Possible Future of Scrap Metal Prices Not So Good - Page 2

don't forget about India...they will emerge as the next China and will need materials just as badly. Look where the investors are putting their money - shipping. A lot of traders expect large contracts for scrap to India in the next few years and are investing in transportation and metal futures.

I'm banking on scrap to stay steady or raise slightly. Like the price of fuel, we'll never see super low numbers again.

I didn't think i would ever see real estate do what its done either. <<

i am guessing you are not old enough to remember carter and reagan. over priced over leveraged and 14% + mortgage rates. and then it all came crashing down.

recycling secrets is correct. real estate has not hit the bottom yet. either the cost of goods and services will have to fall or the number of employed and their wages will have to rise.

the economics of taking from the poor and giving to the wealthy have always lead to recessions, depressions and the total collapse of countries. a large middle class is an absolute necessity for a thriving economy. we have lost our middle class. the current economy is proof.

Originally Posted by rbrooks715

I didn't think i would ever see real estate do what its done either. <<

I didn't either, but in hindsight its not a surprise. When I was shopping for a fixer upper house in the early 2000's even rough houses seemed overpriced, but we all assumed that was the way it worked. Buy a house, keep it a few years, and it beats inflation. Oh well!


Also, something odd about current housing prices - we're seeing houses sell for much less than replacement cost. This concerns me. Even used cars always sell for more than the market value of their components...but not houses? Something seems artificial about these low prices. I agree we're in a correction, but something isn't right here...

Originally Posted by IronPirate

Also, something odd about current housing prices - we're seeing houses sell for much less than replacement cost. This concerns me. Even used cars always sell for more than the market value of their components...but not houses? Something seems artificial about these low prices. I agree we're in a correction, but something isn't right here...

I don't see any newer homes going for less than replacement, but I do see some older ones going like you say. Maybe homes are becoming more like cars and other things. As they get older, more worn out, they depreciate in value. I question replacement value too. I've seen same contractors building and selling houses for 400k and not so distant past building and selling similar homes for 150K yet seemingly still making a profit. The building trades are in shambles, low paid labor is king. I would think, relatively speaking, it is much less expensive to build a home now than it was in the 70s and 80s when you still had union plumbers, carpenters, electricians and viable apprenticeship programs. Couple that with lumber going for 1/3 of what it was going for at height of boom.

you're right, I was born in '77 so that era isn't very memorable. However one significant difference is the level of globalization and interdependence of the world economy.

Perhaps scrap is like gold, when the economy strengthens, scrap prices will fall? However its a resource just as oil is, and necessary for growth around the world. Plus there's a greater economic incentive to recycle materials than ever before.

Short of the zombie apocalypse, we're not going to see $20 scrap again. Yes things can get worse, but I'm not a gloom and doom guy.

I think the prices for existing houses is so low is because there are too many houses avalable for the number of buyers in the market. Just wait till more of the shadow inventory starts showing up!

Originally Posted by freonjoe

I think the prices for existing houses is so low is because there are too many houses avalable for the number of buyers in the market. Just wait till more of the shadow inventory starts showing up!

Or looking at it another way. We need more buyers for the many houses available. Higher wages, more jobs = increased number of buyers. Home prices are low compared to the high of the bubble, but in many areas they are still higher than they were before the bubble.

Also, something odd about current housing prices - we're seeing houses sell for much less than replacement cost. This concerns me. Even used cars always sell for more than the market value of their components...but not houses? Something seems artificial about these low prices. I agree we're in a correction, but something isn't right here... <<<

an item is only worth what someone is willing and able to pay for it. there is an amazing amount of real estate on the market. a lot people who would like to buy but lack the ability. the remainder are looking for a deal. i don't need a house, but if the price is right, i might buy a couple more.

the price of used vehicles is down. the sell thru rates are dismal. go to one of the dealer auctions. half the cars being run thru will not make the reserve. and the rest are being bought cheap. some of the automotive yards are buying at the dealer auctions because the parts are worth more than the bid. people are repairing rather than replacing.

and the rest. well, you see em on the road every day. those are the ones you wonder how they ever got it started and when it is going to finally blow up. the dually running 4 slicks in the back. the mosquito fogger that runs a quart of oil for 100 miles.

check out the warranty's being offered on used trucks. a 4 year old titan can qualify for an 8 year 120,000 mile factory warranty. some dealers are giving life time drive train warranty on those. i bought an 04 silverado last year and got a 60,000 mile factory warranty. getting close to time to trade again. that is all in an effort to increase sales.

if you want me to write a check for that used truck or house, better be something really sweet about the deal. otherwise, i will put that money in a truck load of computers or several gaylords of boards.

here's the thing...there's only so many houses, and so many condos and apartments, and right now there's a growing population. So eventually its got to even out based on supply and demand. As rentals become more expensive because they're in demand, ownership will again be seen as more attractive. <<

there are more houses for sale than there are buyers. well, qualified buyers at the very least. you are going to have calculate the ability to buy into your formula. our population is growing, but at a slower pace.

