Doom and Gloom!

Quote:

---

Originally Posted by Scrappah

Stopped in at my usual gas station last month. Premium was running about 4.30 / gal. and regular was about 3.20 / gal. There was quite a spread there.

I already knew why, but i commented on it when i went inside to pay. The gal explained that she had bought that load at a certain price and couldn't go any lower without losing money.

I'm seeing something similar going on with scrap. It's a slow time of year and there's more time to network and build friendships with the other scrappers in my area. We all get together and just shoot the breeze for an hour or two every week. There's little or nothing coming in right now so they're hoarding till the price comes back up in the spring.

Wonder if we could take a lesson from the gal at the gas station ?

Commodities have been dropping for awhile now and don't appear to have hit bottom yet. Folks are holding while the value of what they have in stock is dropping daily.

Wouldn't it make more sense to turn-n-burn ? Get that stuff in and out of the shop as fast as possible so that you're not losing money on it ?

---

"Dollar Cost Averaging" What you pay for the fuel is not what the liquid in the tank cost, it's what your average cost is over a period. If I buy copper at a healthy margin and it drops .20/lb in a day I don't just hold it because it might lose money. I keep selling and buying at an even lower cost. Over time you have an average purchasing cost, and an average selling price and you only hold enough volume cover what you need to get the best price you can. Fuel prices work the same way. If she's over charging for the fuel she may preserve her marginal target, but she's losing business. Slowing down business works if your commodity is extremely cheap or free and so is storage, but not if margins are thin and space is limited like at a gas station. If that is the case you have to keep the inventory moving out and the new product moving in.

I have been hording when I can but I also have been looking at garage and yard sales and picking up gold and silver watch bands sometimes at a buck apiece , I am also saving low grade boards for the winter now that I have a place that takes them.

I may be wrong (certainly won't be a first), but I think most gas stations daily pump prices are based on what they would pay to replace that fuel at that days wholesale price. Prices actually can change a couple times a day, depending on market conditions. Same thing with this business, the metal commodities market changes constantly. The markets and other factoring conditions (supply, demand, transportation, location, etc.) drives scrap prices and for that matter almost all goods and services.

I too have found being diverse is my silver lining in all of this with the current price drops, and I am surprised at how quickly some people "bail" and just throw their hands up with the prices as the yards going down. I picked up 4 loads the other day from people who just decided its not worth it to them. The sad part is they had already done the work...separated, sorted, and had it ready to go. I think its key to find what works for you in all of this. I love what I do and I think that is 90% of the battle...money comes and goes, sometimes its great sometimes its not. However I have be surprised on more than one occasion that some weird switch or fixture I found is worth X$ because someone wants or needs it!

Quote:

---

Originally Posted by ccantu

"Dollar Cost Averaging" What you pay for the fuel is not what the liquid in the tank cost, it's what your average cost is over a period. If I buy copper at a healthy margin and it drops .20/lb in a day I don't just hold it because it might lose money. I keep selling and buying at an even lower cost. Over time you have an average purchasing cost, and an average selling price and you only hold enough volume cover what you need to get the best price you can. Fuel prices work the same way. If she's over charging for the fuel she may preserve her marginal target, but she's losing business. Slowing down business works if your commodity is extremely cheap or free and so is storage, but not if margins are thin and space is limited like at a gas station. If that is the case you have to keep the inventory moving out and the new product moving in.

---

I think i understand what you're saying about dollar cost averaging. The gal at the gas station is a middle man. She works the margin between what she pays her supplier and what she sells it for to the public. For example: She bought load # 1 last month. The following day the price dropped. She ended up selling that load at a loss of .20 cents a gallon. Last week she bought load #2 and ended up selling that at a profit of .50 cents a gallon. If you dollar cost averaged you could say that she showed a net profit of .30 cents a gallon on the two loads. If you wanted .... you could dollar cost average across hundreds of loads. This works in theory.

Was just curious about how things are going for her so i did a little checking while i was out and about today. As i said earlier she was charging 4.20/gal for premium last month. Today she was charging 3.40/gal. Her nearest competitor is about 400 yards down the road and they're charging 2.44 /gal for premium. That's almost a dollar per gallon difference !

