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 guys we’re back Bulls versus Bears May 2023 I got the man in the myth the legend Chad Heather Brock in the house you guys know him well he’s the guy that keeps me keeps me updated on pricing and what I should be negotiating around here so if you guys don’t listen to him or don’t follow his uh best crap ever I saw on LinkedIn that you had written an article this morning or either you posted it this morning anyways so I made sure that uh I’m I made sure I’m following it checking it out so I can try and sneak some shots in on you on your uh on the info you’re gonna try and bear me out today and tell me how shitty the market is or whatever else but I’m not I’m not going to uh buy any of that I don’t think

but I probably should I got my blue shirt on today you know I’m hoping to kind of put out that aura a little little bearish little bluish you know I know I get it I get it never uh oh sometimes it’s tough being a scrap guy in this world man I’m just a bunch of Bottom Feeders trying to make a living and you still meal guys you’re just always trying to beat us down like like the Bears you are yeah I hear you Bottom Feeders I I believe that sure what’s going on bud well so I mean they’re they’re what a what a interesting 30 days you know last last month there was a lot of a lot of bullish points a lot of bit um but just overall felt like the sentiment has totally completely changed you know and and that’s where it went from like yeah yeah yeah yeah and and even in the in the stock world you know a lot of the the major steel mills had earnings this past month and people even though Prof there’s a beat on earnings beat on revenues the stocks are not doing well

so it’s it’s I think that to me stocks are are indication of the future and and with them going lower after the earnings call makes me think they know something I don’t so it feels like yeah I mean they’re people I mean stocks is like a bet on the future right it’s not necessarily necessarily a bet on the current I mean that’s what drives the you know the multiples and whatever else and you know the few because it’s basically a bet on how does the company going to do down the road and I think it’s you know they’ve been talking about you know earnings coming off you know for a while now and and maybe that does come to fruition but I mean across the board I mean it’s beat after beat you know in a in most Industries I mean even I mean you see the a lot of the tech industry you know they’re laying a bunch of people off and I don’t know what on a percentage basis but um but even those guys are still beating you know I mean are you uh are you one of those guys think

a no recession recession yeah I’m one of those guys that like I’m not a big stock Trader I know you kind of cut your teeth in that a while back and you got a lot more information and you’ve got a lot more knowledge on that than than my dumb ass does but like I I pay attention I read I try to understand but I’m I’m more just like from a distance right because you know like I said in the past like my I put my money on things I feel really comfortable with like things I feel really good about and that’s you know just stuff I know and the stock market is what it is it’s kind of a you know it’s not something I know a lot about but I pay attention to what’s going on out there I guess well let’s uh let’s jump into uh to some charts shall we let’s do it so so talking about stocks and kind of overall Market uh food crude steal I I think it was pretty interesting so we had the big gap up and that was when OPEC announced hey we’re gonna do

some major cuts for the rest of the year and it felt like oh man there’s no way we’re going any lower and and boy is that not the actual reality you know what came came right back down and then some how much of that has to do I mean I was reading an article this morning on how much they’re drain drain now the Strategic reserves and they’re doing that to drive that price down right but if you run a chart against the oil Futures and the Strategic reserves that we hold as a country I mean they’re driving down your your strategic Global reserves just is that part of I mean this pricing I mean Commodities if you think stocks are being traded as a prediction of the future Commodities are also traded that way as well right I mean because people say oh the you know the oil Futures people are predicting a recession that may not be the current market for oil today but they’re thinking in the future they may be less demand or whatever else and then also Supply and and if you’re draining your reserves is that playing you know

much of a role in this or not I’d be curious what your two cents is yeah I feel like the overall you know the trend is your friend you know you could argue that we’re still much very much into a downtrend and yeah we’re I think it’s it’s very similar to like many of the metals markets where you see inventories going down and so do you see prices and so as much as this game can to some certain level uh like I said it’s prediction of the future so can be manipulated or or positioned on and I think it could be a mixture of both yeah but there is no doubt that this chart is not bullish for scrap all right bear Point number one thank you all right hey let another one Fair one iron ores down 127 to 106. that’s 16 and a half percent decrease month over month wow and so this is as We Know This is highly correlated uh you know China is the biggest consumer iron ore so this is this is fascinating see this bigger uh Jack down month over month did not predict this especially with

