The unchanged course of Shortages

And a once in a lifetime storm!

Another one of those that are mostly analysis, with added parts of me, repeating myself and referring to my own work (lol).

The first is…enigmatic, and I truly couldn’t make sense of it, besides referring to historical precedents in regard to Gold and FIAT currency. Maybe Putin is hedging to become a hub of crypto, in case CBDC are dead in the water or there is a form of blow back.

Greece experienced a once in a lifetime snow storm, that disrupted its energy supply, but this is not the main reason I share this one. I am referring to my own post The Year Without Summer 2, and it’s long term trends that very very very few are paying attention and some will use to push Green Agenda. Also, a small signal from Florida………..

I also expect the wiser players in industry, if they didn’t do it already, to add Act of God and Force Majeure to their contracts.

As I previously warned, and for multiple variables, the energy woes of Europe continue, with numerous cascading effects. Energy prices, regardless of what experts write about, and how much LNG is diverted from the US and the rest of the globe to Europe, will keep the prices high, plus diverting too much of your own fuel will make your costs higher. Unintended consequences and all.

The other cascading effects are the lower production and therefore low inventories of metals necessary for the basic function of industry and the economy. The magnesium shortage keeps going strong, and per the article, the output will remain below target because of energy prices and China attempting to go Green. The aluminum price and output will remain the same, therefore higher prices.

In fact, as per a dozen of my last posts, it would be safe to deduce given the information around, that China uses all the policies the Western Elites love so much, to slowly, but surely cripple the Western Industry. Again, China is playing the game almost solo.

And as a side note, and total lack of awareness or outright corruption from regulators, signing a deal that is a double edge sword. China gets access to chips, regardless of what happens. Remember companies banked on the Nazis in the second world war, big corporations don’t care about alliances.

As per the last post, conflict in Ukraine will hurt only nations that already in a hard place. But I can expect much from the current American administration. They are hell-bent on collapsing itself.

It will be rather intellectually stimulating tracking down all the cascade dynamics and how different systems will adapt. Safe to assume some will get very…creative.

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Putin Backs Crypto Mining Despite Bank of Russia’s Hard Line

• Bank of Russia proposed total ban on crypto mining and trading

• Russia is the third-biggest miner, after U.S. and Kazakhstan

President Vladimir Putin backs a Russian government proposal to tax and regulate mining of cryptocurrencies, rejecting the central bank’s proposal to ban it completely, according to three people familiar with the matter.

Snowbound Regions of Greece Face Power Outages

Heavy snow causes power outages in Greece

According to the Hellenic Electricity Distribution Network Operator, there have been reports of power outages in the areas of Pallini and Anthousa in Attica, and in the areas surrounding Mt. Pelion in central Greece.

The city of Chania, on Crete, and the towns surrounding the city have faced a number of power outages on Monday as well.

The Greek islands have been are covered in snow since Sunday in a once-in-a-lifetime weather event. Locals say that the last time this amount of snow fell on the Cyclades was decades ago.

Former Greek Leader Files Censure Motion Over Blizzard Response

Ramaphosa Told by Advisers to Focus on National Energy Crisis

• South Africa regularly hit by power outages that curb growth

• Port, transport, water services must be improved, PEAC says

Orange Juice Prices Soar With Frost Threatening Florida Groves

• Sunshine state already set to collect smallest crop in decades

• Futures in New York are trading at the highest since 2018

Orange juice has been getting more expensive, and now forecasters say frost could hurt groves in Florida, the nation’s biggest supplier.

Most of the state’s growing areas are under a frost watch, and temperatures could descend this weekend below 30 degrees Fahrenheit by Sunday morning, according to Drew Lerner, the president of World Weather Inc. Cold winds could hurt developing fruit and further reduce yields, tightening supplies at a time of surging costs. 

Gas Will Stay High Even After the Spat With Russia

Forward contracts show markets pricing upwards for the next couple of years.

A natural gas storage facility in the Netherlands.

When the European energy crisis started in mid-2021, Brussels bet the upheaval would be largely gone by spring. As it became obvious that wasn’t going to happen, it speculated the problems wouldn’t last beyond 2022. That wager looks to be off, too. Away from the daily gyrations of European spot natural gas prices — swinging between worries about a potential Russian invasion Ukraine and the effects of mild winter — the forward market has begun to price trouble in 2023, 2024 and beyond.

Europe imports approximately 40% of it gas from Russia, and if a war — one that Moscow says it does not intend to launch — led to the loss of all those supplies, the region would be forced to take draconian measures, including shutting large swatches of its energy-intensive industry. European gas prices would spike multiple times higher than the record high set in December.

South Africa’s Emergency Power Process Nears Another Deadline

• Projects are due to reach financial close by month-end

• Most industrialized African nation has had record power cuts

China Approves AMD’s $35 Billion Acquisition of Xilinx

• The watchdog stipulates that AMD must keep supplying China

• The deal, one of the largest in history, was unveiled in 2020

Chinese regulators have granted approval for Advanced Micro Devices Inc. to buy Xilinx Inc., clearing the way for one of the largest deals to emerge from the global semiconductor industry.r

The State Administration for Market Regulation has cleared the deal with certain conditions, the antitrust watchdog said in a statement. It asked AMD not to discriminate against Chinese clients and to continue supplying Xilinx’s products to the country, after determining the deal could exclude or limit competition. The acquisition had already won the blessing of regulators in the U.S., Europe, and U.K., among other jurisdictions.

Hindustan Zinc Says Prices to Stay Strong Due to Power Costs

• Demand is rising as governments lift infrastructure spending

• Indian firm aims to move entirely to renewable energy by 2030

Zinc prices will continue to trade at elevated levels as increasing energy and raw material costs curb production at some smelters and demand grows, according to India’s biggest producer.

High power prices could leave some smelters unable to operate, Arun Misra, chief executive officer of Hindustan Zinc Ltd.

Ukraine’s Ports Brace for More Economic Hardship in Russia Conflict

Aluminium Prices Will Stand Firm amid Intensifying Energy Shortage in Europe

Since December 2021, the energy shortage problem in the Europe fermented. A number of overseas aluminium smelters introduced production cuts, triggering market concerns over primary aluminium supply around the globe. As such, LME aluminium surged, which pulled up SHFE aluminium, while the continuously falling China social inventory in the off-season also boosted the bullish sentiment.

Looking into the near future, the sustaining energy crisis in the Europe as well as the low inventory in China will underpin aluminium prices, but the price moves will still be restricted by the demand. The market shall closely watch the inventory changes and resumption of production in China.

New Crisis in the Automotive Market: Magnesium

The scarcity of magnesium threatens the entire automotive market and not only that of electric vehicles. Magnesium is a key metal in the automotive industry, being used to produce different alloys, such as aluminium alloys.

As in the case of semiconductors, large magnesium producers have struggled to reach their targets for 2020. A year later, the stocks are almost depleted, and the industry is crumbling.

For several months, the country has been affected by serious electricity supply problems. Magnesium production would consume three times more energy than aluminium and, still, there is no real substitute for this metal and its storage can only be for a short-term due to relatively quick oxidation. Therefore, the reserves of different countries could disappear in a short period of time.

While the United States seem almost immune to a shortage due to local production, Europe is exposed to a greater risk if the threat of supply disruption materializes.China: future restrictions in sight

As China is heading to a more energy efficient economy, we can expect soon specific restrictions imposed on the production of many energy-intensive industries. