side other than I feel like this is a pretty Supply Supply driven uh price move this month I would I would uh I would agree I got some charts that that just talking just about that I’m excited you do one thing I love about this this podcast is we get a few charts in our life so before we get into that tell me about uh and we’re talking about inventories tell me about like aluminum copper I know you keep track of those those of inventory levels where what are you seeing on that same man I mean ultimately and you know I was talking to some guys that like say bye you know let’s say AC RADS you

know um Moon copper radiators and they’re like man where’s the inventory what’s and you know that the prices they’re pushing the price pushing the price trying to get you know and to buy scrap and I’m like hey we don’t see a lot of as many AC radiators in December over here in Idaho like that’s not an item like we’re we’re replacing old furnaces here at that this time of year but so I mean you see items like that I mean you’re not seeing a lot of you know the price of copper was pretty dang good for a long enough time that it cleared a lot of inventory out and people who were saving and kind of looking for that good number so the day-to-day scrap is is Flowing you know the the Peddler’s scrap but you know we see a lot of scrap on the construction side too right you know new home build new um commercial construction and once that slows down along with the rest of it then you definitely see um the effects on those markets as well so you know we’re not seeing the big demo project the

big demo scrap we’re not seeing um at least we didn’t in the probably the last quarter of the year um a lot of the you know just the construction type material that you would you would see on you know up on a volume basis that makes it makes sense it sure does feel like things are slowing down here in the States but with China on the other hand it feels like for the first time in a long time they woke up and so we’ve seen the Shanghai steel rebar prices those Jan jumped uh around just shy of nine percent month of a month here yeah I think that’s you know we’ve we’ve talked about this and hashed this back and forth and and I’ve been kind of just him and on about waiting like I feel like once this once they open up and you know it’s it’s gonna be hurtful we’re going to feel the pain on oil I think at some point right I mean you hear people talking about it and if there’s real demand there man we’re going to feel it um but the benefit of that is we should

be able to get some of the advantages of that you know Market opening back up on the commodity side so yeah it’s going to drive the price of oil up we should drive the price of fuel up but hopefully it drives the price of scrap up along with it right absolutely and you know I look in this iron ore chart it looks very similar to that Shanghai rebar chart stretch to like pre-covered and see the the elevator escalator up downs of that whole deal because I’m curious you know how does this how does 103 compare to 2019 yeah that’s that’s a great question I mean this would this goes back to March and it’s at 160 so yeah okay but it’s either way I feel like uh you could argue this is a bullish chart I mean it looks like we’ve we’ve broke through um some lower lows on the left so I like it yeah I think there’s I think it’s there’s it shows some at least some potential opportunity right yeah absolutely and if thinking about uh what up another bullish Point here we have let’s pull up the the hot

roller chart got so we’ve seen this jump uh around just shy of nine nine percent went from 673 to 736. so I think this is a good sign too yeah I mean at least it shows that it’s it’s trying to find a bottom right I mean you saw what happened like what at the beginning you know I think the beginning of 2022 that February March I mean that big just pop was obviously Russia um so you know how true was that you know the the wall of worry it climbed right back up or at least close into the 1500 and then obviously from then on it’s kind of trended trended back down to I would say like pre-covered right um or somewhere in that in that range so you know I I’m hopeful that maybe we found a bottom in here but you can see from that chart going back to uh you know 2020 it if it wants to go down it’s got some ways to go it’s got some room to go down still right oh no way after inflation after fuel that that we can never see those levels again

hey dude I was the guy who’s like hey 99 oil like I don’t see it going lower than this and I watched that thing go to like 65. I’m like that’s why I’m not an oil Trader but I think I’m barely a scrap Trader let alone an oil Trader so what do you think about Otto I mean when you think about us shifting for more of a demand-driven market to supply driven Market how much because because lead times I mean last month and this is this is a bearish point let’s let’s just focus on that let’s make the transition yeah yeah so we went from hopes up and then uh then burn them down yeah so we went if you look well we’re going the wrong way here but if if you look at the steel lead times we went last last month at this time we’re at four to five weeks on hot roll now we’re at three to four or yeah three to four weeks so not a not no I don’t think anyone saying hey this Market’s gonna go up because the demand is so profit how much of that

