Week in Review - August 25, 2024

Inflation and higher rates have put the economy under pressure, including the scrap industry. Easing inflation, and the subsequent drop in rates, would help lower the cost of loans and allow companies to expand. Lower rates also would impact commodity and equity markets, as well as the value of the U.S. dollar, which could boost demand for recycled materials as companies produce more materials comprised of scrap.

The Fed is scheduled to meet in September, when a rate cut is expected. And we will see how the Fed chooses to proceed afterward.

Up north, the Teamsters Canada Rail Conference, government, and railroad officials continue talks after the Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) had locked out more than 9,000 workers who are part of the Teamsters union after they were unsuccessful in reaching an agreement over issues related to scheduling, labor availability, and work-life balance.

Reuters reported the government had ordered an end to the brief rail stoppage which threatened to disrupt the movement of commodities. Even so, the union issued a strike notice just before 10 a.m. on Friday.

Speaking of labor issues, the United Autoworkers said that several locals are preparing to file grievances against Stellantis, which could lead to a national strike against the automaker.

The UAW noted that among these was a commitment to the reopen Belvidere Assembly plant in Illinois, which was indefinitely idled in early 2023.

On the M&A side, the biggest premium aluminum producer in the world set its sights on Spectro Alloys in Rosemount, Minnesota. Emirates Global Aluminium, the largest industrial company in the United Arab Emirates, is acquiring an 80% stake in Spectro. Spectro sources aluminum scrap from more than 250 scrap suppliers in the Upper Midwest and Texas. Earlier this year, Spectro broke ground on a $71 million recycling expansion project that will result in nearly 120 million pounds per year of additional recycling capacity.

In the alternative metals market, pig iron seems to be the only one still holding steady on their prices, as other ferrous metals are facing significant price drops. It’s mainly due to the limited supply options available to U.S. steelmakers because Brazil had become a major seller of pig iron, filling the gap after the Russia-Ukraine conflict disrupted the major sourcing of pig iron.

This could be setting the stage for some tough negotiations in the fourth quarter.

This week, the Recycled Metals Team is joining our Steel Market Update colleagues at Steel Summit 2024 in Atlanta. The event is one of the biggest steel conferences in North America, where we’ll talk about everything from price forecasts, supply and demand and trade policy – and of course, recycled metals. And with it being an election year, naturally, we’ll discuss what that means for our industry. Find out more about the event here. If you’re there, stop by and say hello.

Economic calendar highlights this week: