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 here we go February already 2024 this is Valentine’s month this is Lovers Month this is uh this is when when the steel mills and the scrap the scrap uh processors you need to get along because this is this is Valentine’s month and I feel like there’s a real strong opportunity for everybody to get along this month if the prices go in the right direction so I’m here to promote a positive Bulls versus Bears podcast where everybody comes to an agreement that the market is up in February welcome Chad well I I I love that I love that introduction because he listened to Cleveland Cliffs or new or’s uh latest earnings call about last year I mean they’re they’re in your boat they they’re saying hey why aren’t you buying our stock newor is a seven and a half times evida what are you waiting on yeah I saw that somebody made that post on LinkedIn this morning I think

it was Tim um Ryder boss I if I I’m sure I’m butchering his last name but he has some good content um but he posted that clip from Jim Kramer interviewing the CEO of new cor and basically talk about you know three years running like like year over year over year the best year they’ve ever had and and I’m curious how 2024 shakes out for them but I guess I mean they have cornered you know a good chunk of the market was it one in every four tons produced in the US comes out of a new core Mill is what they said yeah so that that’s a great point so his comments were in the last three years we’ve made more money than the prior 20 before that combined okay that’s what it was okay and so I I got to give a lot of credit to the stock market I think it’s well PR I think the market is the smartest so what they say I mean you can have a great three years but what’s year number four gonna look like which means just I mean if they’ve made that much money

then that’s just they should be sharing that with us poor scrap guys just trying to eek out a living over here you know I mean you guys are printing money we’re over here just trying to keep diesel in our cogens I mean come on bro just buy some stock buy some stock yeah I probably would have done better if I just bought stock instead of scrap you know made more money that’s for sure I hear I here to tell you I feel like the this Market is is poised for some good things in February what do you think Chad well let’s let’s talk about that you know so I I’ll just get this over with we had a we had a one week winter blast across the Midwest uh we had had followed by an nice e storm few days um following that winter blast so tell me about flows and how bad they are terrible and honestly like it’s there was a two- week period we can have which was definitely due to weather but I’ve talked to multiple manufacturers out there right now and they are basically saying like it’s slow right

so industrial scrap flows off not even because of weather but just for demand for you know manufactured goods so I don’t know if that makes the bull case or the bare case stronger but scrap flow is definitely feeling the uh weight of you know a challenging interest rate Market a challenging demand Market um an election year Market you know all those things so scrap flows are not great and that’s why I think this Market should sustain itself or be stronger well I mean let’s just go over some bull cases shall we so I think the overall I mean if you looked at the the S&P 500 or the Dow Jones and you know we’re checking out a a chart of consumer confidence it went up I think around like basically 61 to 79 you know so people are feeling more optimistic now this month this date is a month delayed right but overall it feels like people are feeling better today than they were you know November for sure I I like that chart let’s just everybody’s happy everybody’s confident I mean the stock market’s ripping let’s go then then we talk about

you know the purchasing managers index so this is really how much how much uh our managers buying how much our manufacturers buying we had a we had a little tick up on that not much not much but let’s just say at 47 to 50 that’s about a 6% increase so we not Co covid levels you know coming out of covid levels back into that 63 you know range but I mean shoot like I said it’s it’s it’s in the headed in the the right direction it’s head in a positive direction and and you know continue on the positive check out this chart you can see this is the this is crude oil we’re looking at and so I got a red line on the left the chart and one chart on the the major this is the monthly chart so this is a a bigger longer extended time but it’s it’s Gathering support at that 200 day moving average so that’s that’s that’s basically says oil is basing so that’s that’s a good sign now short term it looks bearish if you look to the other chart right but only bearish in that sense

it might get down to $69 is so I think this kind of setting the floor right I mean of the two charts I mean in the long term you’ve you’re setting the floor in the market which is tends to be a good thing um depending on how the election goes it could really see you know crude rip you know but well there’s so many to me this this is the most important chart for 20 I think in 2024 all right when it’s over the year is over I think with so many uncertainties in the world I I I find it hard that oil just doesn’t become extremely volatile at some point you know I talked to an oil producer um production facility they said hey we’re losing money right like when it gets sub three like we can’t we can’t make money um just with our inflation cost up like everybody else so it just feels like I mean you got demand is slowing down right so I’ll talk about that a little later but but really telling uh you know I just feel like with all these wars Iran you know supply chain

you know ships being attacked all that can can wreak havoc pretty quick well and it could drive the oil price up right I mean I mean like you said if you’re setting a base setting a floor in that thing say around that 69 area but you if you you truly believe like all the volatility that’s going on in the Red Sea and then you’ve got you know the the wars that the ones you know about and they’re they’re they’re kind of sparking off but if you just really think about I mean crude oil drives inflation it drives the economy you know the cost of it is drives your gasoline price it drivve so you know the stuff that you don’t even think about the cost of manufactured goods because it’s in your Plastics and your you know a lot of things that people aren’t even aware of right so it’s it’s a big driver of the economy and it’s something that like you said it’s important I know you always you always discuss you know what the price of oil looks like and rightfully so because it just plays such a big part in

