welcome to a scrap life a podcast solely focused on the hustlers Grinders operators and business owners who live and breathe the scrap metal industry every day here is your host Brett eard all right we’re back for the 140th um Bulls versus Bears podcast no I don’t even know what how long long have we been doing Bulls versus Bears Chad what do you think this is probably episode 15 20 yeah it feels like it’s like been two years almost two years now like give or take but so dude I don’t know like Nick and I did our uh um you know Metal Monday you know number 52 on the year and we’ve been doing that for a while but you know each one has its own flavor and dud just the Bulls versus Bears I feel like the content here is pretty rich for the ferris guys people Trading feris scrap so here we go man let’s get this uh get this party started episode 12 of the Year we’re heading into uh January I guess this would be number one for 2024 right technically speaking so yeah um we’re trying to get this thing

knocked out before the year end so that on January 1 or 2nd we can have this thing posted and everybody can go trade some scrap and try and uh make some make some quality deals with their local Mill scrap buyer everybody knows January is the best best month to be selling scrap it’s the best month to sell scrap if you can find a steel mill that wants to buy it and I feels like there’s a few steel mills out there that might want to buy some scrap in January I mean we’re about to find out I guess huh we’ll talk about that we’ll talk I like it I like it so here we go January 2024 election year it’s everybody predicted 2023 to be a pretty you know great great year and while it didn’t really fire on all cylinders for the most part it did end the year with a bang right so absolutely positive that’s a positive thing how are we gonna fire out of the gates on in 2024 Chad what’s your uh what’s your take well as you know I always like to start you know top down approach and

I think you can’t you can’t start Bulls versus Bears without uh talking about the Dow Jones Industrial Average I mean this this Santa Claus rally that we’re on is been been fairly epic what a rip man huh isn’t that crazy and you know and you think about it like what what has caused it is just the idea that the FED has beat inflation it’s it’s unbelievable to me that just a more of a hawkish tone creates this kind of buzz in the market which that will be the tail of 2024 I think is do the expectations um meet reality or do does reality meet expectations on the rate cut side and do the rate cuts um actually create this much impact if they do actually happen or are they just cutting rates because there’s a problem in the system you know well I think I think it’s it’s interesting to me you have you know oil like for example is flat month over month it’s around 74 bucks a barrel which to me you know that’s that that’s more of a deflationary um then inflationary at that price point my my opinion but I

feel like we’re all ignoring in this Euphoria Market is is that what’s going on in the Red Sea is like could be huge massively inflationary if that really does have implications and I’m talking about the drone strikes right yeah and if instead of and all these ships going below um South America so that that’s G to have a lot of effect not only in America China and a huge impact most impact in Europe so well you’re talking about logistics right like there’s two components to inflation I think that we saw really happen after covid and and how big of a role Logistics plays in cost of goods so it’s the price of fuel that you know the cost of moving material and then it’s also the timeline that that gets affected so you know the the distance traveled if you take away the the Red Sea shortcut if you will right versus having to go all the way around I mean you’re talking about I was I think it was like nine more days or if I recall right and it maybe and I can’t remember exact some somewhere around that range and so

if you extrapolate that you say okay oh it’s only nine days but then you multiply that over you know billions of dollars of goods being traded and you know whatnot it starts to really I mean you could see the cascading effect of you know um what that what that implies and I I I mean when we think about the chaos that was before I mean we had a 20% demand increase on container ships so I I don’t think we’ll have as much chaos as we did in 2021 U but I do think we could see a rear rail impacts because I just feel like that whole containership ma matrix it’s it’s it’s it’s good obviously but it’s fairly fragile too right if you have one one break in the component so to me that that could be a surprise um that would get that most likely will be um handled but if not that that would sure cause inflation and then something else that that in America we don’t really pay attention to but in like Canada and Germany and most of the most of the uni um the European nations they they don’t

have 30-year mortgage rates right like we do in the US in our homes they have a lot of times either variable by year or like can max out at five years and then it’s a variable loan so there’s a lot of people there’s a lot of defaults that are climbing in both Canada and in in Germany for example because in the US I think the average American like out of all the the Home Loans out there I think like 65% of them were either refinanced or in between like 2020 and 2022 wow that’s wild that is wild so we are not seeing it effects necessary here but in the other like if you’re in Australia like every year you just get it you just get a new mortgage rate right like just ch changes your life or so like can you imagine like your home payment being like two grand and all a sudden it’s like 3500 yeah and there’s other countries that have 40 and 50y year mortgages too right like there’s the flip side of that coin that you know I think that and I think if the home prices keep

