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 you know we are we’re back Chad and myself to talk about the market no formal introduction needed I brought I got the brains of the operation with me and I’m just here to talk and try and uh convince him the market should be on 50 and here’s he’s here to tell me that the market probably is is down fit you know Bulls versus Bears August 2023 what’s up Chad you know I feel like the best Bulls versus Bears it’s good it’s good exercise for me because after I get all these data points it really does if you get a lot of bearish data points a lot of bullish data points you can really just by these data points can dictate where you think the Market’s going to go this month it’s it’s pretty split it’s it’s about five neutral or five negative and five uh isn’t there

like a quote somewhere along the line that says like there’s like lies damn lies and then there’s like statistics and like you can manipulate the statistics like however you want it’s just no this is quality data right here okay no I just I was thinking about that you were talking about statistics and I was like I feel like I’ve heard this one before where it’s like you can manipulate about any statistic you know with enough uh work so I’m glad to hear you say though that we’re fairly split this uh this month so let’s let’s go man let’s dig in let’s dig into it all right so let’s let’s start with Mac really as we always do with the Dow Jones and Industrial Average so we were around 34 or 400 last month um now we’re we’re you know I think we’re around 35 000 today 35.5 was kind of earlier this week so it feels like overall the market is uh is feeling pretty positive what do you think yeah I mean well they’re there for a while we had like 15 was it like a record like 15 up days in

a row or something along those lines to where you know I was starting to get the air was starting to get thin up there you know as you can see the last few days you know I think that some of that air has come out of the balloon but generally speaking I mean you know we and we’ve talked about this I think before if you know if in March you know 13 March I see the bottom of the chart around that March 13th if somebody would have said you’re gonna climb all the way back to like damn near 36 you know 35 six you’d be like yeah okay but here we are staring at the Char and uh not that that’s been really bullish for scrap or Commodities because I think it’s kind of went the other way um but it’s it’s definitely makes you wonder you know what’s going on in the background and it to me it feels like the stock market isn’t a true tale of the actual economy but it’s uh it well to me it’s future guidance it’s it’s a feeling of the future and you know you think

about the S P 500 I respect the other day that if you would take out the top seven stocks of the S P 500 how much we’d be up wouldn’t be even half yeah so so you so you could say the two things one companies like meta and Apple and Google are still overvalued which doesn’t feel like the case or you could say all the the other 493 stocks have some opportunity to go up you know so what which Camp are you in you feel like there’s the other 393 stocks have well maybe 493 stocks have a uh have are undervalued or do you feel like the seven are ahead of themselves well well this is where it’s I feel like the answers is it’s like someone told me I was listening to some the other day and they said inflation will come in waves and I think you’re going to see like this like this crude oil chart we’re looking at now uh it was at 70 bucks 70.37 a barrel last month it’s at 81.74 uh today it’s up 16 percent and so I feel like food fuel when when

we see these spiking prices when they take uh Supply off the market this is a very bullish chart and and that’s going to create these waves of fear AKA inflation and so I yes I feel like we’re continuing to go higher in this other 493 companies have chances to go higher it will go higher but it’s not going to be a straight line it’s going to be oh yeah which makes sense and just look at that chart I mean it’s you know there’s no it doesn’t just go straight up or straight down you know there’s a little closer to like an EKG then it looks you know like a you know than anything else you know where there’s a lot of Peaks and valleys yeah well so I’ve already laid on two bullish points the overall Market and the crude oil Futures yeah now to me this is a another very bullish sign and it’s a hot roll lead times so uh last month we’re around three to four weeks according to August this week or this month we’re at five to six weeks and my thought process on that is if lead times