China coming out of covid and still trying to work their way through all that um it’s gonna be an interesting man it’s gonna be an interesting summer an interesting you know half you know second half of 2023 man just how are they going to play how’s the whole China you know situation as far as that economy whatever else gonna play itself out I think you know on the manufacturing side China definitely is you know the manufacturing size driven by you know their ability to export you know to other countries and what are other countries doing economically because on the I was reading another thing I was reading the other day was talking about consumerism in in China and they’re talking about the the rail um the high-speed rail tickets and trips and kind of how that has like set another you know a record and so they’re feeling like people are out and about like they’re moving they’re consuming but is there manufacturing actually producing for the for the rest of the world and I think that’s going to be you know a Telltale sign yeah well I got the chart for you

my friend I mean look at this so this is the black line is is China steel production the blue line is U.S steel production so you can see they came out of making out of Covenant they’re setting it on fire so yeah so that’s so I mean so in your mind how do those charts correlate between say lower iron ore you know pricing but food’s still pretty you know crude steel production on the upswing well I think you know so now we’re looking at uh Shanghai steel rebar pricings here at four one uh was it four thousand yen now now we’re down to like 3 600 Yen down 12 13 and to me this is like an indicator like when then when they were when Chinese steel mills want to run they run you know and and I think this this to me this is the big pivot month over month this you we we’re seeing a lot of it feels like the the worldly steel Market has been taking a pause because of all sudden the abundance of supply of Chinese Steel in the market well we’ve seen this before right we’ve

seen it where they are willing to produce that I I would call it a loss I mean yeah that’s what we would call it here but if you’re if you’re being funded by you know the state then is that a real loss I don’t know you know I guess depends on who’s doing the books but yeah if if if they they’re like it make steel and you don’t care what you sell for keep making steel then you know I feel like that’s part of the charts you’re looking at and we and we’ve talked about this right where that you know we actually gave our the US gave their citizens cash right to go spend and during covid and I think they’re saying and we put you know China One level that that China didn’t do that and one level that they’ve announced it but we might do is is drive up infrastructure to help Drive their economy higher and this would indicate that right so basically a play but I mean it’s not a it’s not an unusual playbook for them I mean that’s that’s kind of the Playbook if you ask me like

they’re ready to build obviously they’re they’re driven by GDP right like what is their you know what when they when they look at growth for themselves it’s not how much money do their citizens have to spend on they’re like let’s go make something let’s go build something let’s let’s push our GDP and and see what see what happens from there yeah yeah and so I do got I do got a bullish slash bearish point and that’s pig iron so Pig iron’s actually up uh seven and seven bucks I think month over month but yeah let’s just stop right you know but the reality is when we’ve seen the iron ore prices they’re down and I think a lot of the buyers are out of the market right now waiting for this thing to settle and I think there’s no doubt this will will keep creeping down once you get it once a couple sales come through and yeah yeah yeah and so to me that that’s the the cap on Prime right it’s tough to think Prime’s gonna go any higher if Pig Iron’s not so absolutely so let’s let’s switch over to demand

hot roll demand I think this has been uh why we’ve seen this this historical run up here in the last 60 90 days Hot Roll uh has for the first time in a few months going there going the other way yeah well I’ve been telling my my steel guys on the pipe side I’m like you know don’t don’t buy at this price it holds you I mean buy what you can sell but I feel like this thing has to top out at some point I mean so that one as much as I you know as much as I’d like if the scrap price was actually tracking this you know number that I’d be like oh man but I there’s just too much and too much Gap you know for it to and they’re starting to roll over to me it’s starting to roll over that’s what it looks like to me yeah and I think I think like especially like Cleveland Cliffs they’ve done a good job trying to drive their increases as much as they could and so maybe that’s why the prediction on the on certain stocks is lower going forward because

um it’s like hey they they try to they try as well as they possibly couldn’t drive the price and we’re here around you know 1100 bucks thousand bucks whatever Hot Roll so and it might stick around this price for a while right I mean I ultimately I mean it may not just fall off the edge of the cliff it may hang around here well if you look at the other you know previous you know the past charts once it starts moving down it tends to kind of trend that way for a bit Yeah like you know I think you’ve mentioned the past being in the Commodities world it’s it’s very rare you see a flat it’s big UPS or big Downs they’re little UPS or little Downs you’ve never seen steadiness that’s for sure exactly all right so I mean I I look you as one of the the better copper copper market predictors and I mean you thought China was coming back and this this thing’s gonna go gangbusters and you’re I think you still are seeing inventories go lower on copper right yeah you’ve seen inventories go lower but pricing’s going lower

