thank you 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 what’s up guys we’re back got the man break down the markets for me um make me smarter today and hopefully whoever’s listening make you smarter as well um Chad Elder Brock thanks for coming back for another Bulls versus Bears um this my this this month it might be a slight tug of war like where there’s no real super super clear Direction I mean I feel like you’re gonna give me the the uh bear case I feel like there may be a little more strength in that side but I won’t I won’t I won’t get into it too far but I feel like it’s a little more of a tug of war this month than it was last month where the the Bears dominated so what’s up Chad thanks for thanks for taking the time man welcome back yeah last month I I I’m still looking

for bullish points from last month but uh this month we got more of a balance you know yeah maybe it’s in maybe there’s somewhat of a an even tug of war side I don’t know maybe not we’ll you’re about to tell us so let’s get right down to brass tacks what do you what do you got for us man all right so I wanna I wanna start out on the macro as always and if you if we look at the Dow Jones Industrial Average can you believe this the highs of of the the year at least and and I I want to reload information for you I’ve got this from a Blog the guy’s like I’m done predicting markets because if you would have told me that you know there’s Russia’s at war with Ukraine China is considering taking Taiwan there’s just a failed uh coup and the largest with one of the world’s largest nuclear uh Powers Russia China and the brics nations are actually challenging the US dollar the US is 31 trillion in debt and running a deficit interest rates are above five percent and have accelerated the quickest they’ve ever

had in decades now we just had the second largest bank collapse in the U.S and names like credit Swiss need to be bailed out overseas and lastly the commercial real estate sector is well-known air pocket and but yet here we are with the Schiller’s PE ratio of 31 when the median 16. yeah man I don’t like I said I don’t pretend to know the stock market because I mean that’s more of a smart people’s game like yourself um I said I sometimes don’t even know if I know the Commodities Market if you want to be honest dude so at least I I I do my best to understand it but it just I I can’t argue with what the statement it feels like there’s there’s so much going on and to your point is it more that the the people are they they’re starting to get over some of the fear of Russia versus Ukraine failed Chris with um overseas um are is it people are just saying they they’re like I don’t know what else to where else to put my money is it um I mean I mean what why

do you think that it it it sits where it sits today what’s what’s your opinion well it just feels like the market is Relentless and it I mean here’s the fear and greed index it’s the highest it’s been in a couple years in uh three years so it’s it’s just it’s just unbelievable that even with all these things going on how you know people are still very very positive and I think I think mindset’s important when we talk about the scrap metal Market because how people especially the the scrap dealer base how they feel is a real real indicator about the future how does explain this one to me how does a guy like Warren Buffett who always said be greedy when everybody else is fearful or be fearful when everybody else is greedy somewhere obviously some that wasn’t exactly the way it was stated but somewhere along those lines I mean when you look at Berkshire Hathaway as a as a as a company are they buying into this Market because it sure feels like it I mean they’re always stacking cash but I mean yeah they do have a ridiculous amount of

cash in their in Berkshire Hathaway but at the same time they’re they’re investing they’re always best like right now apple is one of their their leading positions and and to me you common sense and say well if the median’s 16 then I’m gonna wait till this till we get a Schiller’s PE ratio of that or lower and I’ll and I’ll buy the farm well if you had done that you wouldn’t have bought a stock since since uh 2009 yeah it’s 2009 2010 so you actually bought you would have had a good return yeah 2010 but you also would have had to be in a position to buy in 2009 2010 right well that’s just it you know so that that’s where I just feel like it’s all about Rel you know in America we we remember we we forget quickly both good and bad and so if it feels like this is just another case where we’re forgetting quickly and things are if you look at that chart like don’t pull that chart out look at the p e ratio in 2000 2000 I mean just two thousand sorry yeah I mean does that