I've been seeing reports here on the forum of regular gas selling for under 2.00 $ a gallon.

There's been a massive price drop in this commodity over a very short amount of time. If the gal at the gas station had the foresight to see that this was coming she might have been able to adapt her buying strategy. As it stands now she's in a real pickle because the shelf life of blended fuel is 30 days from the time that it was dispensed from the tank farm terminal. She's not in a position to compete,her product isn't moving, and she's facing the prospect having what she does have in stock going into phase separation.

Dollar cost averaging won't be her salvation in this circumstance. Her best bet in this situation would be to liquidate her entire inventory of premium gas and just take the loss. After that .... mark it down as lesson learned and re-think her business strategy.

Aren't we seeing a parallel thing happening with the small & mid-sized scrap yards ? There have been a lot of reports lately about the scrap commodity prices dropping and yards closing.

The deflationary phase of a recession is just as brutal as the inflationary phase. There's a lot of "winter kill" as the business owners who misjudged future trends find themselves unable to survive in a changing economic landscape.

I would say that not selling premium in a low population area would be another strategy. Just sell regular and diesel. or at least the stuff that moves fairly quickly.

Jon.

A little bit different perspective on the scraping business and the down turn in prices. This business model focuses on the land lease agreement, traditional with farmers. Trust is another tradition. They track the scrap market and when it is low, they are not interested in selling. So diversification is the only option. Many deals have been made to prepare machinery and iron with the promise it will be sold when prices increase.
This requires a great deal of trust and accepting a persons word on both sides.

Many other full time scrapers in the area continue to "turn and burn." This is their lifestyle and all they know.

When iron and machinery is not being prepared, preparing non ferrous and cleaning shelter belts is the priority. This is also a good time to create gifts from scrap. Very little money is being made, but if I can hold out long enough the wind fall will be worth it. Storage is not a problem, so it does not make sense to "turn and burn" for $ 25.00 a day when you can bet the odds. If I die tomorrow the wife will be pissed, we have tons of scrap everywhere.

I guess I am always looking at the upside...as people "give up" and drop out is just gives me more of an opportunity to accumulate more scrap etc...Suppose this has become a way of life for me as it is my livelihood! Enjoying what you do as I have said before is half the battle, After spending 20 plus years as an executive chef and then doing another 7 in healthcare...I have finally found something that satisfies "me" pays the bills and is always evolving and changing and most of ALL...Our actions and what we do have a great impact on the landfills and making things better and safer in how we handle our materials....

Quote:

---

Originally Posted by bigburtchino

I may be wrong (certainly won't be a first), but I think most gas stations daily pump prices are based on what they would pay to replace that fuel at that days wholesale price. Prices actually can change a couple times a day, depending on market conditions. Same thing with this business, the metal commodities market changes constantly. The markets and other factoring conditions (supply, demand, transportation, location, etc.) drives scrap prices and for that matter almost all goods and services.

---

It seems to vary Bert. Back when i was first starting out i worked as a company floater for a mid sized oil company based in Massachusetts. They had an oil tank farm & 120 gas stations in the New England area. I used to cover six stations in the greater Boston area.

One of the things we did on a fairly regular basis was to go out and survey the other gas stations in the area. They were careful to keep their prices on-par or just slightly below what the other guys were charging. It was a very competitive market because you had many different oil companies vying for the customer base. A difference of one or two pennies a gallon was a big deal back then.

Things have changed a lot over the last 30 years. If you wanted a" personal opinion", i would say that on some level the leaders of the oil companies evolved and realized that it wasn't in their best interest, -or- the interest of the public they serve, to be fighting over territory. Perhaps at some point there was a meeting of the lions (so to speak) and they divided up territories based on who was set up to serve that region of the country most efficiently. As long as everyone involved maintains moral integrity it's a win/win/win all the way around. When you think about it .... it's senseless for an oil company based 2000 miles away to refine & transport fuel to a region when one based within 500 miles could do the job just as well or better ?