and you know but I think that’s a lot of that’s you know China driven but I don’t know my gut still says like you know around that four dollar Mark is is is is a four dollar copper is still good is good pricing you know I think this morning it was off a couple cents I think everybody’s just trying to figure out what the fed’s gonna do and I think that’s a big driver in these base in these base Metal pricing um you definitely see it on the on the The Hot Roll cold roll coil side because people are like what’s this economy gonna do everybody’s trying to kind of guess instead of just you know feeling really confident about a project or really confident about infrastructure or confident about you know whatever I think that’s that’s the noise in the background especially on the copper side but I mean if you start reading and doing your research and and looking at articles that people are posting whether it’s on LinkedIn or on Bloomberg had a really good article on that copper mine that finally came to fruition it only took three decades or

two decades but it’s like the volume of copper that’s going to be needed um is is astronomical compared to what’s available and what’s getting approved on the mining side and what’s actually coming out of these you know older mines the future of copper is really bright you know and in the long term for sure I like your pun what is that yeah what is that right right yeah what does that say about the short term I don’t know I don’t know that’s I I’m not the best tea League reader but you know all right so you’re you’re a small yard and you know the old saying sell in May and go away we see on the stock Road right it’s not a scrapbook that’s a scrapbook anyways go ahead well so I think you could say you know Ferris doesn’t look too bullish here in the next you know 60 90 days no and coppers is come off but if if you were if if you’re you know your your small scrapyard called you and says hey I got x amount of cash I want to put one grade to the side right what

one I’ve had a good first half I don’t want to sell everything what one grade and the whole yard when you say that would be the last grade I would liquidate I look at two things I look at space and I look at cash flow right if I have space and I feel and it depends on what I can buy like like if I’m in a super competitive like non-ferrous market and I’m having to pay up for copper then my margins are gonna be really tight on that item and the last thing I want to do is tie up a bunch of cash and and really not have bought it right right so I think I look at it in two ways like I know the question you’re asking is like which one would I bet on like just if I had to take a bet but yeah let’s I want to truly answer your question like what I think about it is like okay I look at space and what can I like what can I buy the rightest I guess what can I buy with the best value so that if

I do have to if I do have to liquidate and I do have to you know move move it what am I going to take the least haircut on you know so I look at it as you know I look at it as there is real opportunity in Copper you know 385 copper you know 386 this morning whatever that is like I think it’s you know it’s it it’s not that’s it’s not a terrible price you know if copper goes down towards that three dollar Mark you know I’m probably trying to hold some back if I can but then again if copper goes to three dollars I think our economy is in a world of her and there’s some some really you know there’s some real things that need to be discussed looked at pay attention to because then it really comes back down the couch cash cash flow if you’re a small small or medium-sized operator you got to keep scrap moving so um if I had to bet one I feel pretty good about cop where just because of China being so aggressive it’s an easy item to export you know

you can export a container of copper and if even at three dollar copper you know that’s 120 130 Grand right you know right you know you got you know what 200 iron to get to that right so yeah you know so I I if I was bullish I mean nickel feels you know around this eleven Dollar in between say 12 and 10 like that 11 doesn’t feel you know too crazy you know high or low it feels about where you you should be um and then aluminum I think it’s had a good run I still feel like where it’s at right now it’s probably it’s still a decent price lettuce I mean it’s it’s that’s a that’s a tough market right now you know batteries and everything anything lead based is that Market’s been challenging so I would bet copper if I had to you know so if there’s one gray assuming space was the thing assuming your margins were the same for everything you bought yeah you know in January 2024 you got to sell one grade that you’re gonna feel like most upside copper copper is the one yeah for me I