is Supply driven Supply availability on in your opinion Chad just because I mean obviously it was more um capacity it has came on this year and more capacities is coming right so does that you know if we get the we get some export opportunities to open back up and then we get some more you know capacity you know here in the in the U.S what does that do to future you know cut grade you know Prime prices does that that should be bullish in the medium in the medium term to long term right well I think it’s going to increase the volatility and so last year you know some years you see a lot of contracts being done and you’re going to have a pretty steady Market because there are so many contracts this year I think if you’re a buyer steel buyer especially you’re probably with all the new capacity coming online you’re not real excited to get locking any big contract because you know we don’t know if this is the bottom or and the way things are projected to feel in 2023 why would anybody be real excited to get

into the long-term contract yeah with that being said you know if we’re living in this world and all of a sudden the man does tick back up even for a quarter I think you could see some some volatility in the market which could be helpful yeah that wouldn’t break uh it wouldn’t break my heart because volatility I mean essentially is I mean those those swings are they can’t be good if you look depends on how you look at it right yeah because I mean you can capitalize on those you know those momentum swings up or down and if you’ve got the willingness or the the cash flow ability to you know sit on some volume you know you know a month take a chance or a couple months take it take a chance and see what see what the market brings well we all love it when the market goes out but man does it suck when the Market’s going down you got inventory so I just feel like this is gonna there’s gonna definitely be some opportunities in the trading side and the positioning side it just when and where right that’s

what we don’t know yet 100 . then on the I mean I got another bearish Point here for you I mean look at this program chart we’re all 15 bucks a ton month over month I mean we went from 495 to 480. It’s just sad the world out there but pig iron is if these new uh you know these new Hot Roll plans come along I mean pig iron is I mean I’m not saying it’s gonna be a thing of the past right but it should be a um less um I mean it should be an item that’s it has less interest like for lack of a better term right but I think we’ve seen during covet when our really the Ukrainian Russian conflict War when that came about once pig iron got crazy high thousand dollars on whatever it was there’s a lot of people that can make pig iron for that that level and so I felt like what seemed like oh my gosh we’re gonna run out of run out of scrap and I was like oh I guess you know there’s a lot of mills in the in the world that

can actually make Pig too instead of just straight uh straight steel so it was a good good lesson that’s for sure well and that’s when I think it comes I mean even on the mind the Mind supply side right like when those guys are seeing Oh man thousand dollar pig like they’re those guys are going overtime double overtime they’re like we haven’t seen a market like this right so all of a sudden there’s some this enormous amount of Supply becomes available right so then all of a sudden everybody’s trying to catch I always figure it’s like the baseball bat game right like everyone’s trying to get the next and until somebody finally caps it and then from there it’s all downhill right yeah so once this once there’s this then all of a sudden you don’t just take all that Supply that’s been produced and then just soak it up out of the market tomorrow it has to work its way through which then obviously you see what happens it drives the drives the pricing down and uh that stuff’s got to work through the system just like anything and and I do think

this month we should see or I think you know Prime grades because of all the the pig iron pressure because just the demand pressure you know Prime scrap has really become uh not popular in this down cycle but it seems like this might be the month where that that Trend changes I think so it’s like anything right like it’s you’re never being in scrap is the scrap industry scrap business I’m used to not being the prettiest girl at the dance all the time right like there are moments when it’s like I am I am the girl with glasses and hair pulled back and zits on my face and then there’s the days where I show up I got the right material I got what you need all of a sudden like I become a significantly better looking I feel like that’s how Prime is right now like it’s gonna show up one of these days people are like oh that our old friend Pride yeah you know she’s beautiful she’s beautiful again and she was ugly for a while but she’s back well these Mills you gotta you always gotta keep track of their

their their scrap rebar uh spread in turkey and I really want to show you this one because I do think inflation is playing a toll here if we go back you know pre pre-covered you know we’re in that you know it’s called 160 200 180 Mark between scrap and rebar now now we’re hanging in there in that 250 to 300 pretty consistently dude I don’t know how you put the toothpaste back in the bottle right like you don’t print that much money create that much just you know money out of thin air and then all of a sudden you know you’re gonna raise some interest rates and drive down some demand for a little bit but U.S is no different than a lot of these other economies like you can’t jack the interest rates up to 17 and not just totally you know your debt burden is too high you know you want to compare the the 70s to today I mean your debt burden is significantly different as a country right and not just our debt burden but like other countries that have similar situations so yeah you want to slow

