Physical Metal Traders: Where is the money?

Question

I would like to ask all the physical metal traders on this forum, where is the money at in the metals realm nowadays?

What I mean by this is, where are margins? Concs, cathodes, billets, ingots, scrap? Which metals (base, battery, ferrous, precious)?

Last but not least, which companies pay the best, consistently?

Any color you can share is appreciated. Thanks!

GoodBread · Accepted Answer

There are way more scrap traders than primary traders. If you go to a conference like ISRI, there are hundreds of people trading or buying scrap that do well for themselves.

Glencore is way bigger than Trafi in North America from what I can tell. I get the sense Glencore will eventually become a metals company whereas Trafi will eventually become an energy trading company.

Hartree I never run into, Traxys is pretty small although they do do Cu Cons, IXM has potential, especially with their new CEO.

Most intriguing might be Mercuria. Former MG/Enron/Sempra/JPM/CCI team.

GoodBread · Answer

Wish I knew! Generally speaking not in stuff that is too close to the underlying on futures. Cathodes are not great, P1020 is dreadful. Concs can be very, very good, billets have decent commercial margins. But those are a lot less liquid.

The margins in metals are tied to barriers to entry and/or risk. Scrap has low barriers to entry but large seasonal swings and is way out on the risk curve - hence the higher margins.

GoodBread · Answer

A lot of the US metals industry is in the Midwest due to the auto industry and logistics advantages of the Mississippi (+coal power).

CME contract is decently liquid, mostly thanks to volatility over past 5 years.

GoodBread · Answer

To your point, the industry is small enough there isn't really a typical path and many of the people in the field have some sort of family tie to it. Assuming you have a couple summers ahead of you, I would look to the scrap world and/or primary/secondary smelters. More jobs, need for bodies (especially smelters during the Summer - word of warning it will be brutal). A summer at a scrapyard or smelter would put you miles and miles ahead of most people going into their Junior/Senior year (and honestly of some senior guys at asset light players and banks).

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Physical Metal Traders: Where is the money?

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Physical Metal Traders: Where is the money?

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