From what i'm seeing these days, in this area, the pricing seems to be based on the load. My wife is a shareholder in an employee based co-operative, that among other things, owns a thriving gas station. From talking with her and some of the insiders in this area the pattern seems to be that price changes at the pump happen on the day that the load is delivered.

If you consistently score a profit on each load you know you're doing well. It's a simple way of figuring things

If you suffer a loss on a load here and there you could average it across a number of loads and still come out a winner.

If you're consistently suffering a long term net loss in the hopes that someday things will get better then maybe it's time to step back and re-think what you're doing.

Passion, hard work, and a love of what you're doing, will help you succeed where others have failed but at the end of the day it's all about the numbers.

Some folks will throw in the towel too early, some will change and adapt, some will steadfastly refuse to quit and hold on too long.

~ It's all a judgement call. ~

I agree with virtually everything noted here.
I started dipping my toes into e-scrap months ago.. and at the present moment.. I'm looking to work deals and send off e-waste (only scrap that warrants my time right now)

As they say "Adapt and Overcome!"

If steel and other non-ferrous comes back.. great.. hope to become an e-scrap master and will have more than one fish to shoot at in the barrel!

http://readingacts.files.wordpress.c...nd-is-near.jpg

or perhaps...

http://www.dangerouscreation.com/wp-...011/08/Sky.jpg

;)

Sirscrapalot - To much doom an gloom, I had to inject some humor. Sue me.

Quote:

---

Originally Posted by DevinThaScrapper

100%, prices dropping just give me a reason to work 2x's as hard and make more money! Gets some of the weak competitors out of the way too and show who is really along for the whole ride! Ill be around until you have to pay your scrapyard to take metal, until than the money is still there, so I am still there! Tough times call for tough workers

---

Yes you are correct you will be working harder... Before say 5 trips to the yard made you $1000.00 now you need to make 15 trips or more for the same $1000.00! But yes lots more stuff out so you can get many more loads than before! Best thing would be for you to talk to your yard and see about better prices as you are still out there scrapping and bring in more loads than the average guy, you may think that this is not the time to negotiate but I feel it is as your yard NEEDS your metal to survive!!!

< Gentle laughter > It's not the end of the world Sir S.

We might be coming down off a really good high.

You know how it is the morning after .... a splitting headache, you find that puked in your work boots and went pee in the closet?

Eventually you get feeling better. :)



ETA : Not one of my finest moments.

Poverty usually comes to those who will keep it's company; "keep your eyes on the road and your hands upon the wheel"!

For those of you who have diesel powered vehicles,

How to turn plastic waste into diesel fuel cheaply - Energetic Forum

article is a bit dated but the principles remain valid. This might help bring costs down even more for your business.

Quote:

---

Originally Posted by Metalbestos

Plastic and low grade boards are the new steel . Nows the time to find a plastic and cardboard recycler in your area . Like others have said adapt to the change . Take the time to dot your i's and cross your T's .

---

Metal, do you have a cardboard or plastic recycler in the area? I would love to stop throwing my plastic out. It isn't something that the county recycles.

Quote:

---

Originally Posted by dave

Poverty usually comes to those who will keep it's company; "keep your eyes on the road and your hands upon the wheel"!

---

The futures uncertain and the end is always near.

It sounds kind of fluffy but:

If you believe in scarcity you will have scarcity.

If you believe in plenty you will have plenty.

It never ceases to amaze me how well some people from other countries do here in the U.S. They came from places that are really poor and so they grew up in an environment where it's a real challenge just to survive from day to day.They are really hardened. Stick them in the land of opportunity and they thrive & grow rich.

I know others of wealth who will never be happy because no matter how much they've got .... it will never be enough.

Quote:

---

Originally Posted by parttimescrapperMD

Metal, do you have a cardboard or plastic recycler in the area? I would love to stop throwing my plastic out. It isn't something that the county recycles.

---

I hear sparrows point has a good facility , here is a list I have found online . Maryland Recycles , haven't got around to calling any of them but I may have to soon , keep ya posted when I get rates and locations

http://rack.0.mshcdn.com/media/ZgkyM...4a4/Beaker.gif

Sirscrapalot - Watch out for falling prices. - Walmart?