that tells you that potentially we could be on this thing could really take off as well right I mean yeah that’s both ways I mean it wouldn’t be the first time that that p e ratio has gotten you know pushed significantly farther and if you think about then we’re really in the the.com bubble but who says we can’t be going into a an AI bubble here soon too any other kind of bubble for that matter right I mean you have to imagine like it is possible I mean and also Black Tuesday is possible too right so I mean I think a lot of themes have changed since 1930 but 29 but I also think that you know I guess it’s not so far out of whack to believe that this thing can run significantly farther just by looking at this chart alone but I wanted to make sure we spent uh spent some time here on on the on this these charts because I do believe that both the steel buyers mindset is very really important right now and also the the scrap dealers mindset if they’re if they feel optimistic about the

second half I feel like the first half of 2023 has been a good year for most most deal and scrap folks and so at some point there’s going to become that time where it’s you know prices are low enough now where maybe I hold back sometimes yeah it feels like that’s and especially if you’ve cleared the decks and you’ve got some space you know last few months then I feel like that’s that’s probably coming and Logistics feels like it’s in a little bit better spot for sure um my truck at least you’re speaking from availability yes sir basically pricing because if as a guy that owns a trucking company when you say better spot means hey you know I I think better spot means Freight rates are up like we can take advantage of of the market when a guy that’s just a consumer says Logistics is in a better spot that means there’s more availability for Trucking there’s more Trucking capacity which is driving rates down yeah right so I just want to make sure that Nuance is stated well I think in regards to the scrap flow I feel like you know

you’re I’m not hearing a lot of hey I I had tons and I have tons here but I couldn’t get it out that those statements are are less today than they were you know definitely that’s a good point that’s third point so all right well let’s let’s keep going here so I got another uh a bullpoint for you it’s got overall Market good here’s are you setting me up are you just setting me up for like uh like you’re like hey let’s let’s get all the positive news out because I’m about to whack you across the knee like Nancy Kerrigan not I mean people only probably listen the first few minutes the podcast anyhow I’m just trying to get all the boys style let’s go yeah so iron ore’s up 105 to 110 around five and a half percent I think this is important because it might tell us what what what potentially could be happening in China yeah I read not not a credible Source but they but they said you know who knows but it feels like uh the the blast furnace and China are running at like a 92 percent uh

utilization rate and eafs are only around 50 so yeah I mean they’re continue to pump out pump out tons which well they’re continue to pump out um cheaper tons right yeah and like as a steel mill guy um just for anybody that doesn’t understand Chad can you just break it down like why would they run a blast furnace at 92 versus an eaf at say 50 something like what would the nuancer be or what should be looked at well I mean even so if you think about it let’s say you’re buying iron ore around 110 a ton and whatever that conversion rate may be you know even if you’re selling hot roll at 700 bucks which would be totally price cutting us right yeah you know there’s there’s a lot of there’s a big there’s a difference there right and so even if you’re just so think about the steel mill as a blast furnaces especially they’re the ones responsible for all the electric in those cities all the electric bills all the water bills they don’t really have um like a welfare system that’s kind of their welfare system so so why wouldn’t

you want to keep the you know there’s a they’re probably if they’re not making money they’re probably not losing a whole bunch and and so why not you eat those at capacity to help help subsidize the state a bit all right well you ready for uh for bull Point number three yes yes let’s go all right so here here’s another one the Shanghai steel rear bar and what’s with tomato I mean this is another one that we if you look kind of month over a month uh we’re up around seven and a half eight percent so another positive uh indicator coming out uh coming out of Asia and speaking of Asia speaking of China in general I mean I know that nothing’s been announced or nothing like that and I’m curious to your from your perspective I feel like it if they do end up deciding to put a you know a pretty strong stimulus package together and they decide they want to hit you know the gas pedal on growth I mean you could see that number pick up quickly you know there’s there’s room there I think to grow um which then

