Trade Flows & Global Markets with Craig Weber

In this episode of Born Scrappy, I sit down with Craig Weber, Vice President of Global Recycled Scrap at Metal Exchange, for a masterclass on how scrap prices are really set.

Craig has spent 30 years at Metal Exchange. He’s lived and worked in Zurich, Shanghai, and Singapore, building a global view of spreads, hedging, risk, and market structure that very few in our industry truly understand.

We break down what “spot,” “forward,” and “hedge” mean in practice. We talk about how LME and COMEX influence pricing, why volatility has changed forward contracting, and what happens when suppliers don’t understand the risk behind a hedge.

In this episode, we talk about:

👉 Diversifying your buyers
👉 Understanding spreads
👉 Managing contract risk
👉 Practical hedging
👉 LME vs COMEX
👉 Market volatility
👉 And more!

Whether you buy or sell, this episode will sharpen how you think about pricing and risk.

Born Scrappy.

Brought to you by Buddy.

The only marketplace and trade OS built for scrappies, by scrappies.



https://www.tradebuddy.io/

https://www.linkedin.com/company/tradewithbuddy/



WHO IS STU KAGAN ANYWAYS?

27 years in the metal recycling game and still learning and growing…

I learnt from the best and worked my way up from yard labourer to Executive Director of Trading and Operations for the largest metal recycler in sub-Saharan Africa. Responsible for 4,500 employees, 85 sites, and the overall profitability of a multi-billion dollar operation.

I brought my breadth and depth of knowledge to bear and co-founded the fastest growing, most-loved, and most awarded metal recycling company in New Zealand.

I thought it was time that tech worked for our industry, so I built THE killer scrap app, Buddy - built for scrappies, by scrappies.

Father of two crazy-awesome boys. Husband to Lisa. Kids rugby coach. YPO member. Founder. Lifelong learner. Mentee. Mentor. Committed Stoic. Undefeated dance-off champion.