so many facets of what we do well to me when I look at this chart I say man that’s there’s a lot of asymmetric risk reward meaning if you if you buy buy fuel today let’s say you have a diesel Shredder right and you you buy 10,000 gallons today you might you might be wrong by 30 40 cents but you might Save A Buck or buck 20 pretty easy too right so yeah it’s it’s good good risk to reward all right so let’s uh let kind on the the scrap flows so checking out a chart of Zorba so Zorba increased from 75 cents to 78 cents 4% increase and I really really think think this is an indication of just how weak flows have been yeah back to Supply right I mean I think I know the the tons that we’ve shipped and I you know for example I was talking to like one of the major converter processors last week and they were talking about you know the volume of converters um and Becky from uccc just had that article in recycling today as well but I think the the volume of

converters being recycled and being processed right now now is is down significantly and that’s because you know car turnover has significantly you know was significantly disrupted during covid right supply chain was you know I mean just virtually you know not existent for a significant period of time which then drove the price of uh used cars through the roof because you couldn’t buy a new one and then and so you just we we’re just feeling that now cuz it took it took a lot of you know potential cars that you know would have got turned over and turned you know went through the auto salvages then eventually ended up through the shredders I mean it took those units out of the market and I think that you know that you’re seeing that in the Zoro prices you’re seeing that in the the volume of of car bodies you know being processed by shredders I uh I think the overall they there’s a study out there um that said that it’s the length length of a car life in the United States you know for the first I want to say eight years of my career

it always hung out around 10 10.1 today I think it’s close to 12 11.7 something like that so like exactly what you’re saying is people are hanging on their cars a little bit longer which just which just means less uh less scrap coming to the yard yeah you’re I mean you basically just take that year and a half two years of Co and you just added that to the life of the car you know through you know interest rates through supply chain disruptions just through a Calamity of different things and you know so you you might might take us a year to to come through that on the bright side which has nothing to do with feris scrap per se but they feel that you know because those you taken those units out of the market they you know pgms had hit you know I mean in some cases multi multi-year lows and like because they’re going to be a shortage of Supply you know if they do get some of that volume back into the automotive you know you could see some some stronger PGM prices this year on the

whole and maybe even into 2025 as they begin to need those you know Platinum plaum bodium units into the new converter process it’s G to be good for the guys to have a converter reclaim right it could have some it could have some uh some positive um positivity in that so that’s the bull case let let’s let’s stay on the positive note so I don’t know if this is positive but it’s not negative we’re looking at heavy Mill 8020 to Turkey okay and last last month you know our January 1 uh we were somewhere around that 418 today we’re somewhere in that 421 range so pretty relatively flat right and so um I think that’s that’s interesting even with I mean turkey’s inflation is still it’s crazy right was it like 6 or 80% I can’t remember some crazy number where you’re like oh my goodness yeah this is just the one month chart you know it just it just continues their road so and what’s causing that Chad like do you know I mean it is it I that’s obviously against the that’s the lra versus the dollar but like what’s really causing

that inflation in their Market I think it I think it goes back to the the dog with the least amount of fleas right and so that’s the dollar and other countries are more fleas and so people pick on them first so gotcha so does that mean we’ll get our turn in the barrel in your opinion on the on the on the dollar side or what do you think I I think it’s not that I admire Janet Yellen but she said still even after Russia made a lot of different changes on their oil and Saudi Arabia did a lot of different changes on their oil contracts CH uh exchanging in Yen right um we’re still the US dollar is still 90% of all all cash flows or all flows of cash around the world so yeah good to come yeah good um but is it going to be tomorrow probably not gotcha yeah all right so you ready to let’s let’s get into the bear good man it was a great podcast um for all you guys negotiating uh contracts this month take those points to your nearest uh scrap broker buyer um consumer and

go tell them that you need more money have a great have a great day wait wait wait oh here let’s talk about the steel lead times yes I there is a part of my business that I am interested in in uh in hearing this so I I sent you a chart and I grew I drew some lines on it and I think your comments were you can’t draw fing lines it’s cheating because you were cheating me you were like look where this thing’s going and you were drawing in your own graph it’s just not right I mean I could have drawn it the other way and sent it back well so I mean overall there’s something pretty compelling about this chart if you let’s just focus on the black line we’re looking at the lead times of Hot Roll versus scrap pricing right and and this chart doesn’t just kind of match up but anytime the black line goes below scrap pricing you it it seems scrap pricing seems to follow tend to follow both on the up and downs side so so we’re at a pinnacle now you know it peaked in uh

throughout December early January and you know we’ll see what happens but sure does feel like you know $400 shredded here we come at some point feels like it definitely feels like you could see it trending trending that way right um depending on the mix depending on what the what the mill needs and what they feel like they can you know at some point they’re going to have to share in that margin compression I think yeah I think you know you got hot roll lead times that’s the light blue line you know that’s that the pricing is starting to come come the other way too so it’s just just telling on on actual demand out there what up which speaks back to my manufacturing uh comment earlier yeah and your so here’s Hot Roll uh we’re looking at a chart of of Hot Roll futures for the month of February and you can see these these were a lot more at one point right um and they can we’ve kind of have a we had a what they would call a lower high right and uh in December so the you know you got three

