David is joined by Alba Benitez of BMG Latin America Inc. to discuss the scrap steel market pre- and post-COVID.
About this segment of Blackbird TV
Recorded: January 7, 2021
Published: March 9, 2021
Today Alba Benitez! Alba, you’re the director of BMG Latin America. You’re a steel broker. What do you do at BMG Latin America? Well, at BMG Latin America we are a strategic supplier for different companies who have the need for special steel, but we bring solutions to these companies. One of the things that you’re really good at doing is being able to fill orders that are below run minimums at particular mills, so a mill might not run something up unless they have 500 tons for the order, or whatever the number is, and you’re able to short fill orders for specific specialty steels, and primarily you’re selling those into Latin America. That’s correct? Yes, that’s correct, and my customers I sell to a few Fortune 500 companies. That’s fascinating. I’m not going to ask how you do that because that’s the secret sauce of BMG. We would like to find out a little bit your perception of the scrap markets, and I ask that question because Blackbird’s in the auction business, and we sell factories full of equipment and very often there’s equipment in the factory that has exceeded its useful life, and it doesn’t make parts anymore, it needs to be dragged out and put into a dumpster, and that turns into scrap. So we get competitive bidding on pieces of equipment that sell for scrap value right now, post-COVID scrap prices are really really high, can you talk about that? Well this is a whole change of events, first of all you know the whole COVID thing, we tanked, everybody tanked, nobody was consuming, so scrap prices were down. [Right.] Now, China started consuming first and they start consuming a lot of raw materials, and specific: scrap, iron, copper, you know all the commodities, because they are the biggest consumption of steel and the world [Right] so they start consuming all this steel and 72 furnaces… mill furnaces shut down in the whole entire world. [When did that happen?] Well 72… I take that back, 22 only furnaces are still active, of the those 72. [Currently right now, as we speak?] Yes. [Okay.] This is so expensive to turn on furnaces again [right] so what had happened right now everybody started picking up, all the automobile industry is crazy, construction residence crazy, it’s consuming steel. The main raw materials for the steel making is scrap and iron. [So there’s a high demand right now, and do you see that as continuing into 2021 or 2022?] Yes. Correct. The economic projections of what we’re expecting is probably the third quarter probably is going to level, but right now all these positions are racing like crazy everything is going up and scrap is one of those ones. [It’ll be interesting to see what happens when the financial incentives that are going out in the Q1 and Q2 are in place, and to see how that money trickles through, I’m afraid that all this price pressure is going to be very inflationary and it will remain to be seen into 2022 as to how that actually played out.] I think so. I think we’re heading in that way. [Really fascinating, Alba thanks for your time.] No, thank you, David, have a blessed day.