COME SAY HI ON LINKEDIN

https://www.linkedin.com/in/stukagan/

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Transcript

How to Read the Market

0:01

The scrap metal recycling industry has always run on hustle, trust, and sharp instincts. This is the podcast for traders and operators who want to get sharper without losing their scrappy edge. I'm Stu Kagan. Bringing you insights and stories from the people shaping the future of our industry. This is Born Scrappy. Hi Craig. How are you? Hi Stu. Thanks for having me. It's our pleasure to have you on Born Scrappy. So, uh, we speak a lot when we see each other. In fact, we speak all the time actually on messaging as well. So now we get to record it all. Maybe we won't speak about the same stuff, but, uh, we'll delve into this topic and, uh, I can't think of anybody better Craig than you to talk us through this. So let me quickly give some context to everybody. Today we're doing a masterclass on pricing like a pro. How scrap prices rarely get set. So the idea here is for everybody to understand terms better when they hear things and which we'll go into them later. Um, also understand how the market is set, how this pricing, you know, where it comes about, um, how the LME plays a part versus comax. And especially with last year with how Comex, you know, all of a sudden people were trading on LME for the first time ever. Um, we'll delve into that. So, Craig, I know you're now the VP of Scrap and Global Recycling at Metal Exchange, but can you give us a bit of background of how you got into the industry and, you know, kind of what the company's all about? So back in 1995, I was looking for a job. I was in the insurance industry for two years. Absolutely hated it. My father, every time I came home from work said, please find another job. I started looking, I actually read a book called Do What You Love and the Money will Follow. A friend gave that to me and one of the things I remember in that is write a job description of what you want. And that's what I did and that's what I started looking. And obviously back in 95 there was newspapers. So, uh, I applied through the St. Louis Post-Dispatch. I actually got a phone call back from mail exchange. Had no idea what I was getting myself into. It was for a scrap buyer, but as I learned more, it sounded like a very exciting role, a guy's role, traveling, getting out there, meeting people, relationships, and really that's where I started. Um, from there, obviously I grew. I've been fortunate to live in Switzerland for mail exchange and set up an office there. I spent a year in Shanghai where really it was a lot of my own education, plus getting to know the, the staff there better, getting to know our Chinese customers better. You know, that was in 2011. Uh, Zurich was 2008, nine, and 10, and then I, I was lucky enough to spend a year and a half in Singapore as well. So continue to grow and learn within, uh, within mail exchange. So you're saying 30 years at middle exchange, 30 years in an industry where traders change their companies more often than they change their underwear, um, that is pretty impressive. Either that or you couldn't get a job anywhere else, and you just kind of set, set it up. That couldn't be the case probably today, you're right. But no, it's Metal Exchange has been very good to me personally and for my personality. It's been a fantastic fit. There's been many opportunities over the years to leave and never felt like the right. Uh, I think one thing about metal exchange is I'm constantly learning and growing and I love the people here, so it really is what got me. Okay. Let's jump into some conversations around, um. Around sales and selling. Uh, let's start with the terminology. A lot of people throw around things like spot hedging, forwards, futures, all these sort of different, um, terms are used often on a day-to-day basis, and often with people not actually understanding what that's all about. What do they actually mean in the day to day real life of a scrap middle yacht? So us as a trading company. Scrap yard. I mean, obviously we do a lot of spot business. I would say that's a back to back where you're buying it and you're selling it, and you're putting your margin, your terms, and your financing costs. We also do a lot of forward contracts where we book on a yearly basis on a discount to the LME. Um, with probably maybe 10 to 12 consumers in the United States for all their various products they buy, and our commitment is to go out and fill those no matter what, whether those spreads are good or bad. We've made that commitment for a year and we're fulfilling. Those things have changed over 2025. We've seen more people in 26 now going into quarterly. Business or even month to month business. And I think it's working out for the consumers.'cause some of'em remember coming back to the spot market and be able to wi buy it wider spreads. Yeah. So let's talk about wider spreads. What do you mean when you say spreads? So each item of aluminum scrap is a discount to the LME London Metal Exchange. Each year during the mating season, usually October, November, December. Now we negotiate those discounts to the LME. Tighter spreads usually mean higher quality materials. 1350 alloy 1,150. 52 generally are higher grade segs. Uh, bare material. I don't wanna get into too many details, but bare material is gonna have better recovery, so your spread's gonna be better. Painted material's gonna widen your spread. Some really depends on the commodity itself and how it's evaluated. Um, I guess a lot of it's got to do with impurities. Like if you're thinking simply, you know, you said painted, it's gonna have a bigger spread, which means it's gonna be a lower sales price, which is because it has more impurities if it's not painted correct. Um, it's obviously, um, more pure metal. So that's kind of the, the basics of it. Um. It's interesting how things have changed. Um, must be about 15 years ago. I used to go to Korea every year and do an annual contract, um, for my company in South Africa. And this was huge volume obviously, because ours was, ours was the annual volume, you know? Yep. And some years you're halfway through and you're like, what was I doing? Like I need to shorten these terms. Otherwise it's like, yes