Scrap You Later

Strange Markets Persist - 7/14/21

July 16, 2021 iScrap App Episode 49
Scrap You Later
Strange Markets Persist - 7/14/21
Chapters
Scrap You Later
Strange Markets Persist - 7/14/21
Jul 16, 2021 Episode 49
iScrap App

Copper's steady, steel drops a tad, and aluminum is on fire. Lots of great questions were asked in this week's report. Join every Wednesday at 1 pm on YouTube or Facebook.

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Show Notes Transcript

Copper's steady, steel drops a tad, and aluminum is on fire. Lots of great questions were asked in this week's report. Join every Wednesday at 1 pm on YouTube or Facebook.

📲Download The App

✌️Become A Patron


Support the show (https://www.patreon.com/iscrapapp)

Tom Buechel:

Without your input over the years for the scrap metal industry, the iScrap App would not have been able to grow the way that it has. We've listened to your ideas, your advice and the things that you want with the newest iScrap App coming out in the summer of 2021. With price charts, better ways for you to report prices, learn about the markets and read different news alerts about the scrap metal industry. This app has been made for scrappers by scrappers and we can't wait for you to use it. Hey, scrappers, it's Tom from the iScrap App and today is Wednesday, which means it's time for our weekly report on YouTube and on Facebook. What are we going to talk about today? Market news, market updates, what you should expect expecting your scrap yard and how you can make more money with your scrap. Follow me, let's go talk scrap. Have questions about the scrap? Time to ask them now. Let's go. Hey, scrappers, it's Tom from the iScrap App and today's Wednesday, July 14 2021. We hope that you are doing well scrapping off and we thank you for tuning in to our live update. Whether you're watching us on YouTube or Facebook, or you're watching us after hours, and this is not live. Thank you for joining us. But make sure when you have questions, whether it's about markets, prices, predictions, ask us those questions during this feed so we can get to those answers as quickly as possible and help you continue to make more money with your scrap. Now over the last week, we've had a lot of people becoming Patreon supporters. By becoming one you have the ability to have more market news, more videos and different types of content push to you that other scrappers don't get. Now let's jump right into the markets where we've had a full five days of trading opposed to last week where we had four days in between us talking because of the Fourth of July holiday. Now over the last four days, what has happened? Well, we've gone from Q2 into Q3. And that means that we're starting to see some different stocks, portfolios and performances and different gauging of where companies are in the profits that they took in the quarter two. Why is this important to us is scrappers? Well, by monitoring companies like Delta, Goldman Sachs, United Airlines, manufacturers, Alcoa, Freeport Comunico, and other big dogs, like Apple or Amazon, that gives us a little insight economically on how some of these companies are doing and how their users are consuming their products. Perfect example, when Apple comes out with their different market, their different quarterly reports, they talk about iPhone sales, they talk about iPad, that's important, we look at some of those numbers not as an indicator of where the market is definitely going to be, but the more of those that are sold, that means there's more of a commodity demand for items like aluminum, the microprocessors that we're hearing about a news non stop right now. It has an indication of gold prices, also on different markets and different sales going forward, which will in turn affect the supply and demand. So when we look at items like aluminum, which has been, in my opinion, probably the hottest and best performing metal of 2021 date, while the prices are not as high or as sexy as copper might be that $4 level, aluminum prices have almost doubled this year. And having a market that's almost doubled in anything is always good news, especially when we think about the tariffs that are still in place. Now I'm not going to go too political here. But one thing that I will point out, the Trump administration had tariffs on aluminum and steel on multiple other companies excuse me, countries. And one very important thing to note five months into the Biden administration, none of those metal tariffs have been reduced. Why is that important? That shows that with the steel prices, and the aluminum prices still being as high as they are other countries are still having to spend between 10-25% on tariffs to import those materials into the country. And this does not just applying to countries like China, but it applies to India, European countries and others in the Middle East, as well. Again, why are these things important? Well, if those tariffs are removed, you might even have a higher market for aluminum and steel prices, as domestic manufacturers and recyclers here in the country don't have to pay those tariff rates. So it keeps their costs a little lower. And what we're really seeing with these price changes are more supply and demand search, then they are the prices because the tariffs. We got a question.

Virginia Buechel:

We have a question ironically from Tom.

Tom Buechel:

Oh, hey Tom!

Virginia Buechel:

He said, do you think prices will significantly drop this winter even though things have been booming in the scrap?