feel like that’s got the most upside because it’s the most challenging to come by right now it’s it’s definitely needed infrastructure wise I mean there’s a there’s a thirst for copper you know all right there definitely is and it’s that’s not going away so I mean I I feel pretty I feel good about that one I like it I like it well I think to me copper is so important to uh to a scrap yard because you know if you think about shred feet for example or shredders you know copper aluminum pricing what that’s doing is such a big deal uh to your typical Auto Shredder so we have seen prices Retreat to No Surprise here on tread feed I think it’s uh down 235 to 217 uh eight percent decrease so which and part of that you know I feel like that Shredder feed go back to that chart yeah yeah if you would part of that Shredder feed if you were to like see look at this chart back you know obviously you’re going a year back and and scrap becomes more plentiful shred feed becomes more plentiful and if you don’t

have a just a crazy strong demand then as scrap becomes you know car bodies you know 10 logs appliances just white goods um then you there’s definitely you they can they know they can buy it cheaper they’re going to buy it cheaper I mean even here no bottoms out November December scrap starts getting harder to come by you know and then you start to see you know a ramp up and from 125 to 225 2 30 whatever that is um that’s not a aggressive aggressive move you know we’ve seen bigger moves than that and I think a lot of that Supply driven there’s just it’s tougher to come by so I mean our flows are picking up in our yards even though the prices are down yeah can you repeat that your flows or how yeah our clothes are picking up quickly like like really slightly um but no in general I’m like more projects are coming up you know in last month we’ve crushed a lot of cars we you know we started you know we start we’ll start building landfills again and our volume will pick up so the pricing I could

I could see why it could soften up on us for sure if there’s you know if you’re still only run your Mills at say low 70s you know I think you know that’s not an aggressive you know like what we have seen so I there’s no doubt in my mind the shred price is you know got some room to go yeah well so on that on that note I I did uh did add talking about shred feed and how it flows you know price is obviously your biggest indicator but well there’s another one so I added this chart particip it’s a per it’s a rain predictor for the the future month and so how true is this who knows right whether men will always get paid right or wrong but you know I think it’s a it’s an interesting chart to say hey in the midwest temperatures are gonna be a little bit below normal and on the Southeast temperatures gonna be a little higher than a normal and then out west they’re saying hey it’s gonna be nice it’s gonna be a little weather’s gonna be a little bit nicer or a little

bit uh warmer 10 punch so which that’s going to create some real uh problems and and I in the west let’s see you know we don’t fight the issues that say the Midwest and the South by as far as the river and flooding and trying to navigate you know barges and all that you know moving still um up and down but there’s everything over here for the most part is either rail or truck you know very little large movements very little you know so the flooding and all that those issues we don’t fight other than just maybe like a road closure or something but yeah make no like no no bones about it in my opinion because of the snowfall we’ve had over here in the Northwest especially that there’s some serious flooding action that’s going to happen and that I don’t that to me doesn’t have anything to do necessarily with scrap but it does in the future potentially have some infrastructure impact that maybe maybe you know outside chance that you know drives a little Demand on the steel side well to me look at this and I see okay they’re going

to be they’re thinking below levels predictable of rain and so um I think there has been some flooding right some closures uh on the Mississippi and so hopefully in the next month if this is true that should bounce back out so I’m cross my fingers all right this is so this is my my last chart well actually I got two more charts but they’re they’re kind of similar all right so this one is the what I think is the the that really goes back to China dumping steel are are lowering the temp you know increasing they have definitely increased the supply of Steel in the world and so uh the the US is on track to export a combined I think like just just shy of 600 000 tons uh bought Ferris scrap in April uh which is the lowest level since 2020. uh two according to August so if you think about that uh that just means to me when you I hear slow export market now that’s that’s all markets East West um yeah and combined in the US but to me that that’s like 50 lower than what it normally is

so I I could see uh a lot of scrap be more available especially on the cut grades side in the US just because of that factor alone especially around the east east and the South right I mean that’s you know your big people talk about turkey price and we’ve had this conversation multiple times and while it’s good for us to pay attention over here in the west you know the this is Rocky Mountain West I could it’s it’s a good number to know like where that where that Market’s trending but it doesn’t necessarily affect us um you know as much as much as just domestic consumption you know you know other you know trade routes you know as we pay a little bit more attention to but I understand the majority of the population of our country needs to know what the turkey price is so you know well yeah and just to reiterate they’re down uh 440 to 3.95. that’s a 10 decrease yeah in case everybody you had to spell that out a little bit better that’s ten plus one zero all right so here’s I think is the most important