baby. Now we can make some real money. No, we, we look at that every year, and some of it is a gut feel of, and looking at historical spreads. You know, we believe 52 really can't get much tighter than a, let's say, a nickel under. Mm-hmm. Um, so you gotta look at those things. And truthfully, over the last couple years with the volatility that's out there and the unknowns and the premium, what is occurred there. That we've done less on the yearly business because we're taking some of that risk off our plate. Mm-hmm. And doing more spot and doing more quarterly on purpose for risk management purposes. And before we move on, you touching on a very important topic or very important part of this. When we talk about forward contracts, there is a huge amount of risk compared to trading on the spot markets as a metal recycler. If you're looking to do forward contracts, you need to be 100% sure. You can fulfill those contracts. Correct. That's where you don't sell. You don't look at last year's volume and say, I'm gonna take a hundred percent of last year's volume and I'm gonna put that on a forward contract because you're gonna have some tough months and then you've got some real problems. So this doesn't mean you don't leave listening to this podcast and go, okay, well actually I must put everything on forward contracts because there's a lot of risk involved. Diversification's important, I think for us as a trading company, even our yard diversify. To be able to have some long-term contracts as well as spot business, I think is extremely important for anybody today, for your own risk management as well as scrap suppliers. They should be looking at these things, but as you said, once you make a commitment, no matter what you've gotta, that spread could go against you. You still owe that. And we've had those situations, I've seen that. We've had it last year where the supplier had a load rejected, they didn't wanna fill it. As you know, the LME ran up so fast and the premium, if he does not fill this, it was over$30,000 one load on a hedge, uh, loss that we needed or have to cover or close out that hedge. So we usually give suppliers many options to fulfill that, not just that load. We'll give'em other options to fill other items at that market price from that past day. So we tried to give as many options as we can. I think there's times where suppliers really don't understand that and we do hedge almost a hundred percent of our business. Mm-hmm. Okay. That's great. Little segue into hedging. So when you say hedge, some people think that they're hedged, some people are like, oh yeah, hedge my copper. And um, it's not always used correctly, right? Mm-hmm. So can you just explain what you mean by hedging. So there's many examples, but if we purchase something on a fixed price, we will throw an LE contract on there of a sale contract to lock in that spread. Now, the other side may be unpriced and may be priced on an average of the month. So you wanna hedge that fixed price to lock into that margin, and then pricing for the consumer would lock in at the last day of the month. So you've locked in your margin. Um, and not taking that risk if you're not hedging that you have a big risk between the time that settles at the end of the month. In today's volatility, you just don't wanna play those games. Yeah. You don't want to, you're not gonna be in it for the long run. Yeah. If you're going to try and run through this all and hedge, um, somebody once told me a, a very simple way of understanding the hedge process. It's taking an unknown price and making it a fixed price. Um, and that's by just locking in your position, whether it's through whatever system you're using. If you are using, we used to use a direct bank. You can use other, um, other groups that you can actually hedge with. Correct. But it's, the idea is you just take your margin where it is today. So it's as if you've basically sold that metal, um, you've bought it and sold it in the exact same market. Exactly. You know, and some people hedge by just a buy and a sell and that can cover your, um. That's a absolutely. So, so a spot, a spot sale is, uh, correct. You've bought the material and you've sold it. Tell me something is, is there anything people don't understand or misunderstand when they think about hedging and how it shows up financially? I think I, that's what I mentioned earlier. I think there's times where someone does not realize when they're selling to a trader or even a consumer, that they are hedging. And if they don't understand that. They're not delivering and they're not delivering even on a timely basis. It puts them in a very bad situation of covering that load. With the market volatility today, I don't think suppliers really understand that. I mean, that makes sense. Craig, I tell you what, this is the crazy thing. I received a phone call. From somebody I, I didn't really know well, um, just the other day he asked for some advice. It was very random. He sold some copper, but the market has moved up. What do I recommend he does? Because he could buy so much more, or could make you know so much more. I, I was like, I don't understand the question. It, you've sold it. The buyer has either sold it or hedged it. It's not like you can say to the buyer, Ooh, since we sold it, the market has moved up. Let's make sure you make the same margin percentage. And therefore you should pass me on hub. They've locked it in and I think that's what I'm getting at. Like I think not everybody understands that a trader or a broker like yourselves, you are backing it to avoid any risk. They often feel like, well, we've sold it to you, but the market's moved up, so let's re let's have a discussion. And I know it doesn't happen often, but you don't see, does go through people. Yeah, it's rare to see that as much anymore, but I would say 15, 20 years ago, it was a little more common, you know? And if maybe a scrap supplier didn't have it, or they lost that industrial account, there's many factors that could come into play, but it's still no excuse. You've made a commitment and you have to deliver. I think 15, 20 years ago, I used to get that phone call weekly when I was buying this scrap, right? I was like, oh, the market's up and what can you do with the price? It's like, well, I'm