Banks aren't just going to dump a property they've invested 200k for 25k...The sky is not falling. Its just low clouds. <<

they are and have been. check out some of the real estate auctions and the prices on reo property. you can also browse thru trulia. hud homes. or similar sites. it is true that many of these need repair. i just bid on some houses in atlanta. they originally sold for over 250k. 15 years later and they brought 45 to 50k. detroit is even worse off. so is vegas. sometimes a loss is the best answer. write it off and put that capitol back to work.


vacancy rates for rentals around here is 15%. eviction rates are up. and we have a lot of vacant property for sale.

the problem is not a lack of interested buyers or renters. regardless of what the true number of unemployed is. unemployed folks normally do not have the money to rent or buy. they are going to find it difficult to qualify for a loan to make that purchase.

mall owners like to charge rent based on door counts. the more people counted coming thru the doors supposedly equates to higher sales. sounds reasonable. until you stand at the door and count the number of people leaving who did not buy anything. 100 people walk in and 90 walk out empty handed. no purchase. true door count is 10. this is even worse in real estate or used vehicles. 100 people are interested in it. only 10 can afford it. and how many of those 10 will want to buy it. that 10 is the potential customer base. if none of those 10 want it, no sale.

is the sky falling? well, i guess that depends on where you are standing. can we change that. of course.

i know i am glad i don't have any property in detroit.

Three simple words supply and demand. 2001 44 steel mill in bancrupty Americas production hovering at 25 percent capacity or lower. Many mills mothballed or idled. Fast forward 2011 zero mills in bancruptcy and capacity at 85 percent or more. 1500 industrial plants in manufacturing are closed each year less scrap more mills fighting over less supply. The price of scrap isn't going lower anytime soon. I got news for you at the rate we are closing manufacturing plants we have thirty years left of manufacturing get ready for the price to go higher in the future. Its a 90 billion a year industry. I remember when I couldn't get more then a hundred for prepared per ton and the market moved up or down five or ten dollars a month.

I think... The price of fuel is keeping up prices.

You hit the whole issue square in the head, Fuel prices are at the real heart of scrap prices vrs. new mining extraction. The Leeb analysis described in Game Over is a comprehensive review of what we have left in both oil and metals. I would say this is a must read if you are in the scrap biz. The price of oil and scrap will more or less "stairstep" over time. From all the research I have done copper,platnium, and palladium are the sure fire "strong" metals, scrap steel also looks good since there is not much easy to get to iron ore for new mining. If I was wealthy I would physically acquire and horde copper (there are wealthy investors that have done (are doing) this, 40K lbs in conex boxes), 2 billion people are electrifying their lives over the next 10 years. Unlike gold "real" industrial metals are hard to create bubbles around due to the price being tied to legitimate demand and growth. Ever study 3rd world economies, they work hard to develop and export value to other markets, sound familiar? We already have record levels of metal theft as the poor try to remain solvent, this will increase as prices increase. We will part ourselves out to meet the demands of world markets. The only thing I can see to disrupt this trend would be a total oil embargo from the middle east..that would stop Eastern development. The Chinese have publicly stated they would be comfortable with 200/bbl oil since they could control the market at that point, that shows a very confident long term out look for our scrap metal.

Originally Posted by RecyclingSecrets

Thinking about Gold too. Usually when the economy does poorly gold does well and that's been the case so far. BUT, this time our on-the-street economy is doing poor but wall street and the stock market are doing very well. Gold historically has been a hedge against poor stock performances and the like. With Wall Street doing well, I'm wondering if we're seeing the beginning of a slide in gold as well.

No offense but recheck you gold facts. The last 10 years gold has been on a roughly 250-1650 bull run while the S&P is up about 165 points. Gold moves with alot of things. Interest rates, turmoil, the dollar strength, leverage in the stock market, you name it. Be careful linking it to the economy only because you trade that way and your going to get broke right off. We get a melt off in the stock markets and the first thing traders are dumping to cover their leverage in stock trades is winning positions. Gold has been a nice hedge on a weak dollar and low intrest rates but traders start taking margin calls on 50 to 1 plays that are going bad and you can bet gold is going negative 10-15% like yesterday.......just something to chew on.

Wall Street's had a nice rebound off the 09 lows. Gold has done quite well in that time frame too as it did set a unadjust for inflation all time high in that period.

So 2011 vs 2010 for me was less pounds of stuff but more $$. Best prices I have seen on many items, but also high gas prices and the most other scrappers out there! I do agree that there are many new yards and other places purchasing items in the last few years!