chart when we think about turkey so you could say well that market could rebound we never know well no I didn’t when I look at this try to say there’s something something fundamentally you have to change and so we’re seeing the rebar scrap spread it got hammered and so it was at 271 which you know I would say it was a very fairly normal average maybe on the low side the last um 12 12 to 24 months and today it’s at 2 15. that’s a 21 decrease and so when you could buy Chinese billets or or scrap when these kind of margins and we all know what inflation has done over the past couple years it’s hard to think we’re gonna we’re gonna see turkey demand just robustly come back for scrap what does that look like what does that look like the spread wise on the U.S we bar scrap spread oh well we’re not we don’t want to talk about that oh I was curious I was asking for a friend hey I just told you his prediction is you know stocks are trending lower on steel I mean you just

got to take that note those margins are gonna be compressed you know one thing I know about over here in the Northwest is you know construction is still going on and a lot of it you know maybe that nearly the amount of homes being built but everywhere you look is man they’re just building everywhere I don’t know what it looks like in your neck of the woods but I don’t feel like the construction’s slowing down yeah and even on Hot Roll demand I think we’re at 9 10 weeks now we’re at like six to seven so nine to ten weeks is a robust market and but anything over six to me is a pretty still decent Market you know some people could say we’re four five yeah right so it’s not like things are completely falling out of the bed but the perception has definitely changed and that’s why I think what we do is so important because there’s no indicator out there that tells you the the psychology of a of a scrap metal you know vendor or or a steel mode buyer and or the steel service guy and I think we

we capture that in this in this podcast so I think that’s it’s very important 100 and I was having this conversation with uh with uh Mikey phone um from Admiral from Admiral Metals you know at isary we did a podcast and we were talking about like on the scrap side like we are an early indication of the general economy right because we’re we’re the ones servicing these you know these manufacturing companies that whether you’re manufacturing still buildings you’re manufacturing widgets if you’re manufacturing something in the United States your excess material is being serviced by a scrap metal recycling company like that’s who’s taking care of it right so we usually have a good feel for like what’s coming right so if we say man our industrial volumes off 30 that’s that’s a good indication that the more that the economy is slowing down now to what extent and all that I mean that’s a different story and and and is it just is it is it just a certain geography or whatever but if you look across the board into east west north south and everybody’s like yeah we’re probably 20 to 40 35

whatever that is and it’s across the board then that that should tell you that the economy has is officially slowing down now does it slow all the way down to a crawl I don’t know like I’m not a you know I’m not an economist but I can just tell you by visually the amount of volume that we receive it’s down like people need to start batting down the houses and getting ready right for whatever is going to come and I’m not saying you get scared and you run for the fence but I am saying like if you’ve got a good consumer for your material you it’s not it’s not in your worst interest to to keep scrap moving right to keep cash flow moving to to do that so I think like you said that like and this podcast important for that reason it kind of gives you a you know a little indication about what’s going on out there hopefully you know I’m not going to tell you to run your business it’s like well you know I want you to tell me how to run mine but you know take take the

advice from um that you’re reading from this Source from 10 other sources make the best decision you can and keep moving well I think I think on that psychology aspect you think about a lot of times what happened last year a lot of folks think that’s what’s going to happen this year and boy does it feel like that this year it feels like this year and last year are trending very similar right yeah but but if that on the bullish side if if demand keeps above six weeks on hot roll for example and we just see a complete flush of inventories throughout the system that that could catch us a surprise again for for more volatility so um I think this game is too too hard for dick long term I’d probably be on a beat somewhere if I could truly truly know it but I think overall the the dealer mindset is very very important and I’m glad we do this so thank you yeah know your geography know your consumers know what your consumers are producing and then you can make an educated decision on what you should be doing right I

mean if I had on the fairest side of the business for sure know who you’re selling to know are yours are you selling to an export yard that’s exporting in Turkey no if you’re selling to a domestic Mill or Mills what do they what are they producing trying to figure out what does that demand market demand look like and it actually give you some rough you know gut feel of how to you know how to handle and process and sell and move the material that you’re actually you know making available I love it I love it well we did it we covered it yeah we’re done let’s call it a wrap we’ll see you see your ass in June take care Brett all right man take care