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2.5 billion kilograms represents roughly one pound of aluminum scrap heading into China for every man, woman, and child on this planet. This is just the scrap aluminum though. It doesn't even count the aluminum that's being mined.
The following chart shows what would happen if this trend continued to the year 2030.
450 billion kilograms of aluminum scrap would represent roughly 150 pounds for every man, woman, and child currently living on the planet. Looks like I better start drinking more canned soda pop to pull my fair share!
Aluminum Imports by China to Drop on Prices, Antaike's Li Says
Aluminum, used in homes, cars and drinks cans, has advanced 19 percent this year on the London Metal Exchange as China's 4 trillion yuan ($586 billion) stimulus package and state stockpiling increased imports to a record and as the world recovered from its worst recession since World War II.
Once everyone has stockpiled, then who will be left to buy? I've stockpiled a lot of aluminum foil over the years on the hopes that hindsight would someday show I was being silly (better being silly than being right during hyperinflation). I think that someday is quickly approaching.
He expects the price of aluminum on the London Metal Exchange to drop to $1,500 a ton by the end of the year and the price on the Shanghai Futures Exchange to decrease to 13,500 yuan per ton.
Dollar Weakness Better Played Via Short-Treasuries Instead Of Long-Gold
Despite a recent increase in inflation expectations from the bond market, 1.99% is still a far cry from what many gold bulls are expecting.
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Yet there's one important caveat - the bond market could end up right, which would likely be bad news for gold or any short position against treasuries.
You know what they say about the market. It likes to inflict the maximum pain on the maximum number of people. The bond market could indeed be right. Maybe every farmer in China won't be flying in aluminum planes in the coming years. In sharp contrast, perhaps we'll actually still be fighting deflation (much like the Japanese have been doing unsuccessfully for decades). If so, the pain I experience by hoarding a bit too much aluminum foil will be dwarfed by the pain felt by investors of today who backed up the truck on commodities at these prices.
Source Data:
UNdata
2 comments:
Stag,
You know what they say about the market. It likes to inflict the maximum pain on the maximum number of people.
I look at it this way. The market has way more entrance doors than exit doors. And not only are the exit doors less numerous, they are much smaller.
Also, the market imposes no limits on the number of participants or the entrance fees that participants pay. However, the market does have an iron clad rule - in aggregate, the particpants can't exit with more capital than is actually earned and saved.
I think stocks are overvalued now for several reasons. First, stocks and debt levels are way above historic norms. That makes no sense to me. Second, ignoring historical norms, stocks are again approaching hysterical norms. And third and most important, I don't think future growth will come close to the levels that stocks are anticipating.
mab,
"I look at it this way. The market has way more entrance doors than exit doors. And not only are the exit doors less numerous, they are much smaller."
No wonder the assets are toxic. You are describing a failing septic system!
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