covered. But that's why I literally say, you know, to receive this last week was very peculiar for me. You would think. I always say the world is smaller now. It's so much easier to just learn a little bit more and, and, um, the volatility too makes a difference in the last few years. So, oh man, whether it's running way up or running way down, so. To me is why things are much different today and you really gotta be on top of it. I mean, I send out a report to all the traders every other week with all their, um, open contracts, right. Making sure that it's put in front of'em, making sure they're shipping time for sure. Because one load, like I said, we had this past year,$33,000 loss, bam, quickly. That was aluminum. So very quickly that's a, that hedge loss for that supplier was significant. That's a big number on aluminum, right? Yeah. Um, and for those international listeners, we talking about aluminum. So, uh, yeah, sorry. I love it. I get a lot of phone calls from old friends and people I've done business with, and they're like, you've only been in the United States for one year, but now you call it aluminum. I'm like, nobody understands when I say aluminum. So it's easy to just, just change it instead of explaining it every time. Craig, let, let's understand the Comex, I mean, last year. Everybody was talking about the Comex and previous years didn't make as much noise. Talk us through what happened last year and I guess the implications of that. So we don't do a lot of copper like we used to. Copper was, was big for us for years, and with high interest rates with$6 a pound copper, it's tough to trade on the, uh, copper side, but. Over the years, mainly Asian customers who were buying lots and lots of copper was LME Copper. You've seen over the last even six months, I've seen more companies using some of the Comex copper as well. My feeling is I would like to see it all one LME copper worldwide. It would make a lot more sense. I think, Craig, we started to experience that last year. Yeah. Yeah, I see it. I've seen it more though. It feels like just in the last, yeah, six months or so with, with customers. Yeah. I don't know if it'll go that direction. You're seeing it more, I think it makes more sense to do the LME side, but also there's um, there's opportunities, right when it comes to arbitrage and some of these opportunities that you can take advantage. Of those situations when you're selling overseas LME versus a Comex to most suppliers here in the states. Craig, there was a time, um, last year where I was receiving phone calls.'cause obviously the buddy platform people, they weren't even on it. They were like, can you access me some copper from Europe? To bring it into the United States because the Comex price was just absolutely ridiculous. But that didn't last long.'cause then everybody had to renegotiate. They said, we can't keep buying against the Comex'cause it isn't realistic. And that was when all of a sudden people are like in the us, well now we have to talk LME. You know? And some people were like, what do you mean? What is the LME? We've only ever spoken comic. So, uh. A bit of a crazy time last year. I do think we're gonna see more of that, um, where people become more accustomed to using a global index now, especially today, because you're, you're seeing supply chains. Flowing differently. For example, you're seeing MLC leaving the US today mainly on the LME basis, but you're also seeing imports, quite a bit of imports from aluminum, copper, and various items depending on the country, depends on tariff, uh, rates and those kind of things. So I think more and more with the trying to figure out the supply chain you're seeing that makes it more tough too. Comax, LME, which ones were we doing here? Yeah, yeah, absolutely. Um, it's just a bit more work for us all to do, right, of course. Track more things, et cetera. Or you in your position are tracking, you're tracking everything, no doubt. Anyway, but now everybody else has to too. When we talk globally about the LME, and you know, there's more context globally now, the United States Metal Cycle. They need to focus on what's happening globally. Do you find that you're ever speaking to an operator and, and he didn't necessarily know what was happening globally, um, and the day-to-day effect that it will have in his yard? Yeah. A couple things. I guess one, I think suppliers need to make themselves very diversified when it comes to products. For example, I've had people even recently in the US tell me, oh, my guy, you know, he doesn't like to export. Somebody says, I really don't like to export. Well, my God, you just eliminated yourself for so many products, or you're gonna sell locally to somebody you know that's gonna pay you a hell of a lot less. And I hear this every year, which I'm amazed over time, but also I think globally. I think using a trader globally also is very important because such as a company of metal exchange. We probably talked to 75 to a hundred consumers around the world every day getting their price sheets, uh, just talking to them, communication of what's going on. So I think as a trader, you're opening up a network for these medium to smaller, I would say scrap yards. So. You know, it's tough for a medium and smaller guy to be able to talk to 15 or 20 people daily, weekly. So I really believe that's where a lot of traders come in globally. For people to be able to ship their MLC export or bring it into the Midwest, so you have those options. Craig, um, you know, you basically, what I tell my team all the time is how shocked I am. We are getting told by medium sized, decent sized scrapyards in the us. Uh, this only goes domestically. I only sell this locally. We talking about like electric motors or like sealed units. And I'm like, no, no, you're wrong. It's going on export. You're just not exporting it. Like there are certain grades that have to be exported outta the country. And it shocks me every time when I hear it's their business. Good size company. Oh, absolutely. But when I ran business, I was like, every time I could maximize on the sale price, I, I tried to push as much as I possibly could also, because, you know, I always say to everybody, if you make more money on per the commodity, you can decide, you can either make that profit. Or you can go and compete and buy more scrap. You decide if you want to grow or if you want to turn it into profit. Without that ability, it's, um, yeah, it often shocks me, I think I just come from, uh, South Africa where, uh, everybody is fighting and pushing really, really hard for every single cent to compete well, and that's the thing you're competing against, right? 