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FDP Forum / Moe's Tavern (_8^(I) / Steel / Aluminum ... Dependency and National Security

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BlondeStrat
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Las Vegas NV

Can't complain but sometimes I still do
Mar 3rd, 2018 10:29 AM   Edit   Profile  

Maybe this can be discussed outside of politics .... hopefully. ;)

With all the news about tariffs and the economic impacts and trade wars yada, yada, yada.

I have been trying to wrap my head around the other side of this thing.

In a nutshell America has been producing less and less of these raw products leaving us dependent on imports to cover our needs.

China is now responsible for more than half of the Worlds production. I have in fact heard they produce more steel than they can sell or use and they do it intentionally.

While we do not import a high percentage of steel directly from China, I have to believe we are importing Chinese steel.

Example would be: While South Korea is a steel producer, South Korea also imports 10% to 12% of China's steel ... they buy lots of Chinese steel, more than any other country at times.

We import a lot of South Korean steel in the from of pipe and flat stock. I have to believe we are purchasing more Chinese steel via South Korea.

This seems to also be the case with other countries who import steel from China. We import finished and semi finished materials that almost have to be made with Chinese steel.

Anyway, I'm certainly no expert on this subject. It does seem to me that in a perfect friendly world this is all pretty much fine and dandy from a pure economic standpoint.

In a not so friendly world one country controlling so much of a material the rest of the world is dependent on could compel the demise of nations ... not just on the economic front, but also in terms of national security and defense.

Is there anything to talk about here?

Again, I'm not interested in talking about tariffs and their economic impact ... I'm thinking about the means of production and the security aspects associated with dependency.

(This message was last edited by BlondeStrat at 12:34 PM, Mar 3rd, 2018)

rok-a-bill-e
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Mar 3rd, 2018 10:42 AM   Edit   Profile  

Self sufficiency is very expensive, for either an individual or a country, as you miss out on the wealth multiplying effects of a Market, which allows higher efficiencies on both ends of a transaction, a true win/win situation. Trying to do everything for yourself is a dead end in a modern interconnected world economy. Export what you are good at and buy what you need cheaper than you can make it. Higher steel prices will enrich a small number of domestic steel producers and hit millions of consumers---of anything made of steel-- in the wallet.
Not being self sufficient in steel is not nearly as worrisome as not being self sufficient in food. We can feed ourselves and then some. Many countries cannot say the same. I'm not at all worried about steel.

BlondeStrat
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Las Vegas NV

Can't complain but sometimes I still do
Mar 3rd, 2018 10:59 AM   Edit   Profile  

rok-a-bill-e, yes ... I get all that and as I noted:

"It does seem to me that in a perfect friendly world this is all pretty much fine and dandy from a pure economic standpoint."

I know it's hard for most of us who are tuned into think purely in terms of economic efficiency to examine this stuff from the back end instead of the front end.

My thinking as noted: "I have been trying to wrap my head around the other side of this thing."

As far as America is concerned (but not limited to America) Is it wise for the most powerful Nation to ever exist to knowingly put it's self in a position where it could so easily be brought to it's knees over an ever so necessary raw material?

Without regard to the economic aspects of it, once you find yourself in a position where you can not produce the things necessary to perpetuate you own existence especially from a national defense standpoint ... you have a problem you likely won't survive.

(This message was last edited by BlondeStrat at 01:08 PM, Mar 3rd, 2018)

ECS-3
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Mar 3rd, 2018 11:11 AM   Edit   Profile  

I don't see "strategic" materials as an all or nothing proposition. I think it makes sense keep some level of internal production capability, but in peacetime you will get the lowest cost with worldwide trade.

I don't know if this is still true but years ago any type of "jeweled movement" was considered strategic (clocks, gyros, and like).

Economists had their theories, which completely ignore the needs for strategic (defense) thinking, so you have to balance the economists view of the world with the need to project power.

On a related note, I'm not sure that importing the lowest priced stuff is best overall if it results in massive unemployment and greater welfare dependency. Lots of cheap stuff at Walmart doesn't help if you got laid off and can't buy anything.

BlondeStrat
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Las Vegas NV

Can't complain but sometimes I still do
Mar 3rd, 2018 11:32 AM   Edit   Profile  

"I don't see "strategic" materials as an all or nothing proposition. I think it makes sense keep some level of internal production capability, but in peacetime you will get the lowest cost with worldwide trade."

Yes, I agree. It does occur to me that right now we may have the scale tipped to a point of leaving ourselves in danger.

Right now the second highest producer of steel accounts less than 1/4 of what China produces. In fact the next 14 producers (entire EU is a single producer on the chart I saw and is #2) doesn't produce the amount of steel China produces.

That's what I call one country controlling the market on a necessary material. That translates to *world power*.

(This message was last edited by BlondeStrat at 01:34 PM, Mar 3rd, 2018)

rok-a-bill-e
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Nashville,USA

Clawhammer Rules!
Mar 3rd, 2018 11:48 AM   Edit   Profile  

I find it hard to imagine any scenario where we could not obtain whatever is required. We have money and a huge military. If the first was not persuasive then the second surely would be.

BlondeStrat
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Las Vegas NV

Can't complain but sometimes I still do
Mar 3rd, 2018 11:52 AM   Edit   Profile  

"I find it hard to imagine any scenario where we could not obtain whatever is required. We have money and a huge military. If the first was not persuasive then the second surely would be."