could potentially put some pressure on the domestic you know rebar Mark the domestic Ferris Market especially on the on the west right um but do you I I would be curious to your thoughts or do you do you anticipate that do you see that and then you’re reading or you know I mean it’s just as pure ass like everybody else but you know what’s interesting on that so if China’s at 92 percent on the bifs and 50 of the EAS I think they’re already trying to stimulate things and so I I don’t know if we see a big like wave of infrastructure happen there but I feel like it’s they’re already trying to do their I mean they’re China’s back to work after covet I mean that’s that’s something that’s only like six months fresh right and so yeah these are these are all positive signs for demand but but but globally it could be a very negative thing because they’re they’re dumping tons whether it be steel rebar Hot Roll All you know whatever yeah I think yeah that has to be taken into consideration as well which could put pressure depending on

like tariffs and whatever else could put pressure on the domestic you know finished goods market right you know but and yeah we’ll we’ll talk a little bit about the the hot oil Market next but I want to talk about um one one other bullish Point here is copper so copper was around 363 last month and then the last month today we’re at our 378 was I think last week so we’re up around four percent so you know I think you’re you’re wanting to give you a Kudos here you said hey I would ship my Ferris and if I had to hold something it would be copper so so good for you man you nailed it well yeah I didn’t know about a lot I think it probably depends on uh depends on how you look at it uh I was just telling you earlier that we were we’re shipping it shipping a couple loads of copper out and you know one of them I cries really well um the other one was priced you know decently and and I always tell people I like do what’s best for your company okay I mean we’re

going to sit here and give you our input and our take on on certain things don’t you know if you said if I had to pick a pick a poison what would I sit on copper being one of them I still believe that to be true I still think that we’re we’re on the lower end of where it could be um but that being said I’m still shipping copper like make no bones about it I’m not like I’m still in the I’m still in the the scrap business I’m still in the recycled materials business I’m still moving material I’m not sitting on copper or Ferris right now at least not a lot so for whatever it’s worth I don’t want anybody to think like I’m uh trying to tell you do something I’m not doing or vice versa but I think that’s a good good point it feels like no matter what what the commodity is a lot of whether you’re a steel mill a steel service center or or a recycling facility you it seems like the lien is lean is the theme right not carrying a lot of inventories I just think

it yeah it comes down to giving yourself a fighting chance to get through tough times right I think that’s what it is what it amounts to is putting yourself in a position to be successful so that if you do if if you do have an opportunity to sit on tons you can afford to sit on tons or if you do feel like you want to sit on some copper you can well you can’t get yourself in that position if you’re just sitting on a bunch of other stuff and you don’t have any cash flow so it’s just getting yourself into a position of strength of negotiation I think that’s and so if we look at Hot Roll of Steel lead times I had to update this one today I think this is a a positive indicator of a bullish indicator uh Hot Roll lead times in the midwest at least jump from two weeks to four to five weeks so you know that who knows this could be could be the sign of the bottom yeah yeah we’ll uh we won’t We’re not gonna hold our breath but we’re also going to uh look

at it as a as an optimist would and say okay you know we’re at least trending short short term trending in the correct direction well now that we’ve got and got all the bullish yeah it’s a great podcast uh thanks everybody for coming out and uh let’s go through the let’s go now let’s get to it so we talked about lead times expanding but but pricing it’s it’s still I mean from the from the end of last at the end of June um we went from 9 35 and hot rolled down to 865. today we’re close to back to 900 again so we did recover some but but overall it feels like things are still on the way down oh you feel like it’s still trending down well I mean besides this little pop we’ve had this week yeah you know which is probably a hint why we’re the lead times expanded a bit but is this a dead cat bounce or is this just uh continue Trend downward yeah I mean in the Bulls defense it feels like it was I mean it was a decent pot though right I mean I mean