5, 6, 10 other scrap yards just in your small town, probably. So to have those options globally to me is where, you know, you can continue to grow. But, uh, yeah. As you say, a lot of them have got really good businesses. So, um, yeah. What do we know when we talk about futures and spreads? Um, how does this affect the regional demand? So how does it actually interact with that? And the reason why I ask that is because sometimes the market can move, um, or sometimes there's an effect in your local market, but it, it often has to do with the futures and the spreads more than it has to do with what is actually happening currently. So, um, obviously we've seen the LME and the premium run up significantly over the last year, and you've seen the spread significantly widen to historical spreads that we've never seen before. And I think there's times where if you're not on top of that quickly, those spreads can change quickly on someone. So if you're not watching that on a daily basis, you can miss out pretty quickly on. Go back to the volatility again. It's causing some of the volatility. You're seeing some tightness coming in on extrusions a little bit this past week, which we haven't seen at all in a while. So we've seen a little bit coming in on some extrusions, but still wide, historically. Um, it's staying on top of it, I believe, and, and keep it up on the market on a daily basis to know when it's the time to make those sales. You see a tightness. It's interesting though, over the years, talking to so many different scrap yards that I've talked to, and they all have a different philosophy. Some sell this baby is going up, some people wait too long and there's others. As soon as this thing starts trapping a penny or two, they get all panicky and will start selling into that. Mm-hmm. So you see, it's really is to me, is the supplier's mentality, their inventory, uh, the way in which they handle it, and it's all different, right? I mean, cash flow's important. Um, for a lot of'em to keep it moving. You still got people today, I believe, have been sitting on some material from the end of last year because why not? Well, me keeps running up. So, yeah, very diverse. Diverse to, to me that gets to a level of gambling and I do think scrap dealers in general have that at heart, you know? Absolutely. It's not like when we go to Vegas, none of the guys are, are hitting the tables. Right. So it's a, I never win. It's very similar. It's very similar and, but it's like calling stocks, right? All of a sudden, like you think you can hit it at the top. It's like, come on. As soon as that thing you, you said earlier, like, people quickly, it might drop a little, but everybody sells often. After a tiny drop, it actually shoots up. It's, uh, you don't know. Nobody knows, right? I mean, yeah. I feel like I've been doing 30 years. I know less. You know, it used to be more supply demand, right? Yeah. Yeah. Not always, but I mean, and that's what's quite interesting for me. It's when we talk about the spreads. It's kind of like people might watch the LME or watch the Comex, especially Comex from last year. You know, they'll go, well, COMEX is up X percent, therefore my price should be up X percent. And they don't realize that demand hasn't necessarily followed the index. So that's where it's like the understanding of. Well, you can't just watch what's happening on the indices. You have to know what's happening by speaking to the different buyers. Correct? If you're speaking to consumers, great. If you're speaking to traders, awesome. Whoever it is, you have to know because you can't make these decisions purely based on what you see on the index. Does that make sense? Yeah. Absolutely. I see that with secondary items. Well, you haven't seen the secondary items really go up much and we've seen aluminum go up crazy and, and some of it's'cause of the automotives not in the best demand right now. So you've seen secondaries, aluminum radiators for example, or secondary type items are not following at all the LME and they normally don't follow the LME, but they will rise according up and down according to sort of where it goes. But you've really seen a flat secondary prices across the board. And some people don't understand, well, why isn't that going up? Well, it's not related really lme basis. But Craig, how do you recommend people get that information? I said earlier, you know, um, can't speak to consumers, speak to your traders, et cetera. Um, is there any other way that you can actually like, be on top of that stuff? It's talking to a network of people. You can't talk to everybody just like us, I mean, but. You want to talk to a diverse group of, let's say, secondary, uh, sheet mill, uh, international, a trader, a consumer. I think just by a handful of those, you're gonna get a good shot of the market. Mm-hmm. There's more information than ever. There's so many publications to read. There's so much you could read. You could spend half your day reading if you wanted to on a lot of information, which it's overload in some ways. Yeah, and, and you'll get two different answers as well, correct. It's like you read the wrong thing. Absolutely. Yeah, but I like, you know, it's just about speaking, getting to the networking events, um, speaking to people as much as possible.'cause it's very easy when you speak to a consumer to work out if they're looking for material or not, and what next month's gonna look like. They know, they know if there'll be a demand or not. They don't know what the indices are necessarily gonna do, but they know if they have that demand. So it's quite easy to, to be able to monitor that, or it's quite important to monitor that, I would think. Plus. Plus you got consumers who are in and outta the market. You know, they may be on maintenance for three weeks and got equipment issues. So you wanna be aware of those things. What's that? Had a big