Aluminum Prices Drop 40% Since May – 6/15/22

Don’t Want To Miss Reports?

SUBSCRIBE HERE

Where to begin?

In the last week, we have seen massive market news and none of it seems to be good. Whether you were trying to hit it rich with cryptocurrency for the traditional copper sales, everything seems to be down right now. On top of that, we are continuing to receive poor economic news from the current administration which is showing us that not only is the country slowing down so but we may be inside of a recession currently or at the beginning of one right now.

Things that we do know, is that the market still has shown signs of pushback. We’ve never seen multiple large cities in China enter their second or third Covid lockdowns which has dramatically affected the metals prices. We’ve seen gas prices and diesel prices hit 20-day record highs in a row. And all these things lead to markets that are unstable and when they start to become unstable people start to make money off of the table.

Energy & Economy Column

By Energy Economist, Marc Champagne

It seems like there is no end in sight. The national average for a gallon of gas has now eclipsed the psychological $5 dollar mark. Generally, a 10% rise in gasoline prices equates to about a 2-3% decline in actual consumption by consumers. However, as we have mentioned last week, peak driving season is upon us as well as pent-up demand for air travel causing refined products across the board to continue their upward price trajectories.

Consumer behaviors have also shifted in terms of how often they go to the pump. We are observing customers going to the pump more frequently but purchasing fewer gallons with each trip. There is certainly a time value of money play here, but with the expectation that prices are only going to continue to climb, it may still be more prudent for customers to try and fill up at the cheaper prices here and now. Trust me, I know that’s a hard concept to get behind!

We got some other economic news last week that certainly is a catalyst to the high gas and diesel prices we see today. May inflation was recorded at 8.5%, still a far cry from the Federal Reserve’s target rate of about 2%. There is much work to be done on the inflation fight and until we start winning that battle, it won’t provide any relief to refined product prices across the US.

More Refineries Closing

Another crushing blow to US refining capacity came out this week as the Lyondell Houston oil refinery has plans to close by the end of next year but could close it sooner if an equipment failure hits major units. This demonstrates the elevated costs for refineries to repair infrastructure and having to weigh the economic costs vs. the benefit of purchasing inflated material costs to perform these repairs to keep the refinery operational.

All we can say is if another refinery bites the dust, this will put even more stress on the distillate and gasoline supply markets. There’s simply no product to be found right now because production capacities have shrunk and continue to shrink while demand and future demand for these products are on the rise. And for our East coast friends specifically in need of diesel, your situation has become especially dire. Distillate inventory levels on the East coast have not been this low in over a decade. 

Non-Ferrous Prices & Market Status

  • Copper – SELL

  • Aluminum – SELL

  • Brass – SELL

  • Copper Wire – SELL

  • Stainless Steel – HOLD 

With aluminum being one of the highlights going into May 2022, we have quickly seen the market for aluminum receding. We have seen prices drop 35 to 40% on many higher grades of aluminum with prices dropping even quicker for some of the lower grades. This has been not only due to the continued Ukrainian conflict but largely in part by the Chinese shutting down their economies for multiple weeks and times. On top of that, we have continued to see the aluminum prices weakening as energy prices to refine these metals have continued their upward trend.

While many people look at the copper market to be able to gain signs of the direction we have not seen any strong resemblance of growth recently. While we did see a bump up in the market after the Chinese returned from their lockdowns, we have seen that same uptick go down words along with the stock market. Many investors think that the energy markets in prices are going to be the largest catalyst to markets going up or down.

Non-Ferrous Price Chart of the Week

 

Ferrous Prices & Market Status

  • #1 Steel – HOLD

  • Shreddable Steel – SELL

  • Light Iron – SELL

  • Cast Iron – HOLD

  • Complete Car – SELL

If you don’t like bad news then we suggest skipping to the next section… We have continued to see the weakening of the iron market with prices dropping again. With continuing downward pressure we believe that we have hit the market floor but with so many outside market events from oil to world economics, we may continue to see the steel markets on the lower side of things, especially compared to the last year. What we have researched is that many large consumers of steel are coming to grips with the fact that in the future they may have to convert many of their facilities from being run on fossil fuels to being run off on renewable energy.

Higher Steel Prices Are Coming…But Not For A While

This has really been apparent in the current administration and may lead to higher scrap prices but it won’t be for many years. In the short term, we should expect to see these markets at the levels that they are at with some type of resurgence happening after the summer and hopefully after some financial pieces have worked themselves out.

Ferrous Price Chart of the Week

Boosted Catalytic Converter Prices at RRCats

Catalytic Converter Prices & Market Status

  • Catalytic Converters – SELL

As have all metals over the last week seen a downward trend the group from the catalytic converter area has seen the same decline. We have seen all three precious metals that go into the catalytic converters on the decline and they may seem depressed for the foreseeable future with much market pushback happening. Even though the push for clean energy continues the need for clean air from gas engines will require more and more metals as we go on. 
 
The team over at www.RRCats.com continues to hold quoted prices of catalytic converters for 10 business days and is offering free shipping nationwide and all OEM units.

Thank You.

Don’t forget to check out weekly videos and podcasts on YouTube!

– Tom

 


Other Valuable Resources 

Ready To Scrap Your Car?

button