lower highs lower highs lower highs so another bearish chart for you Brett was crazy I mean you look at it from like October to I mean to December I mean it damn near doubled right like yeah which is wild um the Peaks and valleys on that chter you know I mean I I I really would love to see what the Peaks and Valley look like if you extrapolated that chart out like five years 10 years just like do is that a normal swing like from your I think there’s a a saying is if you’re a steel Trader you’re sitting on a beach somewhere right because volatility is a great thing and so yeah yeah I think I think there’s a lot of people that done very well when it comes to trading steel and I feel like those those markets are I mean that’s that’s a big swing I mean but which means it tells you like on the especially on the um hot roll side like there’s room for that that to come off and not that that necessarily bodess well for for scrap pricing um but the reality of it is you

better pay attention if you’re if you’re on the new steel side yep yep and so volatility you know you can lose a lot of money too right and so I’m sure people are taking right Downs in inventories here over the next quarter that’s for sure all right so I got uh two more charts for you Brett this one is is the February bushling Futures Contract and you can see here I mean that’s a good move it’s moving in the right direction yeah I figured you like that little bounce at the end yeah I mean it it might be that like the last hopefully it’s not like the last Dy breath hopefully it’s that next climb back to you know to the 550 560 range but uh it’s at least trending it’s it’s a bump in the right direction right that’s a that’s a dead count bounce if I ever seen one well we’re about to find out because I feel like I mean somebody bet a serious amount of coin that that that’s the the trend that needs to go that’s the way it’s going to go all right so here’s here’s my last

chart and I think this is the most bearish and I think this is what a lot of scrap folks are are you know and me too I’ve been to a lot of yards uh throughout the past past 30 days and flows aren’t great right and even though that there’s a lot of lack of especially shred feed out there if you look at this when you this is just the average this is argus’s National averages prices after you factor in the yields you know bushling is actually cheaper than shredded at last month’s level so so if bushling has more pressure which it feels like it does um you know shred is going to be overvalued so you could see some Mills make adjustments so it it’s telling them what could happen in in the markets ahead this is probably like whenever you put these charts together not that I love this one if I’m honest but at least I that I love this month’s chart but this is probably the probably one of the better charts that you know that that comes that you put together is is it just kind of shows you like

what items in your market and every Market’s different so like don’t take this for gospel right because every Mill carries a a different level of inventory for each um each grade and maybe some carryover depends on what they’re you know what they’re making for the month right so but it’s still just kind of a good like top level overview of of what What markets could be advantageous or unad for you moving into this month like which ones should you maybe look at moving off of and in this case like from if I read your chart correctly right you know machine shop turnings probably have the best value for the for the mill today and then it goes to like your HMS number one right and then you move into say 5 foot pns then reason I’m saying this is people that can’t see this chart and then you move into a uh Val you move to bushling and then you move to shredded and then Pig right yep so yeah yeah and it’s just you know when you’re running really busy at a steel mill turnings and heavy M don’t make sense production makes

sense but yeah when Le times start getting really under that five we mark That’s when I think you know other lease cost charges are thought about more comes more value driven at that point than say production driven right and so those are other considerations that’s why that chart doesn’t tell all but it kind of gives you some insight and you know you combine that chart with say the lead times chart and you can kind of start extrapolating what could make sense for the Mills at that time so what do did I convince you are you a bull are you a bear where you at I’m I’m a sideways guy I’ll give it to you it’s a uh it’s a Lovers Month it’s a give and take it’s you know it’s a you know it’s everybody should win so I think maybe we’re looking at maybe a sideways some sideways action well I just just want to let you know I talked to Jake brunstein and he is financially committed to get you a bull costume for isra national because he thinks you’d look great in that thing walking around the floor dude as long

as I get to wear a United States of America flag hat and it’s and it has F Foo and I walk around in a bull costume I’m down let’s go my son so I to end on this which has nothing to do with scrap my uh son this morning he goes he was he was making fun of he said Dad I think you have gray hairs you have more gray hairs than Mom and I said Mom dyes her hair I said that’s it’s cheating and uh and I said and I said I’m gonna dye my hair like jet black he just laughed at me goes no dad you should dye it pink like you should get pink hair and I said okay I said you scor 20 points and get 20 rebounds in a game I’ll go pink and he goes really and I said yeah I said which means you actually have to get 20 rebounds which means you actually have to put for some effort out there he goes okay done deal so now I gota like now I’m cheering against him getting 20 rebounds versus cheering four I don’t want to

walk around pink Care your your bride’s gonna say man you look good in that pink you look good in that pink care then then if I bring home the bull suit it’ll just be game on yeah well thanks man I appreciate I appreciate the uh the information is always the charts you guys will get we’ll do the we’ll put the information out there on the newsletter as well so go follow Chad stuff check us check out uh check your stuff out on LinkedIn um we’ll put the charts out on the recycle 360 newsletter and we’ll see you guys again in March have a great day