it’s it’s a pretty significant job made pretty decent price move in the in the right way but I guess like you said is it a true dead cat balance and are we going to come off the other side of the hill or does it is are we looking for some stabilization some kind of pricing floor and if and if we do look back in a historical sense uh I don’t know if anything pre-covered really matters but in 2018 you know the market did did Peak around that 900 Mark so a lot of times resistance is now support right and so from a charter perspective this could be a Tipping Point I always tell people too pre-covered was before pre-printing of I don’t know how many trillions of dollars right so like pre-covid is also like you know pre-helicopter money which if the value of a dollar truly is you know I mean go to a restaurant go buy it go buy a Coors Light at your favorite watering establishment and go see what it costs you you know like and should Hot Roll you know be should it Trend

around 900 like before before you had a bunch of extra you know dollars come into the market I know there’s some economists and you start going to like M2 money supply and like what does that do to the strength of dawn I’m not here to debate any of that but I’m just saying like where is that floor I don’t know yeah well I’m gonna switch gears and talk about stainless that market continues to get on the way down so nickel is right around 21 000 now it’s 20 20 500 a decrease around two and a half percent it just feels like this is a market that can’t quite get get going again yeah it’s having a tough time getting there I I think I saw 60 cents come across my email um for 304 this morning which be right there on the verge of I always said like once that thing gets into where it starts the five I’m like I’ll file that up like nobody’s business um but like I said in 60 ain’t a great number you know but I I feel like the trend is not your friend with nickel right

now yeah and I didn’t even ask you how are your flows lows have been better to be honest like try and come from an honesty standpoint in this podcast and if I was you know like in June they were good I should say um July will be tricky in Idaho because it I just saw I was looking at the weather forecast and it’s I think it’s like it’s supposed to be 101 here this weekend I mean it’s gonna get hot and dude it’s not like the pricing is fantastic so like a lot of your like you’re Car Crushing you know 10 like landfill logging bailing that’s slowed down because the pricings came off like especially on your Shredder feed which is like a perfect lead-in to you know that material you know you’re always going to you know generate a little bit more material for us in June because it’s not quite hot it’s you’re coming out of you know spring it’s you know the weather’s been been you know okay July will be interesting like June flow was was pretty good if I’m honest um July I wonder you know it’s yeah

it’s going to be an interesting month well I think I think uh you know so shred feed we’ll look at the fast markets uh Shredder Feed Market went from 190 or just shy 200 down to 160 so about a 19 drop so I feel like that tells me flows are pretty good otherwise they wouldn’t cut it so much so quickly yeah but I don’t know I mean I’ve heard multiple people across you know different geographies talk about mid-month price increases on shred feed because I think I feel like the shredders drop the price really hard in anticipation of of a uh rough June Market in an incorrect anticipation and thinking that maybe July goes flat or sideways you know on most grades you know or at least in that range I feel like there’s going to be potentially even an uptick in the Shred Feed Market or at least if if you’re if you’re a local Shredder tried to pound the price you know down and all goes back to what does your price start out with if it’s not Market well where’d you start you know type of deal well I think

I think it’s going to be very Regional because like certain regions like the Southeast Ohio Valley I feel like that starting Point’s a lot higher than per se Upper Midwest right and so 100 yeah so that’s uh that’s a great analogy and I think the most important chart is when we’re going to talk about the future is uh as always turkey heavy metal so uh we dropped 391-ish to around I think we’re at around 377 today it’s about a you know three four percent drop so it feels like this could continue to drop another uh 10 bucks is what some analysts are saying so this is another one that doesn’t doesn’t feel great um I would like to see this chart um match up to like the Turkish lira right like you know versus the dollar and just see how much does currency strength weakness player role in because you know lately you know and I pay you know like I say half-assed attention to you know currency invert you know currency ratios and kind of see what it looks like and I mean that the lira’s just been getting crushed right