down the demand to a certain extent to try and get inflation in check but all you’re doing is creating yourself a larger interest bill at the same time so how do you you know you’re walking a super fine line and I’m no Economist but you know they don’t want to slow this thing to a stop at least not with interest rates because you know it’s it’s that’s not super beneficial I don’t I don’t see it you know um well so do you see you know rebar going back to 180 like I don’t I mean it could I mean depends on what 23 looks like I don’t see it going to 180. well I think that’s that’s very similar with with the Hyrule buyers I just don’t think they’re real excited to take big long-term contracts because 20 20 23 seems like feels like it’s gonna have a lot of uncertainty yeah well I I there’s no doubt about it like I I think I’m probably more optimistic about 23 than maybe most I was talking to Nick about this earlier and you know partly that’s just my nature um but partly like I

am optimistic because so many people are pessimistic right now so like I can usually keep like kind of a level you know Optimist mindset and say yeah okay I’m I’ll see what this year brings like every talking really good about it but I’ll kind of start to temper it down and say hey I’m glad to hear everybody feels good let’s just see what this thing looks like you know 2022 ish right but when everybody’s like already wrote the year off everybody said it it’s going to be crap recession this and you know depression that and 1929 this and you know like everybody’s kind of just basically saying it’s you know it ain’t gonna be worth crap that to me is when I’m like oh really like that’s the way it is huh it kind of makes me go a little bit harder I guess well I’m not very smart but I do listen to some smart people and Elon Musk was on a podcast as let’s do and he’s just sold a big slug of Tesla stock and you know the question was why did you do that and he basically said yeah no

I don’t like selling it yeah I do think Tesla at some point will be the biggest company in the world not today but they will be but you know I think there’s gonna be some stuff on sale he felt like we’re going to be in a recession until Q2 of 2024 and he felt like there’s going to be some real opportunity between now and then um and so he’s like I want to make sure you know I got plenty of plenty of black powder plenty of dry powder to make everything go well and is that dry powder to buy stuff or is it dry powder to keep his operations running or yeah I think I think he I think he’s he’s hinting towards both he thinks there’s gonna be a lot of opportunity out there he said you know in every recession we never know what industry what sector is going to just go down 90 but there’s going to be one you know and I think he to me he’s really tied to the auto financing and I think there’s a lot of upside down auto loans right now because everybody’s buying these

electric cars that he’s making that’s to me like if if I was making shitty overpriced electric cars I’d probably be nervous too I mean I think there’s a lot of people that spent 70 80 90 000 hundred thousand dollars on a new pickup and also it’s not worth that today go on oh boy one thousand percent like the Housing Industry right like yeah and if you’re tied if you’re that tied to the Auto industry well if you’re that tied to the electric automotive industry which still has yet to prove itself out all the way like there’s a lot of there’s a lot of initiative behind it there’s a lot of hoopla behind it but at the at the end of the day like that’s an expensive car it goes if you truly are looking at you know a Slowdown in the economy are you gonna go buy that Toyota Corolla for 35 40 000 that’s gas or a hybrid or you’re gonna go buy the sixty thousand dollars seventy thousand dollar all electric like flashy car you know and Tesla doesn’t make those cars they don’t make the Toyota 35 000 Gasser that just

goes forever right so if you’re that company I I do you you probably should make sure you’re in a position to weather the storm just like any new technology it does take some time to actually take hold and really become you know a real piece of the the puzzle but you hear what the Toyota the CEO of Toyota says I mean he’s like man I’m not jumping on that train I’m not jumping on the electric train he’s there more interested in hydrogen and other you know alternative fuel sources um but he’s the they’re not they’re in no her and Toyota’s been around a long time but they’re in no hurry to jump on electric cars well I think we’ve talked about this in the past where the supply chain has to do a lot of different things to truly meet the demand all those raw materials and batteries and the whole world is going to change for that to happen absolutely which plays all the way back to the Bulls versus Bears market and Prime scrap and and Automotive on the sheet supply side right on the hot roll side yep like how does