moving up and they don’t move the the uh interest rates down and or to do something I think I believe and I’ve been saying this for a while but I think here in America will see the 40-year and 50y year home loan because that’s really the only way unless wages dramatically increase which is inflationary unless that happens I think you’re really going to see you know that something has to give right if you want if you truly want home ownership and I think you could read both sides and say do they really want it do they not whatever but if there truly is a driver in the single family um homes purchases at some point you I think we see the 40 and maybe the 50 year mortgage well that’s a great point to to me why I’m talking about housing and why I think we’re talking about housing is when a person or a couple moves into a new home they buy a lot of stuff you know usually they fix it up they go to the Home Improvement store you know they buy a washer and dryer that in fact steel

demand all those things so so it’s a big part of our economy so I think it’s something worth worth keeping an eye on too when it comes to the world inflation I also think home purchases are are um they also show that there’s people are positive about the economy too right so it’s like people purchase a new home or they upgrade to the from the very from the starter home to the next level home if they feel positive about where they’re at financially or they feel positive about where the the you know the short to medium-term future of the economy and so if you start seeing that level off I mean there’s a lot of factors that are involved in that um obviously you fat you flash the fear greed index up on the on the charts but there but there’s a lot of factors that go into that yeah you can definitely see I mean think about just not too long ago we’re we’re a lot more uh greeder than we were just just in October you know um from a from a psychology standpoint so yeah I think it I think

it’s interesting for sure so this chart essentially is basically saying that that you know today people are a little more greedy than they are um fearful about what the future entails and do you feel like that’s rate cut driven do you think that’s pricing coming down you know quote unquote a little bit of you know um reduction in less inflation at least perceived less inflation um happening or what well I think you if you take out I think most people feel like if if we’ve really beaten inflation and we’re going to have you know all these rate Cuts coming up in 2024 the Magnificent or the top seven stocks those those are pretty high relative like to profits earnings ratios things of that sort right but when you look at the the bottom 4 95 other stocks in the S&P 500 or 4 93 other stocks in this S&P 500 those are still relatively beaten up right and so I think a lot of people think well they were beaten up because inflation and so if if if that’s if we’re kind of past that hump then I think the stock market

is typically indicator of a future of the future right right not necessarily today and so so I think the thought is is that hey we beat inflation those other 490 some stocks are going to come RAR back well here we go man let’s let’s let’s see uh let’s see what happens you know and on top of that I mean I think AI has the potential at least on the especially on the technology side to be deflationary just like we’ve seen AWS or or Amazon right so yeah all right so let let’s let’s change gears here I’ll I’ll stay on the bullish case for you Brett but let’s let’s talk about iron or so to me iron or is always a good indication of a potential demand in China uh for for BFS so blast furnaces and so we actually seen a an increase here from 130 to $136 a ton so that’s a that’s a positive sign yeah it’s moving in the right direction um obviously you can see the chart I mean the last time we you know you know you know from what March levels you know we we blew past those

levels in November and this trend looks like to still be climbing so that’s a positive for feris pricing looking at in January and as uh as iron or goes up you know now I think pig iron is really really Associated more with scrap but but pig iron we’ve seen an increase month over month from around 450 to 47250 or you know somewhere in that 470 to 475 range um fob Nola New Orleans so that that’s another pretty pretty positive sign headed into January yeah I’d like to see that thing break through 500 and see what happens I think if that thing breaks through 500 you’re gonna you can see you can see that you know the the domestic scrap prices you know have a pretty good pretty good climb coming into the first quarter of this year well and so I think about what you’re what you’re hitting on is is what is what is crude steel utilization rting so we’re fairly flat month over month but but if you look at it year-over Year we’re up like 3.1% you know saying in December where we’re at compared to December right and

so it feels which I would agree it feels um healthier this December than it did last December um in the world of of utilization rates yeah and what’s driving that is that do you think there’s going to be this year do you feel like there’s more um domestic steel driven projects is that where why the where the the bullishness the positivity comes from on the you know on the steel production side do you think where mean because in year that’s what you hear because I mean ultimately on the manufacturing side I think most other recycling scrap metal recycling facilities would agree that manufacturing does feel slower right now than it did even at the end of last year and going into the first quarter of 2023 so you know you start thinking about steel steel utilization capacity like it’s hard to I mean I feel like my eyes are almost like fooling me right because I mean the volumes are significantly off I mean you talk to anybody out there and unless they have a really very niche market they’re looking at 25 to 35% you know drop offs in volume well well we’re

