Metal Monday Podcast
[0:21]
Host: All right, Metal Monday! We’re deep into November, almost at Thanksgiving, and through the election.
I thought after the election, I’d wake up to see all green. But instead, the red wave hit the commodities market on the Wednesday after the election.
[0:43]
Guest: Why did commodities drop so hard that day?
Host: I think people were worried about tariffs.
Guest: Was it just tariffs? What about the dollar’s strength?
Host: It’s both—tariffs and the dollar. The dollar’s strength shot up 100%, and that’s still the case today.
[1:04]
Guest: That’s what I thought. I wasn’t sure if there was a lot of data coming from China that might have influenced things too.
Host: Towards the end of last week, China came out with a stimulus plan, but it wasn’t as strong as people had hoped. That definitely took some wind out of the sails.
On Wednesday, commodities got crushed—copper alone dropped 20-23 cents. But the next day, Thursday, it gained back 20 cents, only to fall again by the end of the week.
China, Tariffs, and the Art of Negotiation
[1:45]
Host: I think a lot of what we’re seeing is tariff-driven or at least tariff-talk-driven.
I posted about it on TikTok the other day, and someone commented about tariffs and how they might kill commodities. Here’s the thing: if you haven’t already, go read Donald Trump’s The Art of the Deal.
If you understand how Trump negotiates, you’ll see that there’s always a deal to be made. We need China, and China needs us. Global trade works that way—countries rely on each other for imports and exports.
But when negotiating, are you going to approach it by saying, “We need you, we’ll give you whatever you want”? No, you need leverage.
[2:35]
Trump knows how to create leverage. Sure, he’s not a polished politician, but he’s a skilled negotiator who’s been in his fair share of deals. Negotiation involves rhetoric, positioning, and ensuring you can make a deal that benefits both sides.
When Trump was elected, it shook up commodities temporarily. But it’s all about the narrative. Once that narrative shifts, things balance out.
The Steel Industry and China’s Dumping Problem
[3:24]
Host: I was reading about the CEO of Reller Metal talking about China dumping steel on other countries. That practice is hurting the ferrous market and the domestic steel industry, not just in the U.S. but worldwide.
China is dumping $650 billets onto markets, undercutting other nations’ steel industries. Why? That’s their way of stimulating their economy. They buy scrap, melt it, and make new steel.
Instead of giving citizens welfare checks, they create jobs by producing cheap steel—even if it means hurting other countries’ industries. It keeps their GDP up and people working.
[4:29]
But from the U.S. perspective, we have to protect our domestic steel mills and manufacturing. It’s a tough balance. Back in 2015-16, when Trump took office, he supported steel mills and domestic production.
One thing I’ve learned: when steel mills make money, scrap guys usually make money too. If the mills aren’t making money, guess who gets squeezed the hardest? The scrap guys.
It’s all part of the art of the deal. We need the steel mills, and they need us.
The State of Scrap in Late 2024
[6:11]
Host: Looking ahead to November and December, most of the November deals are already cut. But December will be tricky this year.
Christmas is on a Wednesday, so is New Year’s. That basically wipes out two weeks of December. For all practical purposes, we’ve got a month and some change left in 2024.
[6:39]
In regions like Idaho, Oregon, Washington, Montana, and Wyoming, we’re already seeing snow. Once the snow really starts flying, scrap becomes harder to come by.
[6:54]
If you’re not getting the price you want for your scrap, and you can afford to sit on it, I’d suggest holding onto it. Prices could improve.
If you’re a manufacturing company, though, you’ve got to move your scrap to keep production running. But if you’re in the recycling business and have the space, stacking and waiting could be a smart move.
Looking Forward to 2025
[7:22]
Host: I firmly believe 2025 will be a better year for our industry than 2024 or even 2023. We’ve seen this play out before.
The U.S. will likely protect its domestic steel mills and supply chains. That might hurt the export market, but for guys like us who aren’t heavily into exporting, it’s less of a concern.
[7:57]
People ask why I’m optimistic. It’s because I see better opportunities on the horizon. I think commodities are finally ready to make the moves we’ve been anticipating for years.
[8:26]
Between now and then, there’s going to be a lot of craziness, so run your business smartly. If history repeats itself, better days are coming.
[8:46]
Host: Thank you, everyone, for tuning in. Have a great day!
[8:50]
[Music]