that demand you know because there has been a couple years now where um the man has basically over you know says surpassed Supply because they just couldn’t get the units out right so is this going to be the year where um supply of Automotive you know whether it’s an electric car or you know gas or diesel hybrid whatever it is can keep up with the demand are they going to be able to pump which then does that create some you know some Demand on the hot roll side yeah I I I personally think there’s we’re probably going to see less retail in the automotive sector but I think there’s so much backlog on like the company cars the rental cars that I think they’ll have a good year just be just to get caught back up yeah that’s where I say maybe I’d be worried more about 24 than 23 because you’ve had a couple years where at least on the auto on the on the automotive side yeah you’ve had a couple years where you just haven’t been able to keep up with I am starting to see some of the dealerships around

here though actually starting to like have some inventory again which I haven’t seen that in a long time at least it was at least on the pickup side yeah yeah which that’s that’s a good thing I mean that means they’re actually getting units out and they’re getting them through the system which like I said I don’t know I don’t I don’t pay much attention to the automotive Market because it’s just not our Market here you know we’re we more look at you know rebar stock material export side is kind of more what drives our markets um but I’m always just kind of keep an eye on it just because I’m curious more or anything but I think the re to me the automotive Market lives and dies by that payment and when you’re talking Automotive loan I’m sure those are 15 10 at least north of ten percent and that’s a big payment when you’re buying a an 80 90 000 truck and that’s why those electric cars don’t make sense to me right it’s a it’s not a you know it’s it’s more of a it’s like the thousand dollar iPhone versus the

500 iPhone right like they both can do for the most part the same thing but that thousand dollar one to say I got the nicest flashiest best whatever like that’s good when everybody’s ripping in the government sending out checks you know every six months to people but it’s not it’s not as good when you know when uh rubber meets the road you’re trying to figure out what groceries you need to buy that thousand dollar iPhone does the same there’s the same thing the 500 one does and I think that’s where I feel the on the automotive side that you’re going to see a harder look at the Hybrid you know and and maybe not all this uh I don’t know I could be wrong I mean I’ve been wrong A lot of times in my life but I feel like there’s the the Gasser the hybrid is gonna it’s gonna stay strong I love it well I do got one more bullish Point here and I think this is probably the most important point is is Turkey’s 80 20 price and so if we look at this and this is where I think we’re

we the market sediment may be getting a little too excited and so if you look at what the price was at the beginning of December where 376 turkey today we’re at I think the I think the latest publication said there’s a deal to be done at 402.50 but they offered 405 there’s no sellers so is that number gonna be 410 you know who knows but so maybe let’s just say it’s it’s going to be 410 by the time this trade’s over with that’s that’s only up 35 bucks month over month yeah so if we if we go Way north of that in the next you know 30 60 days it could I mean unless that price continues to elevate there’s there’s going to be there’s going to be a coming a day when the Miss Market cracks itself oh yeah yeah it could be I mean it could look a lot like that you know that August correction or that September correction right like it gets up and then it you know it gets you excited and that you think think the the momentum’s changing and it brings you back down to reality

but what it does look like to me um on the bullish side that it’s trying to base itself out somewhere in there right yeah between that for 100 to 350. you know it’s kind of almost setting up it’s setting a floor right which you as a Trader and understanding how that works you know that once a floor is trying to get set then it it once you can get some some sort of bullish upside momentum it can really climb you know it it and I think that’s the when I look at it is yeah it may take a while I may take a few months it should it may take a year or whatever but ultimately if they solve this if they if which is just a really big asterisk if right now if they solve the Russia Ukraine deal you know I don’t know I’m hopeful that they figure something out um and if and if China does truly open back up man watch out this thing could rip so yeah let’s talk about that what are your some of your predictions for 2023 what are your X factors to be optimistic to

be optimistic I feel that everybody is um I think everybody’s discounting what China’s impact can be once they get through this wave of covid and get opened back up I think that’s probably the biggest you know can be the biggest import impact the second thing I think is the dollar the strength of the dollar If the Fed even hints at stopping slowing whatever the interest rate increases says okay we’re going to sit Pat here for a little bit or we feel like we’ve kind of slowed the economy down enough then I feel like that can be bullish for the economy as a whole which then is could be bullish on the commodity side because I think that that becomes a little more bearish for the dollar if we get a little bit a little bit of break in the dollar strength and you saw this morning’s trade just today like the stock market was strong this morning opened up and Futures were up almost you know almost a whole percent you know across the board and the dollar was you know just barely you know up and all of a sudden man when that

