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Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

wsj.com

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Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#11

Post by 1_2__3 »

loeg wrote: post #6
bitchypat wrote: post #5

Earlier quoted context omitted.

It is posited that in fact it is clear - in the article no less! >In Mexico, Mr. Shen was implementing an audacious plan, according to people familiar with the matter: A network of trading companies could route hundreds of thousands of tons of aluminum from China to Mexico, where a plant would melt it for shipment to the U.S., evading trade restrictions and claiming North American Free Trade Agreement benefits.

And why is that a problem, exactly? In the end aluminum is fungible for aluminum, and the US is getting aluminum from Mexico under NAFTA. Trying to enforce a tariff on element production from a subset of external countries seems sisyphean.

That is not how global trade works. In fact what's being described is essentially laundering and the Feds take a very dim view of that.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#12

Post by thwarted »

loeg wrote: post #6
bitchypat wrote: post #5

Earlier quoted context omitted.

It is posited that in fact it is clear - in the article no less! >In Mexico, Mr. Shen was implementing an audacious plan, according to people familiar with the matter: A network of trading companies could route hundreds of thousands of tons of aluminum from China to Mexico, where a plant would melt it for shipment to the U.S., evading trade restrictions and claiming North American Free Trade Agreement benefits.

And why is that a problem, exactly? In the end aluminum is fungible for aluminum, and the US is getting aluminum from Mexico under NAFTA. Trying to enforce a tariff on element production from a subset of external countries seems sisyphean.

This reminds me of "What Color are your bits?" — http://ansuz.sooke.bc.ca/entry/23

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#13

Post by oh_sigh »

JoeAltmaier wrote: post #4
davesque wrote: post #3

I'm sure this guy will just get a little slap on the wrist.

Its not clear he's done anything wrong. Shipping Aluminum to Mexico? What's the problem.

The simple version: If a foreign government is unfairly subsidizing an industry, America will slap a tariff on it. This is good policy - imagine, for example, if Airbus could afford to sell their planes for $1, because they are being entirely subsidized by the French government. Everyone buys airbus, no one buys Boeing any more. Boeing(along with tens of thousands of jobs) goes bye bye, and now Airbus starts selling their planes for whatever they want, because there is no competition left.

So, that's what China was doing - they were giving this aluminum company tons of money, and it allowed them to produce and sell aluminum for far cheaper than should be possible. So America put a tariff on importing that aluminum from China.

Instead, they sent it to Mexico, and then pretended that the aluminum came there when shipping it into America. No more tariffs!

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#14

Post by criley2 »

senorjazz wrote: post #7
bitchypat wrote: post #5

Earlier quoted context omitted.

It is posited that in fact it is clear - in the article no less! >In Mexico, Mr. Shen was implementing an audacious plan, according to people familiar with the matter: A network of trading companies could route hundreds of thousands of tons of aluminum from China to Mexico, where a plant would melt it for shipment to the U.S., evading trade restrictions and claiming North American Free Trade Agreement benefits.

Does this count as raw metal hacking to disrupt the aluminium industry?

It just counts as standard issue fraud, it's a basic laundering scheme.

He's, simply, laundering Chinese aluminum through Mexico.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#15

Post by ZoF »

loeg wrote: post #6
bitchypat wrote: post #5

Earlier quoted context omitted.

It is posited that in fact it is clear - in the article no less! >In Mexico, Mr. Shen was implementing an audacious plan, according to people familiar with the matter: A network of trading companies could route hundreds of thousands of tons of aluminum from China to Mexico, where a plant would melt it for shipment to the U.S., evading trade restrictions and claiming North American Free Trade Agreement benefits.

And why is that a problem, exactly? In the end aluminum is fungible for aluminum, and the US is getting aluminum from Mexico under NAFTA. Trying to enforce a tariff on element production from a subset of external countries seems sisyphean.

>Trying to enforce a tariff on element production from a subset of external countries seems sisyphean.

I loved fantasy books as well.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#16

Post by ktRolster »

oh_sigh wrote: post #13
JoeAltmaier wrote: post #4

Earlier quoted context omitted.

Its not clear he's done anything wrong. Shipping Aluminum to Mexico? What's the problem.

The simple version: If a foreign government is unfairly subsidizing an industry, America will slap a tariff on it. This is good policy - imagine, for example, if Airbus could afford to sell their planes for $1, because they are being entirely subsidized by the French government. Everyone buys airbus, no one buys Boeing any more. Boeing(along with tens of thousands of jobs) goes bye bye, and now Airbus starts selling…

Note that this trick is very hard to pull off in the long-term. China tried it with rare-earth metals, and production just started up elsewhere. In the short term it's annoying and causes disruptions.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#17

Post by rrggrr »

danielvf wrote: post #2

The article mentions that aluminum prices have fallen 50% since 2010. However, prices were double historical normal from 2005 to 2011. The price lowering was just a return to normal prices.

This is correct. Three factors drove the bubble in aluminum and other commodities: Increased energy expense, speculative and fraudulent investment, and some increased consumption. However, three factors are likely to continue to drive aluminum and other commodities under the mean: Lack of confidence, spectacular debt burdens and deflationary trends across commodity price inputs. Its likely to be years before a stable mean is established, despite the occasional mirage of stability from month to month.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#18

Post by Justin_K »

ktRolster wrote: post #16
oh_sigh wrote: post #13

Earlier quoted context omitted.

The simple version: If a foreign government is unfairly subsidizing an industry, America will slap a tariff on it. This is good policy - imagine, for example, if Airbus could afford to sell their planes for $1, because they are being entirely subsidized by the French government. Everyone buys airbus, no one buys Boeing any more. Boeing(along with tens of thousands of jobs) goes bye bye, and now Airbus starts selling…

Note that this trick is very hard to pull off in the long-term. China tried it with rare-earth metals, and production just started up elsewhere. In the short term it's annoying and causes disruptions.

It isn't very hard to pull off dumping, it's game that's been played for centuries. That's why all modern governments disallow it. China especially does it all the time, here's an example with solar: http://www.nytimes.com/2014/12/17/business/energy-environmen... .

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#19

Post by rrggrr »

oh_sigh wrote: post #13
JoeAltmaier wrote: post #4

Earlier quoted context omitted.

Its not clear he's done anything wrong. Shipping Aluminum to Mexico? What's the problem.

The simple version: If a foreign government is unfairly subsidizing an industry, America will slap a tariff on it. This is good policy - imagine, for example, if Airbus could afford to sell their planes for $1, because they are being entirely subsidized by the French government. Everyone buys airbus, no one buys Boeing any more. Boeing(along with tens of thousands of jobs) goes bye bye, and now Airbus starts selling…

This is a SLOW process. By the time tariffs are enacted companies (and jobs) can be wiped out.

Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert

#20

Post by rrggrr »

ktRolster wrote: post #16
oh_sigh wrote: post #13

Earlier quoted context omitted.

The simple version: If a foreign government is unfairly subsidizing an industry, America will slap a tariff on it. This is good policy - imagine, for example, if Airbus could afford to sell their planes for $1, because they are being entirely subsidized by the French government. Everyone buys airbus, no one buys Boeing any more. Boeing(along with tens of thousands of jobs) goes bye bye, and now Airbus starts selling…

Note that this trick is very hard to pull off in the long-term. China tried it with rare-earth metals, and production just started up elsewhere. In the short term it's annoying and causes disruptions.

This is correct. Dumping is very easy to pull off because it takes a long time to obtain a remedy and much damage is done in the meantime.
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