Tom Buechel:

You know, this is a really great question. And let me tell you a couple of reasons why I think that they could, and a couple of reasons why I think that they want. Number one, we are halfway through the year. I was listening to an economist earlier today. And he was talking about profits. And all economists have predicted that companies are going to blow out their Q1, Q2 and Q3 profits from year over year. I mean, why wouldn't they how many, how many planes are going to be flying for Delta or United this year, compared to last year, and that's going to really change how much money they're going to make. So when we look at some of these profit structures, a lot of people have baked the stock price in or the metal prices in. Excuse me, what they're concerned about, is moving forward, what's going to happen in quarter three and quarter four. Sorry, we, we have new hires today. So I've been teaching and talking all day long. And that generally drives me up a bit. I do believe that the markets are gonna continue at a very strong level for the rest of 2021. Going into 2022, I think that the first half of 2022 is going to be very strong. While I think the second half of 2022, we're going to have a lot of market disruptions. And I'm not sure that we're going to see a really aggressive market, like we are right now. The supply and demand right now is not really unbalance. And that's going to lead to a lot of these different price surges that you're seeing, even steel prices dropping $5-15 in the month of July, isn't a big deal, considering the markets are still more than double where they were a year ago. So if you ask me going from 2021 to 2022, I think that the first half of 2022 is going to be strong. I think the second half is going to start to pull back a little bit. And then you have these politicians talking about another $4 trillion in stimuluses and infrastructure plans. And we have no idea what $4 trillion looks like being injected in the economy, two years in a row because we already had it in 2021. And 2022. Follow up question.

Virginia Buechel:

We have another question from Kelly that is similar. Is brass going up? Or is it going to stay idle?

Tom Buechel:

Yeah, so brass prices have been relatively idle. And if you pay attention to the national pricing page, which is put together through reported prices, you'll see the market has been relatively unchanged with the yellow and red brass markets right now. Now, with copper having largely stabilized over the last three months, we're really happy to see that. And of course, with brass being between 60-90%. Copper, you want to follow those copper markets a little more close to get a better feel of the brass markets. But certain things that you want to keep in mind. Copper prices have really been resilient. And there's a couple of key indicators that I'm looking at. Number one, we saw this, the Chinese a month and a half ago pump thousands of tons of copper into the market. And guess what they just did again, the same exact thing. Here's the difference. Two months ago, when they did it, the market went and dropped $0.50 in one week. On the news, you probably didn't hear about the second influx of copper, but we did not see much of a drop. A penny or two drop in one day is a rounding error when it comes to copper prices, stock prices or gas prices. But when you start to move into the 3%, 5%, to 10% differences, that's when you have price movement, volatility and problems both good and both back. Question.

Virginia Buechel:

We have another question that is similar one from one of our big Facebook group members Jason Barrett.

Tom Buechel:

Jason, nice to see on here. Thanks for joining.

Virginia Buechel:

He said I've seen a sudden boost in prices in eastern Canada while the prices were comparable almost half during the boom and the American prices. Is Canada playing catch up with the demand needed in America or another reason?

Tom Buechel:

I think that is one of the many reasons. The biggest reason I would point to is that the Canadian government reacted very differently than the United States government did in 2020 to COVID. You guys have had more restrictions, less vaccinations and because of that, you've seen your markets reacting differently example, you can have inter country commerce right now, excuse me, traffic for people visiting. You know, I have a friend up in Canada that normally goes down to Disney World with his family every July and he's not allowed to go. So while Disney and scrap are very different, they are related in the sense that the government's have performed in different ways. And the Canadian government being slightly behind, you're going to have a lot of the metal producers and a lot of the metal recycling units in Canada having a little bit of a harder time producing and manufacturing goods with different labor problems and different supply chain disruptions. So with the Canadian government open for business, but with the people being more so at home, and that work from home model, we see you guys been about six months behind United States, but you might want to start working with a different scrap yard because price has been half of what you should be getting is way too big of a difference. If you told me that there was a 25% difference would be better with that. Maybe not okay, but better, just because you guys do have different supply chain disruptions that we don't have here in the States. Questions, ask them. We're here live. It's Wednesday, July 14. And regardless of how many times we move the video cameras around, I'm still here to answer your questions on scrap. So let's go back into the non ferrous markets. Copper, relatively unchanged week over week, with our new version of iScrap coming out, I gotta tell you, I started testing it over the weekend on my iPhone, you guys are going to really love it. And if you don't, then we have really bad listening ears like I tell my children, because we've been listening to you and taking your ideas and building them in. We think that it's going to be a fantastic tool for you not only to report prices, but learn more about the market have quicker notifications sent to you overall super great user experience. And the preview behind me is just a small glimpse into what the new iScrap App 2.0 is going to be. So we're going to post a link. If you want to sign up to get notified when it gets released or new updates are coming, let us know you can sign up with your email through that link. Or when the new app drops, you can always sign up for updates through there as well. Now, these markets going into quarter three, copper looks to be relatively steady. One of the biggest things that we continue to look for are the oil prices. We're now having oil prices hit multi year highs, while some economists and gas prediction lists so that we are going to see $100 a barrel by the end of this year. We are now predicting that number down to the $80 to $90 per barrel range, according to four different groups that we study and follow. What does this mean for you? Well, higher gas prices with a national average around $3.20. Right now, we are expecting those prices to rise another $0.30-$0.40 by the end of the third quarter going into the holiday season. We might see that up ticking even more. Why is that important? Well, you're going to pay more money at the pump. Yes, you're getting more money at the scrapyard, but your home heating your fuel your consumption and also the fuel consumption of the scrap yards powering large pieces of equipment. Think about a big excavator, a sheer, a grapple. Well, you look at these beautiful pieces of yellow and green machinery at the scrap yards. They guzzle a lot of fuel, so when they're guzzling, sometimes half a tank a day, which could be 100-200 gallons of fuel, with those prices increasing just for day to day operations at the scrapyard. They're going to enjoy the higher prices to help offset. But once you start to see the market adjusting differently, you're going to start to see scrap yards making their profit margins a little wider, because they're not sure where things are going to go. Well, their overhead for trucks, excavators, heating oil and other things gas and oil related, those are going to go up which will affect their bottom line and which will affect your scrap prices question.

