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It looks like it’s going to become a long summer fueled by high gas prices and upset scrappers. After listening to many economists over the last few weeks we have learned about the oversupply of steel across many areas of the country. These over supplies inside of scrap yards have been due to a large push for new buildings and large demolition projects taking place.
With these prices dipping down again another $20 per ton over the last week and a half we have continued to see the decline in the scrap iron market. These prices are going to be pushed down for the foreseeable future and many of the things that we will continue to reference will all go into the oil prices.
Weekly Energy Column by Marc Champagne
This week, we are excited to bring a new column to the report from Energy Economist, Marc Champagne. With a background in policy and supply/demand, Marc is going to be providing inside looks at how fuel is affect scrap metal.
It seems like gasoline and diesel prices have only been going in one direction for the past few months. Even more concerning, they have accelerated their creep up in recent weeks as we enter peak driving demand season. Refineries are continuing to produce lower diesel and gasoline volumes now than before the COVID-19 pandemic. It is estimated refineries are operating somewhere between 5-10% less capacity now vs. 2019. It may not seem like a big percentage, but it certainly is a driving force keeping diesel and gas prices at historic highs.
How Ukraine Has Affected Gas
The Russia-Ukraine conflict has also materially impacted gas and diesel prices in the US due to crude oil being the input needed to produce such refined products. Last week, Europe decided to ban most oil imports from Russia by the end of the year, which means Europe will need to find other counterparties to buy oil from. With much of Russia’s oil supply not wanted anymore from the EU, this naturally creates a tighter supply market for crude, thus keeping the purchasing price high for crude, which refiners are handcuffed to pay in order to produce refined products like gas and diesel fuel.
Global Supply, About To Get Intervented?
Given the current global supply and demand imbalance, shrunken refiner capacity, and that summer driving season upon us, I wouldn’t count on any relief at the pump in the near term. There could be some policy intervention at the federal and state level but don’t hold your breath on having any policy provide any long-lasting reprieve for your wallets.
Copper – SELL
Aluminum – HOLD
Brass – SELL
Copper Wire – SELL
Stainless Steel – HOLD
With copper prices rebounding last week we saw a very nice jump in the market back to the mid-levels that we saw about two months ago. These prices not only jumped up but also stabilized and many think that it’s due to the fact that the Chinese returned back to work. After returning to work and starting to unload some of the ships and process materials we are seeing a further uptick for these materials.
This has been a very difficult time to be able to help predict and understand where the metals prices are with all these recessionary talks going on throughout the world. One thing that we try to look at is the employment numbers and it looks like we continue to have a low employment rate after all of the restrictions have been lifted and many stimulus payments have been stopped.
Having more people back to work both in the US and abroad will continue to lead to more and more goods and services being needed with a heavy emphasis on the goods portion of them. The more stuff that people buy means the more metal that will be needed and we will continue to see the Recycling stay strong.
Non-Ferrous Price Chart of the Week
#1 Steel – HOLD
Shreddable Steel – SELL
Light Iron – SELL
Cast Iron – HOLD
Complete Car – HOLD
Ferrous Price Chart of the Week
Catalytic Converter Prices & Market Status
Catalytic Converters – SELL
Other Metal Markets:
We have a couple of videos and podcasts that feature some interviews with family inside the Scrap business and with Scrappers. If you’re looking to be featured, interviewed, or even interview any of the people at iScrap, let us know so we can get it together.
Other Valuable Resources
- Boosted Converter Prices, China Reopening – 6/1/22
- Full-Time Scrapping: Is It An Option For You?
- Best Time for Your Trip to the Scrap Yard