[LINK] O/T - Economic Recovery Strategies [Greece]
Michael Skeggs email@example.com
mskeggs at gmail.com
Thu Mar 10 15:27:08 AEDT 2011
On 10 March 2011 14:14, Tom Koltai <tomk at unwired.com.au> wrote:
> So why do the Chinese keep dealing with AU ?
> Brazil Super Port to China 10751 miles or 17298.36 Kilometres
> Port Hedland to China 4155 Miles or 6685 Kms.
Indeed. Factor in increased shipping costs for both raw materials and
finished product as fossil fuel availability declines and a global
supply chain looks wobbly.
Jeff Rubin, former Chief Economist with CIBC World Market:
"Take the steel industry, for example. Just before the recent
recession, some very curious things were happening in the US market.
When oil prices got to be over $100 barrel, all of the sudden, Chinese
steel exports to the US fell at double-digit rates. And all of the
sudden, US steel production was up. And all of the sudden, US Steel
Corp., which was one of the biggest dogs in the market, all of the
sudden its share price doubled.
What was going on? I'll tell you what was going on. For the first time
in 20 years, it was cheaper to make steel in the United States than to
import it from China. Why? Consider what China has to do to send you
steel. First, it has to ship iron ore from Brazil, across the Pacific
Ocean, turn it into steel, which is itself a very energy-intensive
process, then ship it back, across the Pacific Ocean, to you. At $20
barrel, that works. At $100 barrel, that doesn't work. It added on $60
to $70 dollars, to the cost of a ton of hot-rolled steel. How much
labor time do you think there is in making steel these days? One and a
half to two hours. The transit costs all of a sudden exceeded the
labor costs. Who would dream that triple digit oil prices would
breathe new life into our hollowed-out Rust Belt? But in a world where
distance costs money, that is exactly what is going to happen."
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