RZR Recycling Blog Rantings, Ravings, and other Ruminations on the world of Scrap Metals.

some info on Copper

took this blurb from Ivan Martchev in an article on Seeking Alpha (www.seekingalpha.com), a great resource for financial information.. Take it with a grain of salt as many other articles I have read have the opposite conclusion. Original article can be found here: http://seekingalpha.com/article/4035510-another-vinny-gambini-moment-hibor-market?app=1&auth_param=1doc9u:1c79ll1:d2058642d71cedd2032dd91f58adc671&uprof=45&dr=1

Mind Dr. Copper

The surprising Republican victory created a "Trumpnado" in more than one market, from bonds to stocks to currencies to commodities. But one market where the Trumpnado is just a short squeeze is in copper.

 

The reason is that the Trumpnado was supposed to be driven by expected Trump policies that would affect the demand for commodities, driving up demand for capital and maybe creating higher inflation. I have not heard a thing along these lines coming out of the upcoming Trump administration, or the President-elect's infamous Twitter account, that is anything but bearish for copper, which is why I think the short squeeze in copper may fizzle out and we will make new lows in the commodity market.

 

The reason is, you guessed it, China. As the #1 consumer of copper, China is mired in a deflating credit bubble exacerbated by a verbal war with the President-elect over a possible trade war. If there is no trade war with China, which I hope will be the case, I think the price of copper will decline based just on the deflating credit bubble in the Chinese economy. If there is a trade war, the price of copper will decline faster.

Disclosure: *Navellier may hold securities in one or more investment strategies offered to its clients.

Disclaimer: Please click here for important disclosures located in the "About" section of the Navellier & Associates profile that accompany this article.

Why things are priced the way they are- Angry customers and their pre-conceived notions

So I just had a guy with 5 pounds of cast aluminum and a small electric motor complaining how little he got. When I inquired why he was upset, he said he thought Aluminum would be a dollar something a pound, based on can pricing he has seen. His expectations were high and he was let down by the actual value. Another customer was upset when I couldn't pay a price he had received on his material the last time he scrapped, about two years ago! He decided to hold on to that material and shop around until he got the price he wanted, which was about .20 more than the best current pricing available. And that price is for top sellers like myself and other scrap yards, not the general public.

So let's talk about reality vs. assumptions. Assumption is that scrap pricing remains constant and always high. Assumption also means that one aluminum is the same as another and both prices should be similar. Reality is the markets are constantly changing and pricing clearly reflects the current conditions. Reality is the fact that some grades of the same base metal are wildly different in price, depending on many factors. The first customer example above thought all aluminums would be the same because he had seen the can pricing from yards that take the cans to CA for the CRV prices. When I tried to explain why an inferior aluminum was artificially inflated he simply got mad at me.Unfortunately there isn't much I can do to change his mind as he has no factual basis for his assumption, just his pre-conceived notion that he should have received more money. To him, I am a typical cheating scrap yard who only cares about massive profit ( I do care about profit of course, just not massive) and he will most likely never come back to my yard.  He didn't have the knowledge to make an informed sale and refused to listen to my explanation. 

In the second example customer we see someone who knows what he has but has not kept up with market conditions. Again, this puts me at a disadvantage as I will most likely not be in line to purchase his material a second time. He will take his load to another yard, where they will tell him the same thing I did, but now since he has verification that I was indeed correct, he will sell to that yard because he is already there. It is not that my price was low, or that I was not willing to negotiate, but that he was not equipped with current knowledge of pricing before he reached out to me. 

It's a shame really, but an unavoidable consequence of my industry. Not many people keep us with scrap markets and instead rely on anecdotal information to form their opinions on what they should be paid. By utilizing this blog and various social media sites, I try my best to educate the masses about the current markets but it's only good if people take the time to research.

Anyway, I needed to get that out, I truly hate disappointing my customers. It always leaves a bad taste in my mouth, even when I know i did it right. 

On a side note, copper still doing ok with .2 to .05 fluctuations in the market daily. But it is still up 15% from last month so that's some good news!

Thanks for reading,

Will

RZR Recycling

will@rzrmechanical.com

 

It's over, now what?

I heard an interesting point on politics yesterday, worth repeating. Much like our sports teams, we are conditioned to "hate" the other side during campaigns. We are given as much negative info as possible to make "our guy" look better and sway our opinion. But this way of campaigning is exactly why we are so fractured as a nation. At the end of the campaign we are told, or tell others, to heal and come back together. But why do our elected officials feel the need to destroy the other side so thoroughly that we have a hard time getting back to normal. If we wish to become more civil and avoid these scorched earth campaigns we must not fall prey to the rhetoric and instead demand that our politicians tell us why we SHOULD vote for them, not why we shouldn't vote for the other person. Only then will politics become a positive influence in our lives.
Jerry Maguire out..

 

In other news Copper is up big. Let's hope it continues to recover at a fast pace.

Scrap update and my final thoughts on the Election

Wednesday Oct 26th today and Copper hovering at 2.14 on the Comex market. The good news is it's up .045 from last week. The bad news is it's just as likely to lose the gains next week. There is no rhyme or reason anymore as to why copper jumps. Seems like one guy says something in passing about copper and the market goes nuts. Aluminums are up just a touch and Stainless seems to be holding at a decent price (although nowhere near what it once was). Steel is still in the gutter, yet cost of produced steel keeps rising. Serious profit taking or ancillary costs rising? Who knows, for now cardboard has more value per pound than steel...

In other news

I voted early last week. It took me longer to finish this ballot than any other one I have done in my life. I hope I made the right choices  but at the end of the day whoever wins is in for a 4 year shit show and I don't envy them. If you feel helpless or distraught at who wins just remember that all politics is local. Get more involved in your community and make a difference there. We can't control what our Federal overlords do on our behalf but we can make real and significant changes in our local communities, which will filter up to the bigger govts.

Whatever happens, we will continue to buy your scrap metals at competitive prices, and hopefully brighten your day a bit. Peace to all in the next few weeks and try to remember on Nov 9th we are still all a part of this wonderful experiment called America. Let's start the healing.

Will

RZR Recycling

www.rzrrecycling.com

 

Is it over yet?

Watching the debate last night was a monumental task. The two candidates our country has picked have left all of us wondering where in the hell this country is headed. I wasn't planning on watching it as I felt it would be sh*t show on the highest level and I was correct. It truly boggles the mind that these two are the best that we can find in a nation of so many good and decent people. No matter who wins we all lose so I plan on spending the next four years with my head down concentrating on what I can do to improve my own life and the lives of my employees and clients. Hopefully in four years someone will appear to bring back some decency and class to our political system.

On a more positive note copper finally broke through the 2.20 mark. Steel is still at garbage levels.

Good luck to all of us no matter who wins. Just remember to vote and pay attention to the stuff that matters, locally. Hug your kids, be friendly to all you encounter and for pete's sake, bring me your scrap!

Will

RZR Recycling

22380 N 20th Ave Phoenix, AZ 85027

623-869-0021

www.rzrrecycling.com

 

 

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