are picking up and then I just read something on Argus as well they were talking about uh um hot roll coil and they they brought the price down I think it was uh 50 bucks so it’s kind of a skewed both ways right where I mean if you would think if lead Times Are Climbing at that pace and you wouldn’t think that the coil price would be coming down at the same time right that either tells you that coil price was too high to begin with you know or there’s a lot of Mill shut down there’s a lot of uh um you know potentially like buyers are coming back in the market which doesn’t really feel to be the case and I feel like there’s more like less volume available percent well yeah I think you’re exactly right and that that’s one of my my barest points here on the same chart we’re seeing the pricing the blue line and like us um like August Futures they were at 874 um they’re around 8 21 the last time I checked so down six percent and you say well how does lead times go up

and price goes down well here’s my next stat that’s pretty bearish us finish steel Imports Market is estimated to be up 23 over the first six six months of 2023. imports Imports which tells you that there’s there’s a little price pressure coming right for the new steel side if uh if they’re you’re getting what if you’re getting that many Imports coming in then that may be this is just my maybe maybe the steel mills have been getting a little bit greedy domestically well I think yeah well so further furthermore on that point uh let’s let’s talk about heavy Mountain turkey Bob this is this is a I felt like if they’re after the end of July trade there’s a lot of bullish sediment in the market felt like Supply had had dried up flows are definitely down and but surprisingly turkey’s 80 20 price went from 385 it grows to around 357. a seven percent decrease and so you say well how can that be right yeah well one they’re not buying very much volume uh I read uh somewhere the export volumes of all scrap is down 33 year over year and month

over month it being from May to July is down 34 percent so you have a lot less tons going export and and more importantly you talk about these these poor steel mills look at look at this chart this is the rebar scrap spread I mean I mean we’re at 300 325 dollars an hour we’re closing that you know 220 217 Mark yeah but look at this look at the spread in 2020. you know like it’s it’s and I’m not saying that’s the ideal spread that you want but I mean should the spread really be 320 a ton you know like I mean it’s good for the it’s good for the investors it’s good for the you know it’s good for the the steel mill but does that I mean either two things happen right either the price of scrap didn’t keep up or steel mills got a little bit you know too far ahead of themselves and I you know and and not I would be curious to look at a volume against the spread chart you know because I feel like those two can probably go hand in hand as far as you

know what what kind of volume is turkey exporting is it there primarily a rebar exporting country correct yes so how does that export volume Stack Up Against the Spread are they just trying to move units yeah well to me on your first point about steel mills you know making a few shackles especially last couple years is this is an anism in the in the scrap industry I’ve heard several times is hey if the steel mills are making money I’m happy because that means the scrap guy is making money yeah and so and I I do feel like both on the scrap and the steel mill side the second half will be a whole bunch of margin compression yeah and and to that point is I sit here and talk a lot of you know about margins getting a little bit wide but the reality of it is if I’m sitting in the steel mill Tracker seat right like I’m not doing anything different I’m just speaking from the guy over here trying to sell scraps saying hey you know this bus over here doesn’t run out of love like I would knock some of

that love over here too you know and I think that that’s the you know that’s the position I come from but that being said like if I’m in that if I’m in that c if I’m in the driver’s seat like I’m taking the same road I’m doing the same I’m probably making the same moves right um but to your point you want the steel mills to be profitable you want the steel mills to have status you want the steel mills to uh to have margin you just want as as a as just a lonely old uh recycled materials sales guy I just prefer to you know capture some of that myself you know well I think I think I’ve successfully done that maybe this will be our last spot I’ve convinced you that the steel mill guys are great yeah I you know I have a lot of good relationships with steel mill guys you know but also I think if your friends can’t tell you the truth then who the can’t hey guys like kick some down over here you know well I think I think it’s really I think the supply chain

issues are really resolving themselves yes they are and and with that being said I think you’re you’re seeing that we’ve really had A Tale of Two Worlds being the rest of the world in the US and the steel industry and now with supply chain you know Imports are up 23 we’re noticing that on this on the trucking side too you know like on the freight side like the domestic Freight you know Trucking side we’re noticing the uh that the logistics and stuff starting to you know clean themselves out a lot you know I so you know it makes sense on a on a worldwide basis that you know containers are moving a little more freely you know your boat cargo’s moving a little more freely you know and if volumes start to slip then you know you’re going to be able to move stuff a lot cheaper than you once could yeah and and you know for the for the turkey steel mills if you can buy Russian billets in the mid 400s or you can buy you know U.S scrap in the mid-400s you you got to go with the billets