we’re still at this is still only a 73% utilization right and so usually as a scrap guy guys we know like once that gets in the 60s like it’s scary right yeah now now I feel like um capacity is you know we just seen Granite City convert their their Blast Furnace from a steel mill to a pig iron facility right and so you’re going to see some of this capacity come off but but just but you’re going to see other new capacity come in thef form so it just feels like the you know when I look at this chart I say man how Hot Roll which is the the dark blue line it’s going up right scrap pricing is not going up quite as much so hold your comments for shocking you mean you mean the steel mills aren’t gonna give any of that margin to the scrap guy I’m flabbergasted they’re just keeping it competitive with pigr keeping it competitive with something yeah that’s a whole another conversation yeah so it be it’ll be interesting we see if as we if if prices start to come down and U utilization rates hold or

if we start seeing utilization rates creep up because you know just just in may we were around 78% so it’s it’s it’s easy that we can get back there yeah well it’s always interesting that when you start when you look at the two because to me those two the utilization rate and the the hot roll coil prices I mean those are the ones that got the most you know the biggest moves in them right you look at those two charts and then and you look at the like the the bushling and then the shredded and those like numbers are like they barely move right but you see the utilization and the and the hot Road coil those those things are moving all over the place so I don’t know I feel like there’s room in it for both shredded and bushling to to move up you know in a decent way in January to follow the you know just to follow the the the trend of the hotro coil price there there you go I love it well to talk about talk about H roll coil price so so this is we’re we seeing

H roll Futures now we’re talking they went from uh 1044 to 1155 uh month over month so that’s about a 10% increase so to me we’re we’re still in the S on the way up on what that Trend would say and the next chart you’re going to give us is the um lead times chart which I’m really looking forward to because that always you know gets me excited yeah so we’re still we’re still hovering around that eight our our seven week lead time but but this is a new chart for me what I find this interesting is because if you go back and you look you know let’s just call it July of 2022 okay right take out the black line from July 2022 right you can see that us domestic um hot roll pricing bushling and shredded scrap you know that no this this this the scale of this chart is different but you can see they’re all pretty correlated right a strong correlation and then if you get to the far right you’d say well you know Hot Roll steel is coming up so either Hot Roll steel has to come down

or scrap pricing continues to have to rise for those to really continue to be in convergence correct so we we there’s one of two things that are coming coming our way shorter lead times which I don’t feel is the necessarily the case so I feel like all you bullish bullish uh scrap sellers out there things might be looking up for you 2024 at least in January and and you know I think I think do domestically we’re doing a lot better than internationally but but this is China’s steel re rebar pricing it went to 3670 to 3956 so this is another steel um indicator that’s that’s looking pretty good you know one thing I do wonder and this is just strictly a a stone cold guess you know on your part I I know just um you know 20203 was supposed to be the year China came roaring back right it was going to be the year where you know they had lifted their covid restrictions and they were going to build and they were going to do and it was going to be you know BL blast off and that just never came to

fruition you know it felt like and and does China just continue to muddle along in 2024 or do you see there being some growth opportunities there which obviously drives the the rebar price if there is you know construction or growth or or do they do they slump off more what’s what’s your prediction for 2024 well I think 2023 surprised a lot of people in that a lot of us investment left and I think China especially the government maybe felt like that’s okay right I think now that we’ve seen ping come to San Francisco and say no no we’re not going to war with Taiwan we welcome investment back I think he’s he’s basically said Is Us investment is needed to make China continue to grow and so that’s why I think one one reason why I didn’t take off and then two is you know we at the beginning of last last year we’ve seen the largest real estate holding company in China default right and so just that when that strong growth went away well that demand for for housing when away along with it so what 2024 May hold that’s a that’s

a great question but I don’t see I don’t see a lot of us companies all sudden racing back to go to go to China for production what do what do you think no not in an election year especially a contentious election year where you’ve got you know the the Republican side which is you know um being I don’t know how to the best way to say it but very domestic focused um and and if if people feel like that’s the case then they’re going to want to invest here right because I feel like there’s a bigger upside for return um safer investment y y y um if they felt like the core would be shaken here if something big changed then maybe money does escape and go look for a you know a better more opportunistic home um so this is always a tricky year and you know I I I always say like you know make the decisions you’re going to make that are good for your business not like who’s going to get elected right but doesn’t mean that it’s not going to be interesting it’s not doesn’t mean that there’s not

going to be a lot of factors at play that drive the markets that we all have to pay attention to and sell into so keep an eye on it pay attention to it make good decisions but I I think that you know if the elections were to be held today you know we’d have a new president and if that was the case I feel like the US is probably the best place for investment for you know and I feel like that would drive more domestic strength than say Chinese strength yeah I definitely think the the de de globalization Trend will continue for 2024 there’s no doubt about that yeah what are you uh all right Dr copper what what do you think dude I have one more day to win my bet with Nick um I bet on $4 dollar and I got to 396 I think yesterday or the day before and I’m like God can you you just reach up and slap it on the ass for me and then go back down like I’d be happy you know just so I could get my damn $100 out of Nick like every

