Market
September 3, 2024
Falling fast: Can the market survive the storm of uncertainty this fall?
Written by Gabriella Vagnini
Week after week we post that the recycled metals market is most likely facing a tough period ahead. Well, this week is no exception. As we move into fall there is a lot of uncertainty and downward pressure on prices. The steel market’s underperformance has had a ripple effect, dragging down ferrous scrap prices with it, as it continues to remain weak.
Hopes for stabilization or even a slight recovery is fading as more market participants expect further declines in September.
On the domestic front, while ferrous prime scrap may hold steady, obsolete scrap is prices are said to be dropping even further. This reflective of the lack in yard intake and auto production scrap. Even in aluminum scrap, when you see twitch prices almost fall in line with zorba pricing, heard trading around the 70s, this definitely supports the downward outlook for September and some even say for all of Q4. While I’ve said before that market players are just looking to hold steady until the elections, it seems like they haven’t changed that sentiment in my most recent discussions with our market sources. Besides not looking for major profits, the focus is to just to mitigate the losses.
While most of the recycled metals market says they are doing b2b transactions, one can’t see that being the case, especially in the downward trending market where metal tends to sit longer. Perhaps, while Feds are indicating towards interest rates cuts, even up to 50, now is a better time than any to look into hedging. To minimize your risk, it’s like insurance. Not saying it’s right for everyone, but with this type of market, mitigating any loses is a win, win. You take out insurance on your cars, your home, why not your metal? That’s just an area of concern when so much uncertainty is out there, especially when contract season is coming up. If you want to know more about it, hit us up and we will be happy to write more about it.
Globally, China’s ongoing manufacturing slump is further weakening the aluminum and steel markets, which is again adding to the challenges in the scrap industry. The expected drop in the U.S. interest rates may weaken the dollar and encourage more investments and more financing opportunities, but the question remains- will that provide enough support to lift scrap prices?
This cloud of uncertainty will make the ReMA Roundtable an interesting gathering this year, as we all huddle around, looking for answers. The competition is expected to intensify, everyone will be on their game.
Stay tuned for RMUs bullet point insight article on what hot topics will be discussed this year as you go into ReMA Roundtable discussion.