so yeah I think that’s that’s really why we’re seeing this I mean typically the these two markets go hand in hand but you’re seeing this Divergence because I feel like you’re you’re finally getting some of those two worlds colliding going back on the on the history you know you have a 2020 you know uh basically just a three-year chart what what is that like traditionally look like on a turkey rebar scrap spread did you do you have if you were to go back say 10 or 15 years what is that like kind of sweet spot on average number that they like to hover around yeah well I think you have to throw that out and and because of of this chart and you’ve pointed this out the US dollar to the Turkey Lira yeah massive change so that for this reason I don’t think it’s I think it was 160 180 was this like pre-covered levels uh but but today it’s a whole nother so another world because of the currency because of inflation in general so and I would love to look at that chart stretched out too because I do

Wonder like is there going to come back you know is there more going to be more semblance like what I quote unquote normal and where is normal is it around 18 is it around 20 you know um historically because I think that plays a big role not just with turkey for us on the export side but I mean other countries as well right I mean we’ve seen since covid um for all the you know bad everything that went along with it and it still hangs around the dollar dominance is just kind of I mean really put the squeeze to I mean I mean by I guess when I think about it what currency has actually strengthened since covid compared to the dollar do you can you I mean well that’s Jamie Diamond said it perfect yesterday he said uh you know for us to downgrade the US dollar which they did from uh AAA to AAA Plus yeah he said it’s absurd because it’s really a comparison to other currencies so what you’re saying is is the only countries that have higher ratings is because it’s under the protection of the US Military and

so it yes I there’s there’s facts and they I understand why they downgraded it but on the contradict on the other side it’s hey you this is really a game of comparison right like the number one’s always going to win the race and I think U.S is the US currency is like 90 of all International transactions which is down okay yeah uh but it’s still 90 and so that that’s where at times when you know when I when I’m getting nervous about our our debt the US debt and and our we’re spending more than we make right all those things when you keep it in that perspective I think that’s where it provides a little bit more balance to people’s people’s minds well and I want to bring this up because you know not the currency the the dollar the Lira uh the one there they play such a big role anymore I mean this is maybe 20 years ago this probably wasn’t a really big topic of conversation at least or as major of a topic of conversation as it is today right because of the international trading that’s going on with

you know you know between all countries and I think that you have to you’re foolish to not pay attention to the ratios the currency ratios and say okay like why I mean there’s because there’s so many factors at Play It’s Not Just Turkey demand it’s not or Turkish demand it’s not necessarily um rebar spreads you know scrap spreads there’s just so many other factors that have to be taken into consideration such as you know the dollar the US dollars at this chart I mean regardless you mean you take I mean what is that a uh you know what I mean is that good 70 percent six just roughing just roughing it in my head like 60 70 percent you know decline in value to the right I mean think about that like that’s I mean we get really our underwear in a bunch here in the United States over like five percent inflation right like you’re looking at a chart that’s like mind-boggling you know I mean if you’re you’re sitting there in turkey with you know your liras and you’re going like my buying power especially from the US or whatever is

getting crushed and one year and this charge you know think about July 2022 so that’s one year you lost 65 of your buying power yeah I mean that’s a to me I mean you just have to kind of really like blink your eyes a few times and be like well no wonder there’s a lot less scrap leaving the United States Shores going to Turkey now leaving other Country Shores maybe like it’s probably there’s probably a lot more um scrap that’s a little more appetizing out there for them than our scrap right so all right I’m gonna I’m Gonna Leave You with one dude I got two more bullish points for you on certain grades and then we’ll be done and I will let everybody go make their trades for the month and let’s go on talking about currencies talk about inflation really I am I Nucor uh our last earnings call they said they’re operating at 84 percent which is now substantially from year over year still good but yeah it feels like we’re getting close to the bottom on like at least the obsolete scrap Market to me I feel like inflation really