$100 bet I make with him lately I’m just giving I’m donating to the to the SNY Family Fun fund you I haven’t recouped any money I’m so close I can see it so I guess we’ll see I got tomorrow to to see what happens but no I genuinely think like if if this domestic Market stays strong copper breaks $4 do you know I think it keeps the trend it keeps moving up um it’s copper is also in you know like I say what lack of supply and just like Ferris scrap you know it’s you know there’s there’s a lot of copper Choppers out there that are hurting they want need more material to keep things running or they’re on the hunt they’re tightening their chop margins they’re tightening their squeeze to get more material right it’s kind of like a shredder like you start tightening up your margins so you see if you can buy more material and get it through um I feel like there’s there’s less copper out there to be recycled than there has been because manufacturing’s slower so if you know if there’s a still a strong you know

export demand and a decent I mean what I think there’s in 2024 there’s also like a a brand new Copper at least was it one or two facilities coming online that are going to be domestic consumers of copper and copper bearing scrap so I mean that bodess well for copper you know at least you know consumption domestically so I I think we not only do we wrap step up and smack for Dollar on the ass I think we we keep we keep it the train moving in January but time will tell well I love it I love your perspective and you know I think uh Copper’s obviously that’s why they call it Dr copper it’s a good good indicator of the overall economy and it sure does feel like especially vers this thing in vers three months ago to October or so um we sure more lot more optimistic that’s for sure it definitely if you look at the trend line it sure does follow the the Dow Jones Market doesn’t it geez yeah like that that bounce you know end of September early October and then just work its way up absolutely so

all right so let’s uh let’s get to our last bullish point of the day and that is man we just after this one we call it a day no no no no so so we had uh 8020 you know uh turkeys heavy melt it uh us or origin base went from 4 10ish to 4 30ish now it’s it’s off its highs um but it’s still higher month over month and so I I feel like that’s a it’s always a good sign and I think I think exporters especially from the East Coast are are selling into this typee Market yeah I think so too selling selling into this type of market and heaping domestic steel mills you know I think honest keeping them you know letting them know there’s still more than one buyer at the table is a good thing it moves tons off out of the out of the US market which if there’s there’s obviously more capacity coming you know I think we we’ve discussed that in 2024 right it’s like was it two was it one or two more eaf Mills or something like that and just this year alone they’ll

come online it there well I think big river is going to double their capacity that should be done by this year and so and I think there’s potentially one more coming so yeah yeah so I mean I mean the demand I think will be there it’s just is there going to be the demand for for scrap if the demand for new steals there so um well we’re talking about demand for new steel so you know one thing we didn’t talk about earlier at Hot Roll was was the future and so yes the the hot roll Futures indicate indicative Cur our indicate curve is basically saying hey it was you know January we talked about was 11:55 you can see in April it’s it’s 9:30 March a000 so it feels like if if we trust the the Midwest Futures Market on hot roll it feels like people are less more bearish than bullish when it comes to that people are trying ramp up get the year get some inventory and they figure like by if they buy you know you know a year or a year a month or so or two of

inventory and then then maybe there might be a little bit less demand in April I don’t know we’ll see but that’s not the the most positive outlook for uh especially like for your bushling you know material or there’s that’s not that’s not that’s not the not the best look but I guess if you have to to squeeze a a bearish point in that’s that’s a fair one which you means you know that there’s probably going to be a little margin had to come out on the the steel mill side for us you know poor little scrap guys trying to make it a living well you know I I know it’s been tough for you scrap guys I bet I bet you don’t have like vacation scheduled or anything right no we we are we are eating tuna fish and uh whatever you know in a can putting some mustard in it for for lunch today you know we usually start this call out with you tell them about how slow the scrap flows are but I noticed you didn’t do that this month so I have to wonder at least in the midwest it’s

