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Report Date: 8/3/22
We’ve been doing a weekly report for the last 5 to 7 years. We’ve been talking about where the markets are and where we think that they are headed. Instead, we’re talking about what’s going on and how the next few days could be luck, let alone the next few weeks.
Summer Scrap Prices Are Weird…
We never like the summer months because they’re mixed with all types of mixed messages, from traveling to consumer demand to the economic reporting happening at the end of June and July. When we look at all these months, it’s hard to tell where the commodity prices will go.
Yards Are Being Cautious with Prices
Scrap yards try to be relatively aggressive, but that does not make much sense right now. However, with the market moves over the last six months, most yard owners have pulled back a lot of their aggressiveness.
Some yards are still aggressive, but a change could happen soon. We see the markets reacting differently than average and acting similarly to the beginning of 2020 than in the middle of 2021. That tells us that scrap yards will not be aggressive and are a little more cautious; that sums up the direction we think prices will go in the next few weeks.
Markets Will Remain Down in 2022
While we’ve seen a nice increase in the copper prices since bottoming out by more than $1.75, we’ve seen $0.38 added back onto the market. We try to be positive when we can, but we currently have down markets and likely will for the balance of this year, and this will be the new normal. Many people try to hold their metal and wait for $4.00 copper again (it could happen), but probably not happening this year. So either sell or hold on based on your priorities; hopefully, some of our advice helps.
Energy Column – Oil & Gas Prices
Gas and diesel prices have continued to fall, roughly 10¢ lower than last week. This trajectory is further expected over the next several weeks. Still, as we enter hurricane season in the Atlantic, keeping a close eye on any developments that could threaten refining operations on the Gulf Coast is imperative. We also wanted to highlight several oil majors who reported earnings to Wall Street for their previous quarter. No surprise that they all reported record profits, primarily from a continued high price environment with demand still outpacing supply. Oil majors are still reluctant to add any more capacity even as the Biden administration has continued to push them in that direction. We will see how that battle shakes out, but as prices trend downward, there is very little ground any federal mandates can stand on.
In the world of renewable energy, Democrats in congress have reached an agreement regarding climate legislation. The 377-Billion-dollar proposal encompasses incentivizing clean energy manufacturing here in the U.S. It would expand tax credits to ramp up wind and solar construction. And those tax credits would also flow to still-developing energy technologies like carbon capture, which is favored in fossil fuel-producing areas.
What Clean Energy Is Being Built?
This bill significantly impacts determining the types of clean energies being built. Tax credit support for wind and solar will help further grow the industry, and this will require more types of materials than we have mentioned in the past few weeks. Since we covered solar last week, we’d like to showcase wind technologies and the primary needs for building and repowering wind turbines.
Wind turbines require a large amount of steel from an energy intensity perspective. Nearly 70% of steel production uses coal as an energy source. Given the high natural gas price environment that we are currently in, this share may increase in the short term before any meaningful reduction is recognized. Below is a good infographic explaining the materials needed to construct a wind turbine:
Currently, the World Bank estimates that 80% of wind turbine capacity consists of geared turbines, which use a gearbox to convert the relatively low rotational speed of the turbine rotor to a much higher rate for input to a generator. These geared turbines use a heavy amount of iron and copper to function. Alternative to geared turbines are direct-drive turbines; the generator is affixed to the rotor and turns at the same speed. These are more common in offshore installations due to their lower maintenance requirements. They often use permanent magnets with rare earth elements.
From a purely numerical perspective, here is a breakdown of the amounts of materials needed to build out a 3 MW onshore wind turbine:
We noted earlier the amount of coal needed to produce steel used in wind turbines. Another critical piece of wind turbine development is the amount of concrete needed. Concrete is a very carbon-intensive process that has nearly doubled its intensity over the past twenty years. This demonstrates that clean technologies may not appear as clean as they are, but there will still be strong demand for mature energy technologies like wind and solar. These technologies are likely to be continually supported by government tax incentives, which makes the construction of wind and solar farms more economical for developers now and in the future.
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Copper – SELL
Aluminum – SELL
Copper Wire – SELL
Stainless Steel – HOLD
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#1 Steel – HOLD
Shreddable Steel – SELL
Light Iron – SELL
Cast Iron – HOLD
Complete Car –SELL
Catalytic Converter Prices & Market Status
Catalytic Converters – SELL
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Other Valuable Resources
- Last Week’s Report: Copper Continues To Fall
- Can I Get Money From My Old Catalytic Converter?
- 7 Tips To Find The Best Scrap Yard & Prices