Do you think China will be the new superpower because they will take advantage of the hostility that a lot of countries are giving the U.S.? Canada and Mexico just matched the tariff rates.
Anyone have any insight or another explanation that proves Trump is in the right and this is just 4D chess?
Do you think China will be the new superpower because they will take advantage of the hostility that a lot of countries are giving the U.S.? Canada and Mexico just matched the tariff rates.
Anyone have any insight or another explanation that proves Trump is in the right and this is just 4D chess?
I'm about to do something that will, probably, go right over your head, but - here you go:
To start with, we need to look at the key manufacturing industries. The energy sectors have largely been self-standing in all societies, though the attempt was made by trying to ban coal in the U.S. and force reliance on Chinese photovoltaic panel developers and wind turbine manufacturers. That was intercepted, however.
To start with, we all understand that steel, aluminum, titanium, copper, etc all starts as ores - usually an oxide (rust) of that metal - that is then smelted in a furnace to break the metal atoms out of their bond with the oxygen (usually by offering it carbon to bond with). This is Primary Production and nets an increase to the overall supply of a metal within the market to be supplied for producing castings, extrusions, etc.
Secondary Production consists of scrap metals that are being reprocessed into an ingot or charge for further manufacturing processes. Secondary production represents retention of metal in the manufacturing market.
To review:
Primary Production increases Manufacturing Inventory. Sourced from ores - mines.
Manufacturing goods/appliances reduces Manufacturing Inventory.
Secondary Production retains metal from Manufacturing. Sourced from industrial, commercial, and residential scrap.
So, let's begin looking at world/national production figures. We'll start with Aluminum, because it is the industry I was born into:
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As you can see, Aluminum production in North America has completely traded places with China. However, this is only part of the picture, as this includes secondary production, as well.
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Primary production sources of Aluminum have effectively vanished from the U.S. and, as of 2016, were no longer in operation. ALL U.S. production of aluminum was secondary production sourced from scrap and imported material.
However, let us also look at world demand for aluminum:
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Global demand for aluminum has increased by nearly 30% over the past ten years, with a large portion of that being driven directly by increased demand for aluminum in China. This, however, creates a massive problem:
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"The energy intensity required to produce a tonne of aluminium has decreased steadily since 1980, from a global average of nearly 17,000 kWh in 1980 to 14,289 kWh in 2014. According to the latest data from the International Aluminium Institute (IAI), last year China was the country which consumed the least amount of energy for the production of this metal (13,596 kWh). These efforts are still thwarted by the massive use of coal, which China is the world’s largest consumer of. In North America, 83% of the electricity needed to produce primary aluminium is generated by hydropower plants, against 52% in 2014. According to the International Energy Agency, the primary aluminium industry accounts for 1% of global greenhouse gas emissions."[/i]
Simply put, China's aluminum production is centered around the use of coal power plants to fuel its aluminum industry. Its market demand for aluminum is increasing drastically as North American production slumps and global demand rises.
This entire move is very intriguing, considering that global aluminum prices have only moved modestly since 1990:
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Here, we see global aluminum prices climb rather sharply, more so than they have in years, following the virtual end of U.S. primary aluminum production in 2016. Despite the claims that Chinese, Indian, and other foreign sources of aluminum offer the American consumer windfall cost savings, the reality is anything but.
Chinese demand is paced to outstrip its production capacity. Global demand is, effectively, already at capacity. If anything, global demand rapidly increases to absorb any excess production capacity. What is occurring, presently, is that Chinese manufacturing is going largely to U.S. and foreign markets while they are unable to meet their own domestic demand. This is placing an immense burden on their energy sector, as they can't build factories or power plants fast enough to meet the demands of their own society, let alone the rest of the world on top of it.
Steel:
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Simply put, China produces more steel than the rest of the world, combined, or so close to it that it hardly bears distinction, and it's no surprise why:
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This graphic should scare the hell out of China. Chinese steel consumption per capita is higher than the U.S. at any recorded GDP. Their steel production is not sufficient, even though apparent demand has tapered off:
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China, historically, has occupied the place of being an economic superpower. With as many resources at their disposal, to include **** tons of people, it is an inevitability that China becomes an economic superpower, short of war or cultural sabotage. As their GDP per capita grows (and it will), their consumption of steel will also grow, particularly as they continue to develop infrastructure to support their growing consumer demand:
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Most steel is used in construction. As the Chinese demand updated buildings, advanced roadways/transportation, and other expansions to their national infrastructure, their steel use will only increase.
It is, again, absurd to suggest this will start a trade war, as much of the world is already operating at or near capacity with demand for expansions to that capacity more so than reduced pricing on products. Short of mass extinctions, this trend is extremely unlikely to reverse as India continues to develop and Persia looks to re-integrate into the world along with North Korea.