thing swung dollar up stock market down oil down I mean the bam it just happened it happened in a matter of a day right just that big of a turn so imagine that like across you know months or across the year like if we can get a real you know breather in in the dollar strength I think that there’s there is there is reason to be optimistic now whether we get or not I mean that’s here nor there but I I feel like if that does happen that’s that’s bullish for commodities yeah I would say that was one of my biggest sex factors too was was just I could see an infrastructure be deal being done in China if that would happen if some if for some reason China would really turn on the stimulus I think that would affect the whole the whole world of Commodities and the Asian market and this is only speaking about you know the West Coast markets right like export side like we benefit from strong Asian markets on the west coast you know it’s just like turkey you know the East Coast markets the gulf like they

benefit a little bit more from a strong turkey Market than you know we do over here in the Northwest like that doesn’t really affect us that much it does help the overall market and where scrap moves and kind of how and and the direction it goes but it’s not a huge factor for what we’re doing right but the Asian market when that if that thing opens up and starts to push all of a sudden just if you have a lack of supply and then these you know these export markets are they turn on a little bit a little breather in the dollar man you know and every and the sentiment everybody being like already kind of are writing this year off like ah it’s it’s just a year you know just count on a recession coming you know I feel like the US is a little more resilient than most people kind of give us credit for yeah all right so here’s here’s your other prediction I want you to make today let’s just call it turkeys for around 400 bucks for heavy metal is in January 1st 2024 are we going to be

a higher or lower price higher I’m a bull by I’m a bull higher I are always the price should always be higher and you know what I mean don’t worry we’re just going to keep printing money and sending it to other countries and we’re just gonna keep putting money out of thin air so you’re telling me the price of Commodities you know as a whole you know a year two five from now are going to come down I mean I don’t know man I mean in what currency you know I mean in Bitcoin or the dollar or what I don’t know I mean I feel like the dollar is a little is is is definitely you know more resilient than most people would think as well right I mean you know that they it’s proved that out the last year that you know so me I I got a question for you do you think here’s my I I did a prediction for you you got to do this one do you think that the interest rate today January 2nd 2023 will be higher or lower January 2nd of 2024. I think it’ll be

higher higher than it is today yes okay and and the reason I think that is because I I feel like they’ve said over and over again we have tools to fix a bad economy we don’t have tools to fix inflation and I I think I think sometimes Q2 like let’s just let’s just play this out right oil is getting it’s getting hammered but how long is it going to take before if and the supply chain just seems very fragile still whether you’re talking aluminum copper Fair scrap I mean we keep seeing these patterns right where something little happens and all sudden it just ten percent eight percent just like that right yeah so you can’t tell me what this the things don’t continue to escalate in 2023 between Russia and Ukraine and however that looks right he’s got like Putin does not have an out right now he needs a win he he cannot walk away without a big win yeah or a sizable win and so to me something instrumental has to happen between now and then and when that does Commodities fly which creates another wave of inflation which creates another wave

of higher interest rates interesting interesting I guess I mean ultimately I mean we can only hope that they can solve it now but I mean I I’m a big believer and you know you can print it you can keep printing it all the money I want and just and it’s like until you stop doing that until you stop juicing the markets and you can raise the interest rates and just create yourself a bigger bill on the back end yeah but you still got to print your way out of that bill yeah well I could see him doing both I get tnm continue to rise interest rates but I could see them passing like an infrastructure deal of size where they they would you know find other ways to increase quantities and AKA printing printing money right so yeah that that both both like both could really happen man I’m not I’m not good at predicting anything I all I can do is just is uh just tell you our ours uh our supply sucks the flow sucks and we should get higher prices and that’s all I got for you I love it I

love it well I think this is going to be no I think that’s it that’s what I got hope everybody has a great 23 we’ll be back once a month keep everybody in uh we got something we’ve been kind of cooking on we’ll figure it out we’ll let you know um if some comes to fruition but other than that man have a great everybody has a great month and uh see you guys in February adios Brett all right man