fire. Yeah. Oh, there you go. There's, there's always things that happen in the marketplace that, this is another, I mean, I'm selling the, the trading part here at Exchange, but we're in the market. One of the things I like to say, we're in the market every day. I'll give you a price on every aluminum, every day on any item you want. Now, is it the best price every day? Probably not, but we're gonna be in the market for you every single day and, and others aren't. Consumers might not be so. We've got positions that can fill to go into those things. That's where diversification, which you said earlier on, is so important, right? For you guys having the bunch of different buyers or consumers, make sure that you always constantly have a home. I know lots of people that rely on one buyer for one commodity, and it's just, yeah, and they always think that, well, we have a great relationship, which means even in the tough time, they'll take from you. That's not true. If something goes really bad. Yeah, exactly. They're in a comfortable position when things get tough and they can't take anymore, and the message from the top is like, we're not buying scrap this month. It doesn't really matter how good your relationship is, they have nowhere to move here. So diversification is massively important. Where have you seen, I'd love to know where, have you seen it go wrong in a yard where either they've been selling too much on spots or selling too much on contracts, or kind of like where somebody couldn't fill their order, not specifically on yours. And you don't have to mention who, but have you kind of seen anything go wrong? Um, even if it was something was hedged and then they couldn't fulfill it. Oh, I've seen a lot go wrong over 30 years. Um, I'd say we've been lucky as well. You know, I thought in 2008 I honestly thought I was gonna have a heart attack coming in the office every day. Dead serious. Totally. I've never seen anything like it where the market just free fall and everybody just sat on the sidelines. I mean, that's obviously one thing that stands out more than anything. I mean. It was a shock to the industry and everybody just stopped for a period of time. Um, you know, we've had, uh, yeah, like I said, the one before, we've had issues where somebody doesn't ship and we have to go after them for hedge loss and or a market loss. We gotta go out and fill it ourself. There's, there's many situations like that, but at the end of the day, it's all can be worked out at the end of the day. For both parties. You make a commitment, you gotta stick with it. That's our philosophy. We'll never cancel an order, good or bad. Uh, many times I would've liked to, but I'll tell you, for longevity and being in this business, I think many consumers have favored us because we've done that. There's years that we've had fantastic, but there's years that have, uh, been a struggle. Of course, like anything else. Look, if you could, if you could pull out of a contract when you wanted to, uh, we wouldn't be having this conversation. We'd be on our yacht in, uh, Croatia, somewhere like, uh, it's not even, it's not even an option. I remember in 2007 I had moved into the trading team in South Africa, and it was like the first thing we were told. You know, it's like literally once you've agreed. Whether it's on a phone call or an email, whatever it is, once you've agreed that is the deal done and you have to fulfill it, and we were obviously sellers, large sellers at the time, you know, when we went to our contracts, um, we go to Korea, we go to different markets and, and do our long term contracts. It's just, it never even crossed our mind. And I think, um, yeah, I think some people think it might sometimes be flexible, but those people probably aren't in business anymore. Correct, and I think the industry's done a fantastic job truthfully since 2008, where I think there's more unpriced contracts on arrival kind of things. If stuff were shipping to Asia, for example, if some items that we do unpriced till it arrives, right? Coppers at one. So you have, you limit your risk. They get the material at the market price when it arrives. So I think you've seen more of that. I also think you've got rid of a lot of the bad characters over, you know, the past 20, 30 years where they're not in business anymore because they didn't manage their risk properly. Yeah, exactly. Have you, have you seen somebody, I mean, you might must see it all the time, and I just wanna harp on again because it's a masterclass, making sure people will learn certain things from this if they can. Have you seen people use an index with you and be like, well, LME is this, or. And actually you can just tell that they didn't understand what they were talking about. Like they want a better price because of this. Can you give us some examples of that?'cause that's important for people to understand. Maybe they're that person having that conversation with one of your guys. So I've heard more and more over the last couple years, people getting away from a MM or American Metal Market. Plat is another one I think that lots of people do within our industry, but I'm seeing more and more people going to the LME basis. Really, that's where you should be in my opinion. Because like you just said, well, I've got A-M-N-L-M-E is this, well, you didn't do LME on a contract basis. So I think you're seeing more moving over towards the LME, in my opinion. We're seeing that now. There's still a lot out there. I know that does it that way. It's hard to change people, but I think that's the direction, truthfully, where things really should be going on the same playing field. But Craig, can you think of a time where like somebody misunderstood the actual, I guess the intricacies of the index where they're saying to you like, yeah, but the LME has done this. Why can't you pay more? Or whatever it is. So yes, we've had something just most recently, um. So there's a lot of technical things that happen too on the LME that can change backwardation. I don't, I don't wanna get into all the details of some of this, but Contango, exactly. Contango and the market changes to where, well, that's not the price I should have got. It should have been cash. Well, cash is the same as three month right now. And there's times