has caused different lows levels like I I’m surprised that even at what we’re paying today for scrap that we’re quote unquote bottoming out it feels like we had more to go in my mind just based on historical information and so what are your thoughts there I think it’s I mean we’ve talked about this a lot but it’s very regionally driven right like right now because there is that and and I think I have two I have two points to that to that uh question one when somebody told me a while back I mean this is still a really good price you know whatever you know mid 300 or like low 400 like this is a really good price deal you know for you to be saying no and I was like but the costs associated with processing shipping that scrap has went up dramatically as well so it’s hard to just say dollar for dollar 400 scrap is way better than you know 300 scrap 10 years ago like I don’t know that it’s that much different right like you know like because of the costs associated with actually delivering that scrap to a

uh Stillman now um I also you know I also believe that regionally if you’re in an export primary facility and you have no choice but to kind of move your pricing down because the dollar is all has been on a tear you’re having a harder time getting other countries to you know could commit to buying scrap in US dollar you know US dollars and I think that your domestic steel mills regionally like the Midwest and I I’m looking for some for you to shed some light on this here in a little bit I would assume that but River issues and transportation issues and like you know that it’s and maybe volume issues that now a sudden like what should be maybe a down month maybe is it you know just for all the other extenuating circumstances and we’re not talking about very many miles apart in you know where the how the pricing gets structured so I’m looking I’m looking forward to your input on that well last year I remember Argus wrote a great article about how Fiona diesel pickup you go and pick up you know two tons of scrap you get

paid a couple hundred bucks you probably spend 100 bucks in fuel like is that worth it and it just feels like I’m I think especially this year you’ve seen once one scale levels both reached and you know it was it’s different regionally based on freight right but but it seems like man once we get below that hundred dollars mark on the scales for Peddlers It’s A Tale of Two Worlds like they’re just float is completely cuts off yeah all right and and discussing like the stadium in the midwest because I’ve got some friends up there and and they’re talking the market you know is actually up on Obsolete right and there’s some like there’s some up money to be handed out for certain grades and and I was asking them like what’s driving that you know and he’s like you know I think it’s just flow there’s just not as much scrap availability out there so they’re actually seeing up money on certain grades which I was kind of surprised I thought maybe this was a soft sideways Market at least over here in the in the west right or rocky mountains or where

whatever region you want to call us but I was looking at like a potentially a soft sideways market now thinking well I mean you know what everybody else does maybe it’s not you know as as bad as maybe one would predict well we’re going to use generic numbers but then these are generic yields but I think this answers your question perfectly these are Argus media’s National averages or Southeast averages numbers but they got heavy melt at 290. so if you yield 90 that’s around 320 330 cost yeah shred it at 400 bucks that’s at 450. and when you’re printing money and you’re just blowing and going you don’t you care less about this fact when you’re down to 84 operating rates or less this is what comes really really important and you can see in green here is the cheapest grades turnings and heavy metal yeah it’s an significant cost savings which I mean ultimately like you’re I mean and then you factor in you know the the different blends that you’re making you know every steel mill is a little bit different everybody still knows got their Bland their their cake right that

they like to make and they know what the ingredients they need to make that cake and depending on what you know if what your position is like month over month or depending on what your uh what your you know what’s available in the market that this current one and it may not be all the way the guidance you know like hey you know yeah maybe a the number one HMS a little bit better deal than shredded but you know there’s not as much shred out there so we’re gonna have to go maybe kind of pick some of that material up right yeah um I this reminds me and I I I’ve probably never said this but so internally um we make a chart just like this and we talk we and I’d have pricing for shredders uh pricing for steel mills I calculate in my average backhaul I calculate in Freight miles right and this is a chart that my uh CFO Brian built I mean that dude he’s the brains of the operation right like like I’m here with all the crazy ideas and Brian’s the one that like says okay like let’s

