Thank you for a great 2021, and we’re going to give you a preview of what’s ahead in 2022. But before we can do that, we have to look back and get some perspective on 2021. It’s stunning to understand where metals are now compared to where they were then and where the US dollar was then compared to where it is now.
If you would’ve told me that the US dollar is going to be up markedly throughout the year from the beginning of January, and at the same time metals would increase by even more, I’d think you’re crazy. But that’s the kind of thing that happened this year. But there were other factors that were at play.
Beginning of the year, copper was sitting at $3.59, and now it’s at $4.29. Aluminum was at $0.914 on January 4th and is now at $1.24. Nickel saw a more moderate change from $7.89 to $8.90. And this was all with the backdrop of the dollar also gaining. The dollar right now is at $96.59, touching a 52-week high. Beginning of the year, January 4th, it was under $90. That’s a dramatic annual increase.
There are some huge discrepancies and things that don’t add up that would lead to this big metal market we’ve had this year. Obviously, as we know, there are supply chain issues, product shortages, and labor shortages that have impacted it and all kinds of things going on. We also have a backdrop of inflation. At the same time, there are all kinds of issues related to infrastructure. The infrastructure issues will cause more of a strain on some of these materials and may give them even more of a boost.
That’s a backdrop on where we were at the beginning of 2021 and where we ended. From a steel point of view, Busheling was at $460. This is Philadelphia, and this month is at $550, a 20% increase. HMS #1, $415 to $440, much more moderate. From a scrap point of view, Steel was much more stable this year than some of the non-ferrous metals.
So it’s a very interesting time, and it’s scary to make predictions because, as you can see, if you would’ve said that at the beginning of the year, the dollar is going to increase by that much and metals would too, I’d think you’re crazy.
Looking ahead to 2022, there are some things we know. We can count on inflation. We already know the Fed has announced three rate heights for next year. I believe that will have the most significant impact on the metals’ outlook for 2022. If they stick to three rate hikes and if they’re three small rate hikes, or even three bigger rate hikes, what that should do in theory is strengthen the dollar and make us look good compared to other currencies, which should dampen metals.
We don’t know if that’s going to happen. Obviously, this year, that dollar impact wasn’t enough to make an impact and metals rose. Maybe you could say that metals would’ve gone up higher had it not been for the drag of the dollar. That’s what we’re going to have to look at next year. I think that is the biggest factor underlying everything. We’ve seen asset prices across the board over-inflated in real estate and every asset class. Metals could be another one that is no different. As tides rise, all boats are lifted.
We shall see. So that’s… 2022 right now, as I said, copper at $4.30. Nickel at $8.90 and aluminum at $1.24. We’ll see where we end up. I think that this is a promising outlook for metals because the backdrop is strong. As I said, I think the Fed is the one factor that’s iffy that we don’t know how much of an impact the rate hikes are going to have and how that filters out across the board.
Again, thank you for a great 2021. It’s been a very good one here. We appreciate all of our customer’s business. We’ve been selling a lot of metal from the yard to our local people who come in and look to buy scraps and things like that because it’s hard to find. And we’ve been buying a lot of metal from our customers. Thanks again, and it’s Dan Sahd signing off and thanking everyone for a great year and wishing you the best in 2022.