where people don't understand that. And I've seen that even once this past year where somebody, we had to go through and, and, and. I get, you know, I'm not faulting that person because it's the first time they've ever locked up a contract for the year, and they were trying to understand it and learn it themselves because it's a smaller scrap yard who's gotten a lot bigger over time, and they want to start doing some besides just spot selling. They want to start putting some stuff on contract because they're doing more and more industrial business and locking up that risk. So I've seen that where, yeah, just didn't understand it at that point. Yeah, but, so let's, let's delve into that. Help the listener kind of understand if they're looking to do it, what should they make sure they understand about doing a forward contract or how the LME works, like you're talking about backwardation, let's actually, um, delve into it. Yeah. They need to understand how the LME works and how pricing works. And as a company here in Metal Exchange, we have a fantastic risk department. Um. If we need to explain that like a teacher, sometimes it needs to be done with someone, especially if it's their first time, they've never locked up on a yearly contract before. To understand what some of these specifics are and what can change on the LME to affect their prices, I guess is what can happen at over time. It's really is just to educate them so they understand it. And, and you can't educate us now just a little bit. Is it too long a, is it too long a process? Which it might be to really delve into the intricacies of it. Yeah. It's really understanding the, those specifics. Some of it's just the basics really with the BA radiation Tango. Um. Cash flow three month. Yeah. It can change on you where you don't, you just look at the screen every time and you're looking at that three month thing where a lot of people, that's all they look at. And the premium can adjust as well. Yeah. Over time where people don't understand that as well at times. I don't know if that makes sense, but So, so Craig, when you talk about that person in particular, can people take forward contracts with you for like a quarter or a year? Yes. So we will do that with scrap yards as well. We will lock up, right? So when we take, as we mentioned, we take yearly positions. One of the things we do is we'll go out to some yards that, that we've done yearlys over the past 20 years. Some of the same guys. We will lock up mainly their industrial business that they know they're gonna be generating. Or maybe they're only gonna sell you 75% just to make sure that they deliver and they'll play with the 25% spot in the marketplace. Mm mm Okay. So that's actually really good to know that you, for example, are willing to, to lock that in these people, you know, as a scrap, I don't have to fly to Japan or Korea, wherever I'm going to go and lock in an agreement I can utilize. Certain brokers in the US to actually back to back that. Well, they will back to back it for me and I'm back to back it probably on my side, which means back to back, meaning having a buy locked in and a sell locked in. And then if the market moves, it doesn't matter.'cause your margin is always, always fixed. Correct. And yeah. And, and we will lock up stuff on a, on, you know, when you do a yearly contract though. You've gotta be straight with them and saying, how is it pricing? It could be month prior average. It could be month of average. It could be spot, but that spot price doesn't allow you to price it any time during the year. You want, we're giving restrictions of you have 30 days to price it, or you have, you have to price it in the month of delivery. So there's a lot of little things that are important to. Make sure you're educating, um, when you're doing those contracts so you don't have any issues down the road. Correct. That's a very good point. You need to make sure you lock in the pricing mechanism at the same time. So for example, we always priced m plus one or m plus two, so shipping month plus.'cause it would take time to receive wherever it was. Mm-hmm. But we would hedge against that. It doesn't matter. What it is, it matters that you understand it and make sure you back to back it accordingly. That's the number one thing. You've gotta tie them up. If you're getting an industry account and they want it based on the average, you can't then lock in a sale and base it on the last day of the month, or the official for the last day of the month or whatever. It's, yeah, you need to make sure that those,'cause it's quite easy to go, oh well. 98% works for me and I'm buying at 96%. This is great, but you actually didn't look at the few little things that will. Make or lose your money and the way I've experienced it, you will always lose more than you will make. So, uh, try and avoid that, mitigate that risk. Craig, on the other side, I wanted to ask you, maybe somebody isn't locking in a long term contract with you and they're not wanting to do a quarter or a half the year, but maybe they have, they believe this month they're going to buy. One full container of something, and this is really coming up more and more on copper suit because of the volatility. So is somebody able to cover as they go? So say for example, every five metric tons or maybe every half the container, or 10 metric tons or 20,000 pounds. Mm-hmm. Are they able to cover that as well? And how does that work? So we will do minimum 20,000. Pounds, 10 metric tons. Hedging. We've done that in Copper Past Sylvania. Yeah. And it's, it, it covers their risk. So if a supplier, uh, either getting in 20,000 pounds but don't have the balance, they can. Price the 20,000 pounds. Um, it's tough when you're hedging because lots are 55,000 on the LME for aluminum, obviously. And, and if you're only pricing that you also wanna make sure there could be others pricing at the same time or others. So you wanna make sure you're covered on that. Um. It happens more and more as we see the prices, where the prices are today, where you're seeing the volatility a little bit more. People are looking at covering their risks sooner than waiting today. You're seeing that more and more, and I think if I could give a tip to some people out there because of the volatility, I