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

Some interesting articles I have been reading

Hello again, as usual I wait months in between blog posts.  I'm actually going to be a bit lazy today and post a few articles from people I follow daily. You will get some excellent information and hopefully some understanding of where the markets are at and what they are doing!

https://seekingalpha.com/article/4185934-dollar-stalls-highs?isDirectRoadblock=true

 

This one is about the dollar valuation, a very important factor in scrap pricing. As the dollar strengthens our export material becomes more expensive and foreign markets don't like to buy our stuff.. A weak dollar is very good for our commodities. So take a look and gain some knowledge!

Will RZR Recycling

www.rzrrecycling.com

New Year, New me! Just kidding, I like me the way I am

Hello and happy 2018!

So I had a new client come in yesterday and he mentioned my blog as one of the reasons he decided to come to the yard. This of course made me realize how long it's been since I actually bothered to write something...So here I am today, attempting to put words to screen in a vain attempt to get more of you to come to my yard and scrap your metals with me! Did it work? Checking...no. But that's ok, at some point you will stop by and honor me with your scrap metal and trust in my business values :). 

So what has happened in the world of scrap since my last post? To start, China decided to stop being the World's garbage taker and upset the scrap markets a bit. Without warning, they instigated a ban on 25 different categories of scrap material due to the amount of non recyclable content on them. Things like insulated wire, electric motors, sealed units and other items that tend to have a lot of byproducts to them are being phased out of processing plants. It isn't 100% yet but it has already shook the market up and will continue to do so as time goes on. 

Copper is healthy but not spectacular. It's been relatively steady though and that's a good thing for pricing since we aren't seeing wild fluctuations and having to change the values every day. Aluminum has shown signs of life as well in most categories, not blowing up in price but not sinking either. Smooth and steady I like to say. Of course as I write this I'm getting news of profit taking and a stronger dollar, both of which will affect pricing a bit. But everything I have read to date shows a strong market in 2018, which should translate to stronger pricing on copper and steel. I'll keep you updated via my RZR Recycling Facebook(www.facebook.com/rzrrecycling) page as things develop. 

In local news, the weather has been entirely too nice and the AC unit scrap is down considerably from last year. This is bad since I need constant material to keep right side up, but good because we can catch up on last summer's inventory of units that need processing. I actually expect my yard to be close to empty by March, perfect timing as the summer will once again be upon us and I will need every inch for stacking units. But please, don't think I don't want your material, bring it in as often as you can. My employees still need to eat ( I'm good, could use a few skipped meals to be honest) and rent always comes due! 

Anyways, feels good to get some ideas down on here, i'll make a greater effort to post more this year. A little feedback would be good, so I don't think I'm writing this for myself and the one gentleman who mentioned it to me yesterday( first mention ever) you know? 

Thanks for reading and keep on scrapping! I appreciate it as does the world's climate!

Best regards,

Will

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

 

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