Virginia Buechel:

A question from Devil Dom on YouTube. When you recycle AC compressors what happens to them?

Tom Buechel:

The AC compressors generally go into a really cool unit. Thank you for following us on YouTube. Imagine a can opener for AC compressors. There's a tool where you take it you put it on the stand, you kind of lock it in from a couple of sides. a cutting tool starts spinning and we'll make a circle around that compressor. Think about cracking an egg right in half, not lengthwise, but kind of width wise. Once they crack it off. You have the exposed copper which is kind of like an electric motor where you're able to pull that out And then recycle the copper in whatever way fitting, we've seen different companies cutting it on both ends we've seen and we've seen some, you know, day to day scrappers, taking that electric motor or that yoke or something from inside those compressors, or general electric motors, put them into a vise on their bench tightening it really well cutting half the copper off with a really nice reciprocating saw. And the other side, sometimes they can use a winch, or they can use a crowbar, where they put it in, they're able to pull those pieces of copper out. Of course, those pieces of copper are almost always enameled, creating a number two copper. And when you have the sealed units for the compressors, you might have some additional leftover oil after you had it properly drained. So make sure that you have that inside some type of a bucket. So you don't have the oil dripping all over creating unworked unsafe working environment. And we hope that answered your questions. Do we think that it's worth it, I don't know what's your time worth? If you want to learn and by all means go for it. And in the coming months, we'll probably have a video coming out here from iScrap showing you how to deal with day to day tools. A grinder has heavy duty saws, all vise grip, all the different tools that you can grab and make things doing it. But number one, always work safe. Now the steel markets while they're relatively unchanged, down $5-15, a ton still very strong national prices that have been reported very high, strong, aggressive markets, we're happy to see that going on. Gold slightly over $1,800 an ounce. And let me tell you why that's important as we do not always talk about gold on these different videos. Gold is an economic indicator with the amount of money that the government wants to borrow from us over the next 10-15 years with these different infrastructure plans, they generally affect gold, because gold for years has been a safe haven for investors, why they know that it's needed, they know that the old gold standard still has some strength to it. And also while gold isn't bet as highly as it used to be because it was used so heavy in electronics, the value of gold is still there, whether its intrinsic, or it's just more societal, that value is there. And when people are worried about the markets, whether it's the US government printing more money, taking out more loans, all of these things matter. So having gold at strong levels is going to be really important. Maybe you're not trading it, but you do want to watch it, you know, every day, through the iScrap App on the national page, I always like to look at some different prices on the new app that's coming out, the 2.0 version, gold will be one of the options that you're going to eventually be able to favorite. And you're going to be able to track some of these things as economic indicators, because it's going to help you learn where the markets are. Maybe you're not selling your gold bars that you use as doorstops, but you might be learning about where the markets are. And I'll just give you a better perspective into the markets overall. Now on to the catalytic converter side of things, we could fall in these markets super close it I'm looking at some prices right now. Just the other day on Friday, we saw the rhodium markets bottomed out around $16,000 an ounce only to rebound over the last three business days for almost $19,000 an ounce. Why is that important? Well, that's a 17-20% price fluctuation over just a few day period, which shows how volatile the metal is. And with rhodium being used 80% of the time in catalytic converters, there's not much other movement for the rhodium markets to take because there aren't multiple uses. So the catalytic converter market is so heavily reliant on rhodium, and rhodium on catalytic converters that we watch these markets very closely. Now over at RRCats.com, you know that we're not only a part of it, but actively promoting and making sure that you know how transparent the team over there is. With market prices updated daily for palladium, platinum, rhodium, and dozens of other grades of catalytic converters the team at RRCats.com will give you the ability to track markets in a different way than you've seen before, and will of course help you make more money with your scrap catalytic converters. And we watched markets like palladium and platinum moving 5% over the last few days, which are strong indicators. But one thing that I've really been able to pull out of the market right now, they don't have a real direction. They're so confused because company's profits are all bigger than they were last year because COVID hit and other companies that have not recovered as swiftly like the travel and entertainment sector. their profits are expected to be really big when they come out because they were really small, if not negative last year. And these are going to be different indicating factors that change markets, and things like that are going to really affect the markets. Overall, we have one last question that we'd like to talk about.