I mean they’ve been having a rough you talk about inflation okay those guys that haven’t are having a rough go yeah um and so I wonder how much of that plays into you know and then you know another chart that I think would be interesting is the turkey price versus um the Asian chart that you put up uh or you had you had the rebar chart but I’d be curious like to run this chart against and see if they generally track each other or if they you know if the or if they don’t and I would assume I don’t know it’d just be interesting to see yeah well I think I think this is a good chart because I got the the heavy melt turkey uh 80 20 the New York export number one heavy metal and then the national average for the heavy metal also so yeah I mean there’s obviously gyrations but overall you know they’re they’re half they’re halfway in sync so I think it’s look at the spread man on the I mean is that looks like just going through it I mean the you know us delivered the national

average spread versus the the turkey spread it’s it’s it’s about in I mean nothing looks too out of whack there yeah yeah I feel like for me it tells me turkey’s gonna go down or or and definitely the the New York the gray lines got to go down um or you know or they’re this feels like there’s more momentum on the downside potentially you can you can kind of sense this chart every time it goes down they get real skinny every time it goes up it yeah it starts to tighten back up because they gotta you know get more aggressive to keep keep flows yep at home yep so that’s it I feel like it’s the only thing else worth mentioning is you know it’s it feels like the chicken versus the egg I think a lot of Steel buyers don’t want to come off the sidelines until the scrap Market bottoms yeah but but when that happens you got a lot of shutdowns you got a lot of you know that just being that seasonal time of year for somebody you know maintenance and then you also got just no no long-term

interest in demand it feels like everybody’s just protecting what they need to buy today and that’s about it so yeah it definitely feels going back to that last comment this is just my you know even when I’m looking across my manufacturing base the guys are generating material you know generating scrap every day um even that you know their flow you know has has fallen but it’s starting to even level out because we’re to the point where they’re just manufacturing at a pace that supports their day their business today nobody’s anticipating trying to get ahead of big orders right on the manufacturing side so it feels like we could potentially just muddle along at this flow at this pace for a while until something either major happens to the upside or the downside right it feels like we are just kind of in that I always call it just kind of muddling period where you’re just kind of waiting for something big to happen good or bad yeah it feels like we’re blindfolded right like you’re you’re in a boxing match with several people and blindfolded because on the upside I feel like the inventories

are so lean you could see like a little little pop here and there um on the but on the macro side talk I mean going back to all the negative points that I talked about the beginning man there could be a big shoe to drop also and and then inflation is not done I mean interest rates are projected to go higher so if we get to you know if we raise another couple basis points it’s gonna be it’s gonna be a big deal in the economy 100 well if you go back to that chart we were talking about the shield rpe ratio I wonder as you look at uh as you look at that in the 2000 and through the through the stock Tech you know the tech boom and as that race as that chart climb up to like a 44 let’s say um p e ratio Wonder on the interest rate side was that climbing along with it because I’m and I’m just going back to my own personal um you know I think we were at around seven or eight percent interest rate at that point yeah so you could really

see interest rates track the market up as well at that time and I will say this too looking at that 2 000 timeline um for those you know people that you know I was in just I I was in college at that point and I remember you know talking to my my mom my dad and them saying you know the price of scrap was was dog you know like it was it was a rough go I tell really like probably you know oh or you know they started to catch a little bit of momentum oh fives obviously six seven eight was when it really started to go but 2000 to 2002 or three or whatever that was like that wasn’t like a great time to be in this in the in the scrap business and and that that part of that is interest rates for climbing right like and the stock market was climbing and everybody wanted to be in everything else except for you know because there was a lot more upside yeah and you know whether that’s whether that’s uh gonna happen you know now or not I guess time will tell

but you know that’s a that’s the reality of it so if the interest rates do climb and stock market continues to climb with it that doesn’t necessarily bode well for Commodities so just be aware yep I’m with you loving me look at Lumber went all the way up and came all the way back back pre-covered levels so yeah yep now everybody you know there’s all those memes of uh you know a truckload of two by fours all this money and now you know trying to give that away all right Chad I appreciate you man thanks for uh breaking it down as always love the charge love the information um we’ll put out the uh you know the best crap ever put the charts out you guys can check it out and we will uh keep you guys informed we’ll chat will let you know what he knows and thanks for tuning in thanks Brett take care man