let’s organize this and make this actually like make sense so kudos to him but we’ve we plug in the pricing and we know our back call Value and we know what our what our what it costs us to run that truck or that rail car and if you just say here’s the map right now I give my Transportation guy the leeway I say okay like and we may lose ten dollars going east or west with HMS or shredded or whatever that is but if it’s a customer relationship if it’s a uh you know if it’s something that we’ve committed to previously that yeah I’m willing to take that hit on the load or whatever the times knowing that there’s a longer term Vision I’m just basically say here’s the keys to the car and I would assume and this is just kind of mean making an assumption you you could probably shed some light on it that a steel mill melt manager says you know I need this many tons this many you know whatever for the month and then you build this chart and say okay how can I most cost effectively get

the ingredients for the cake and make everybody happy is there is there a lot of similarity to that yes but I also would think it’s it’s every operation is completely independent every milk manager has a completely different way of of of doing things okay working for suml 10 years you had told me there’s a there’s an art to making steel I would have said I would think it’s a science right but yeah but today I feel like there is an art to making steel and so I have way more appreciation for the art of making steel versus the science because of the results that I’ve seen uh working for stomach and and when I see charts like this too it gives me don’t uh all you scrap guys don’t get mad at me for this but uh it gives me a little appreciation a little more appreciation I guess for steel mill buyers because there’s an arc to to getting the ingredients too right there’s the relationships there’s the you know what what’s the most cost effective what’s the you know what’s logistically you know where am I bringing the material out of there’s

there’s a lot of there’s a lot of art you know they’ve always said you know the best business minded individuals have a very good combination of of Art and Science right they have a little bit of heartbone in them and a little bit of science bone in them and that’s kind of what what makes you you know kind of more well-rounded and I feel like as you get into these positions where you’re trying to figure out what material is available at what cost and what you need when the relationship’s involved there’s a there’s there’s there’s an art to that dance well it’s just like buying scrap for your scrap yard there’s there’s there’s both an art and a science an art and math so I think there’s a lot of a lot of uh similarities there that’s for sure so the bull in me says if you got HMS you got some pns you know or attorneys like maybe you’re in a good position to negotiate Big Island you may maybe have a tough road tough road to hoe you know well I think I think we got to give credit to you

Brett uh RAM may you said hey if I had to be if I had to take a position I would be short steel long copper here we are today in August copper was around 360 then it’s around 3.99 today or at least it was last Monday and and still probably fell you know 50-ish dollars a ton so you did it my friend you nailed it even a blind squirrel finds a nut you know like that’s the that’s the game right um but looking back going back on that chart and if I I genuinely think I mean copper obviously he’s kind of broken hit for 402 or something like that and uh they kind of broke back down to that 385 range somewhere today I think it’s 385 386 somewhere in there um I I feel like there’s still a good push coming on the price of copper I think we get back above four and we probably pushed you know even a little harder so how’s that for a prediction that’s probably will go the other direction but uh I don’t know I just feel like there is a potential momentum there

I mean you start really trying to see what these governments are trying to shove down people’s throats as far as you know alternative energy and everything else I mean to Electrify everything man you need copper I mean you got and you need a lot of it so I mean I think you’re in a good position my fellow recyclers if you are dealing with thopper or have the ability to to uh process um you know whether it’s number two number one or um you know Brian I think you’ve gotta there’s a bright future ahead so well I love your prediction and you know I think if you got margin in it sell sell sell well and trust me yes there is that uh component like I do I’m in agreement when the copyright four dollars I I got rid of a load of crop I didn’t around and wait until 4 20. I’m just saying I feel feel momentum to go and if it hits four dollars again I got a few more that are probably gonna go down the road so if I would have smart I would have sold all three of them

but you know how it goes well thanks again for uh another Bulls versus Bears here in August absolutely man and I do appreciate the charts and good luck to everybody out there uh negotiating their August material um every region is going to be a little bit different but you know I’m thinking there might be it might be a little bullish action on a couple commodities for you this month have a great uh month and we’ll see you in September thank you