been above way above average on warmth I mean you could has the is the weather just been a crazy weather year this year I mean we feel like we didn’t have a hell hell of a hard fall like fall was pretty damn nice which you know I was very thankful for um construction wise and um you know know this winter I mean we got a little skiff of snow the other day um the day after Christmas and we got a little bit of snow like a month three weeks before that but I mean sh we ain’t hardly seen any snow um it’s just been an interesting interesting weather year for us so so tell me no winter storms that doesn’t impact scrap flow right in a good way just yeah other than what affects it is the pricing we can’t get I Can’t Get Enough value out of our Fair scrap to to drive pull more strap in so we but you know weatherwise you would think I mean that would be it’s almost a scary thing if you really think about it so weather’s been good pricing hasn’t been egregiously terrible and if

you talk to people and they say we’re still off 30 30% of flow and you’ve had decent weather decent pricing like I don’t know that bodess well for like the economic outlook on the manufactur the domestic manufacturing side or are people gauging their 30% down on like kind of false positives right like 2022 you know 2021 2022 volumes where everything was just ripping right and I think it’s Are we more like about that 2010 11 like typical volume where oh we’re down 30% like but from what total I think you have to kind of set your your expectations at a reasonable level you took the words right out of my mouth great mind s alike and then there’s people like us well talking about you know the poor little scrap guy I mean these look at the look at these poor little rebar Mills in Turkey I mean if you look at these margins for this is the spread between rebar pricing and scrap pricing you know they they did get squeezed quite a bit in uh in December and so they’re starting to bounce back a little bit but they’re still that back

to what they were and so turkey has seen massive inflation unbeliev unbelievable compared to the US and so I’m I just feel like when I look at this chart I say either scrap doesn’t have a whole lot of room to move up unless rebar really takes off and I don’t necessarily feel like the international Market’s going to be white hot here the in the first quarter of 2024 no I think that that’s a point it’s a good point and I think how much of that is like the L driven right I mean how much of that is you know just driven by their own inflation their own currency devaluation I think that doesn’t help your cause um because I think that that that hurts you on the domestic you know manufacturing front like people building doing like investing in your economy I mean until it hits a certain point and people feel like they can buy everything on sale and then all of a sudden that deal flips right yeah but nobody wants to catch a falling knife I always feel like they’ll let that thing go and then you might see a a

steady climb out but just I think the the trend on this one is not your friend the trend is the wrong the wrong direction you know like from from being positive for the feris you know feris scrap export Market to Turkey looks pretty rough yeah well I would I would after you looking at this chart we’re checking out the the the curve of Midwest bushling and this is January’s trade and so if you look at this I I’ve I’ve been keeping a close eye on this Futures Market because it’s really been telling I was very surprised how far we went in in January in bushing pricing and and this thing was trading as high as 570 for January U I think December some settled somewhere in that 520 523 range so that would indicate well we got a lot more to go well today it’s back down to 535 take taking a pause you know it’s a light trading light trading days you know going to the holidays and then everybody’s just getting ready for January no these big big green bars at the bottom that’s volume yeah that’s what I’m saying but now

but you see like what’s been happened the last few days right that you see go to volume those little those little little red bars down there which means little little volume um yeah getting traded because everybody’s waiting for the new year and they’re going to come January you get those big green ones again but it just overall it feels like the the siment uh for January’s trade was Sky High and it’s coming a little bit back to reality now so that that’s it I mean I think I’m gonna leave the bar case alone with that chart yeah that I mean that’s a good one for you to end on just remember the the margins that are getting produced at today’s hot roll coil price versus a scrap price remember that the dollar is coming off in value which means the export Market Market could gain some steam so we could see some tons leave if the prices you know domestically don’t make sense maybe they don’t go to Turkey maybe they go somewhere else um oh I wanna I want to get in on this Nick ster fot I got a 100 Buck to

say turkey will be lower than it is today what do you thinking yeah I think yeah you’re gonna try you want to get on Nick Snider’s Family Fun package donation by Brett eart feel free I mean I’m about to give give Nick another $100 to uh to you know that guy I mean sometimes that guy he’s he I’ve beat him I in sports bets I think I got him but these scrap best man I can’t win to save my ass maybe it’s just because I’m just too damn positive and too positive guys betting because Nick’s a positive individual but you know you know how it goes I maybe I’m just a little too Rosie of a picture guy hey that’s why we’re the perfect uh pair for Bulls vers Bears it works out great you keep me you keep me uh you keep me down where I belong like hey stop trying to Jack the price up 50 bucks next month all right all right I’ll take 45 all right man anything you want to end on anything you want to end on for uh to start out 2024 no I hope everybody enjoys

January trade and and uh we’ll see what happens here time to move some scrap time to sit on some scrap time to negotiate negotiate yourself a good deal everybody that’s why we do this make sure everybody’s on the up and up you guys are talking the same language and and uh go make it happen here’s to a solid 2024 wish everybody the best