This reminds me of the 2013 Goldman Sachs aluminum story:
http://www.nytimes.com/2013/07/21/business/a-shuffle-of-alum...
Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
21–30 of 168 posts
Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
#22Earlier quoted context omitted.
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... .
A genuine question: why is this dumping, but importing any other electronics (say any modern computer, cellphone, appliances) not so?
Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
#23Earlier quoted context omitted.
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.
If China is greatly subsidizing the aluminum production then then how will US producers compete? It's in the US's interests that they don't allow another country to manipulate the market to destroy the US production capacity. Once that capacity is online the foreign country can then raise prices. It's not easy or cheap to bring production capacity online.
It could be well within the Chinese government agenda to have broader control over global productive capacity. Impossible to prove, I know.
Generally I'm pro-free trade, but the issue gets quite messy when you consider government subsidies. As a Canadian, this discussion comes up frequently along the lines of the subsidized agriculture sector.
Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
#24“My Moby-Dick has been Zhongwang,” says Mr. Henderson, president of the Aluminum Extruders Council, a U.S. trade group.
Without context, I would have thought that a Markov text generator was on the loose.
Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
#25One of the reader comments said: "Extradite him to the US and then prosecute him. Getting rich without any merits is horrible."
and I thought: you must be new here
Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
#26Earlier 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…
Clearly then the US and EU should slap tariffs on Apple, as it was being unfairly subsidized by Irish tax scheme.
Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
#27Earlier quoted context omitted.
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... .
A genuine question: why is this dumping, but importing any other electronics (say any modern computer, cellphone, appliances) not so?
As the article mentions:
> the companies were selling products below the cost of manufacture and that the Chinese companies were benefiting from unfair subsidies from their government.
I assume Foxconn does not get subsidies to sell iPhones below cost :)
Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
#28The 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…
I remember working at a bike shop around this time and within 6 months all of our bikes went up in price like $50-100. I had no idea what was going on and asked one of corporate office guys what the deal was.
He said between India and China, they had both put huge strains on steel, aluminum and titanium and it was causing a shortage for bike manufacturers, so they were raising their prices since the prices for these metals had skyrocketed in recent months.
Good to know it was a little more to it, but interesting nonetheless.
Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
#29Earlier quoted context omitted.
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... .
A genuine question: why is this dumping, but importing any other electronics (say any modern computer, cellphone, appliances) not so?
Selling at below cost is dumping. Selling at above cost is not.
Re: Chinese Billionaire Linked to Giant Aluminum Stockpile in Mexican Desert
#30Now imagine the TPP goes through, how much of a footprint will be exposed to similar practices.