really recommend that. I highly recommend that. Mm-hmm. You know, buy against the first half of the container, the first half of the load. Buy against that, lock that in. And then once you've got that go buy against the next half, it just kind of covers you. Make sure that you mm-hmm. You don't have to wait for the full amount. A lot of people do sell as they go to larger scrap companies for that main reason. Yep. Because they're worried if I don't sell this in this market, I'm, I'm gonna lose money. But if they know that they can cover that, it's super helpful. Absolutely. Or if you know, if you know forecasting, if you know you get five loads a month of something or if you know, hey, look at four loads, Hedgie. To get to that point. Mm. You know, it's like to protect yourself. Yeah, absolutely. Let's understand the, um, the mechanics behind that. Somebody would contact you and they would then lock in a discount to, or a percentage of an index, and then they would then let you know when they had the first half available and they can then choose, right? They've got, how long do you give them? 30 days. Generally 30 days. Now, there's times where you can roll, there's a cost to rolling. So there, it just depends really on the situation. Depends on the, the, uh, position that we have with the consumer. What are their requirements as well. So yeah, so generally I think if you're in, uh, the middle recycling, scrap middle game, if you're buying a decent amount of copper and you're worried about the risk of the volatility. Look to hedge as you go. Um, buy half the material. Make sure upfront you lock in the contract as you understand it. Make sure you are aware of exactly how that works. Lock that in. But it's not a, like we'd explained earlier, which gets a bit more. Intricate in more detail when you're actually locking in a long-term contract. The difference between the two, just so everybody's aware, would be if I'm locking in a long-term contract, I'm locking in something for half the year or the full year or a quarter, but it's of a longer period, not specific to this month. And whereas I could in the beginning of the month phone Craig and say, Craig. This month I'm going to buy a full contain load of Birchcliff. I'd like you to please lock in now the percentage against the LME and I'll contact you when I'm ready to lock in the first 10 tons or 20,000. Absolutely perfect. Yeah. All right. Now that we've got that out the way, this has been lots of fun, Craig, but we want to get to know you a little bit better as we always do. So the tough questions come now. Uh, you probably don't have any notes for this one because they're tricky. You probably don't know what's coming. I have done this before. Um, what's your favorite TV series or movie? Um, TV series. First one that came to mind is the Ozark Love Ozark. Jason Bateman, like him in most uh, series are movies. He's great. Currently watch. Did you get all the way through? Did you finish it? Oh yeah, there were a whole bunch. Okay. I got to like season two. We're usually pretty far behind. Anyway. We're watching the White Lotus right now. Boy, is that a weird one? A good kind. Kind of weird, yeah. And movie. Do you have any sort of movie that you're kind of your go-to or not? Are, you're a drama guy. Action, spy, horror. All, all of the above. I mean, I love a good comedy. I'll tell you, it's been more TV series, I think we've been watching the last couple years, uh, than movies itself. That's okay. You don't have to have a movie. It was just out of interest. I was just wondering what you would throw out there. Yeah. Um, what's your favorite place to visit? That's a tough one too. I tell ya. Told you the hard questions we're coming now These are the tough questions, man. Um, Switzerland, living in Switzerland, the quality of life is fantastic. There's no better quality of life than Switzerland if you can afford it. Yeah. Yeah. But to me it's, to me it's the quality of life. There is the best in the world, and I love Bangkok, Singapore, the other one in the us. If I have to pick, I would say Arizona. I love Arizona. Oh, cool. Is it the heat that you like about it? You know, I love the hiking, the golf. Okay. Lots of activities we do. Awesome. Going out there. I the heat's. I prefer heat versus cold. Yeah. Yeah, me too. Absolutely. That's why I moved to Texas. It's my African blood. I'm coldblooded. I need to warm it up. Yep. Um, have you got a favorite book? So, yeah, I, you know, for years, my parents for Christmas gave me a book every year, and I've read a lot of biographies. I was thinking about that today too. I was like. Andre Agassi, Roger Federer, Jack Buck, I could go on and on. A lot of the Open is fantastic. Agassi book was incredible. Oh yeah. I loved him growing up. You know, Roger Federer Class Act, but a lot of sports biography probably, and, and, and some books on local stuff even recently here in St. Louis. Um, but yeah. That's cool. I also enjoy a, I enjoy a good biography as well. Yeah. Um, last question is, I almost forgot what it was, but it is, have you got a favorite quote? So, I have it on my body, so I feel like I have to say that one. It's probably different when I was 30 years old, or twenties or whatever it was when I got it versus today. Is it no regrets, like that movie where the guy has it spelled wrong? No regrets. No, it's spelled correctly, but I think it's becoming a little blurry over 30 years. Um, no day but today, and that was very important to me when I was young. I was always looking forward, never really living in the moment. And today I would say it's, uh. It's probably not the same. I try to live more living for the day. Um, but things have changed obviously over 30 years, which is a good thing. So yeah. No day but today. Well, it's a great one, man. That's awesome. I love it. Um, Craig, thanks man. This has been a great show. Appreciate you being on Born Scrubby. Thank you. No, very much. Appreciate it Stu. Hope to see you in, uh, St. Louis or Vegas in one of the, see you in St. Louis. I'll see you in Buddy in coming meetings. You got it. Exactly. Cheers, Greg. Thank you. That's it for this episode of Born Scrappy. If you have any questions, stories, or topics you want us to dig into, send them my way. Until then, keep it scrappy.