I lean toward the belief it's best to not be in a position where it was necessary to overthrow another country in order to acquire steel.

rok-a-bill-e
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Nashville,USA

Clawhammer Rules!
Mar 3rd, 2018 11:53 AM   Edit   Profile  

Steel was crucial in the 20th century, for building tanks and warships and such. Soon it could be specialty plastics or some trace element that makes the robots happy. I do wonder just how strategic steel is these days? And, we CAN still make what we need, even if we can't sell competitively on the world market.

RKSTRAT
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USA

"Clapton is Good"
Mar 3rd, 2018 12:44 PM   Edit   Profile  

We import most of our steel and aluminum from Canada.

BlondeStrat
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Las Vegas NV

Can't complain but sometimes I still do
Mar 3rd, 2018 01:14 PM   Edit   Profile  

RKSTRAT, I think I understand what you are saying is that Canada is our largest supplier of steel.

In the interest of clarity ... we certainly do not get anywhere near "most" of our steel from Canada.

Close to 85% of it comes from other sources. Canada supplies about 15%.

South Korea supplies almost as much at about 10% and I'm guessing most of that (SK steel) is actually processed Chinese steel

RKSTRAT
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USA

"Clapton is Good"
Mar 3rd, 2018 01:18 PM   Edit   Profile  

Right, sorry! Important distinction.

Mikeyguitar
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PA - USA

THAT...IS...RIGHT!
Mar 3rd, 2018 03:53 PM   Edit   Profile  

Wait - I thought I heard last night that of all the steel we use in this country, 70% of it is produced right here.

BlondeStrat
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Las Vegas NV

Can't complain but sometimes I still do
Mar 3rd, 2018 04:40 PM   Edit   Profile  

"I thought I heard last night that of all the steel we use in this country, 70% of it is produced right here."

I'm not sure what the usage of steel is in America (need to do more research) but the US is the largest net importer of steel in the World.

Net steel imports totaled 21.7 million metric tons for 2016

(This message was last edited by BlondeStrat at 06:41 PM, Mar 3rd, 2018)

rok-a-bill-e
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Nashville,USA

Clawhammer Rules!
Mar 3rd, 2018 04:48 PM   Edit   Profile  

From the American Steel Construction Institute website:

---"American steel mills have the capacity to produce 9 million tons of structural steel each year
7.2 million tons of structural steel were used in the U.S. in 2015
Existing American structural steel manufacturers can easily meet all domestic demand----"

So we import for economy, not need. And export where we can.

BlondeStrat
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Las Vegas NV

Can't complain but sometimes I still do
Mar 3rd, 2018 06:13 PM   Edit   Profile  

Keep in mind that "structural steel" is only one use of steel.

Structural steel is a large steel usage category, but it's not the only usage category.

K4
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Being defenseless

does not make you more safe
Mar 3rd, 2018 08:03 PM   Edit   Profile  

US produced steel is a very high quality version. Railroad tracks and other things that need a quality product. The stuff that comes from China is a lower grade suitable for car fenders and other non critical items. Same with aluminum.

I see no problem buying over seas steel at low prices for the mundane uses. The only drawback is the loss of jobs. But do we really want to use our resources for low quality formulations?

The current system keeps prices of finished consumer goods at a low price.

If we end up in a world war our ability to start turning out tonnage of steel and other products is a year out or less. We have enough parts and other items to cover that time.

Tariffs never work and only harm the people who buy products.

professor
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North Gnarlyington

Mar 4th, 2018 08:20 AM   Edit   Profile  

"The mills and smelters that supply the raw material that would benefit directly...have been shrinking for years. Today those industries employ fewer than 200K people. The companies that buy steel and aluminum, to make everything from trucks to chicken coops, employ more than 6.5 million workers, acco rding to a Heritage Foundation analysis of Commerce Department data......One retrospective study of ( 30% tariffs on steel imposed by Pres. Bush in 2003) found that higher steel prices cost more jobs than people employed in the industry at the time."
NYT 3/4/18

(This message was last edited by professor at 10:21 AM, Mar 4th, 2018)

professor
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North Gnarlyington

Mar 4th, 2018 08:29 AM   Edit   Profile  

In the wake of WW2, when much of what was the industrial world was in wreckage, the US could dominate because our infrastructure was intact and powered up for war production.

It's a radically different world now. The Chinese have to keep their economy juiced in order to keep a billion people busy and not on the streets. They will press their advantages where they can, but they can't rock the boat of trade too much, because they have much more to lose and operate closer to the margin.

Current tariff talk, like other statements, will end up being posturing on the US' part, IMO.

(This message was last edited by professor at 10:32 AM, Mar 4th, 2018)

Jake
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West Chester PA

Wait, what?
Mar 4th, 2018 08:51 AM   Edit   Profile  

Security may imply having available multiple options from friendly partners.

BlondeStrat
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Las Vegas NV

Can't complain but sometimes I still do
Mar 4th, 2018 09:42 AM   Edit   Profile  

"Security may imply having available multiple options from friendly partners."

While this is true.

The problem crops up where you have to realize that if one unfriendly player controls over half the means of production of the raw material and many of the friendly partners are being supplied through that route ... security is a mirage.

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FDP Forum / Moe's Tavern (_8^(I) / Steel / Aluminum ... Dependency and National Security




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