Virginia Buechel:

A question from Chris over on YouTube.

Tom Buechel:

Hey, Chris.

Virginia Buechel:

He asks, Do you guys take clean plated same brass as yellow brass or pay the same for it? Do some? Some do, but there's some confusion with a new yard here?

Tom Buechel:

Sure. So there's a couple of things that you need to look for. And that is an awesome question. We've made a video on this before and you really want to look out for it. Clean yellow brass off of sinks is almost always just going to be a yellow brass price, there's not going to be a special upgrade. The only time that there would be upgrade is in the rare scenarios where you have red brass, but generally chrome plated yellow brass is not going to fetch a higher price. Now, here's where your new yard could be doing things and not explaining them correctly, or as transparently as we would hear at the iScrap. A lot of the new sinks when you look at them are not brass, they are Die Cast or zinc, or possibly plastic, the inner guts are going to be brass, but you're going to need your handy dandy file to scratch the outside silver part and see what color pops up inside at Rockaway Recycling our sister company, our scrap yard. Our scale operators always do this because of the growing amount of Chinese sinks that are made of plastic or die cast that are coming in because well, they look the same, they operate the same, and they're cheaper. So you're going to want to test it with a file. If it's brass, you might want to talk to your scrap yard or ask them what qualifies is clean and dirty. That might help you as well. I said we had no more questions, but we got one more so let's do it.

Virginia Buechel:

Jerry on YouTube asked: Can you clean out your cats and make more money?

Tom Buechel:

Oh no, that's a horrible idea. One of the worst things that you could do is cut the material out of the catalytic converters after you cut the cap off of the cars that you own. Why? Well all the honeycomb, whether it's ceramic or foil material, or DPF filtered, always looks very close. Now if I had a brick that came out of a cat, how do I know it's out of that cat even if it fits inside of the shield, so RRCats.com, we bought it by the whole cat with the shield, the pipes attach the brick inside pictures from both sides. This way we know that that material came from that cat and we can quote it correctly. Once you break material up, remove it from a catalytic converter, you could have material from a $500 cat look the same as material from an aftermarket cat. The colors could even be spot on. Why does that matter? Well, if an aftermarkets worth $25, and OEM Honda is worth $500, and you take the material out and they both weigh 4-5 pounds, one's go ng to be worth more than the other. But from the naked ey you don't know which so the t am at RRCats.com, as to many oth r catalytic converter b yers will buy on a per pound b sis, knowing that as a buyer, we have a much greater upside than the seller would. But we also have a much greater downside th n the seller would. You're a se ler trying to sell that loose aterial. If you can find someon that's going to buy it for a re lly strong price or trust that ou pulled it out of the cat, go d for you. But for the transp rency, you're going to want to leave it inside show pictures o the cat before on both sides This way you don't take anyth ng out. And if you're working wi h RRCats.com, almost all o the tickets that we're puttin out or getting free shippin . So it doesn't matter what t looks like or what it weig s. Just don't take it apart. No scrappers, this is Tom from th iScrap App and today's Wedne day, July 14 2021. Thank you for all of you that asked questio s during the week. We hope that ou tune in every week Wednesda at 1pm. Eastern we try to go ive on YouTube and on Facebook. ou're looking for more catalyti converter information g to RRCats.com if you're lookin to get notifications wh n this new 2.0 drops, please ma e sure you subscribe to our mailing list or ask us where you can and we'll let you know whe the new iScrap App is coming out, and until next week scr ppers scrap soon stay healthy nd I'll scrap you later.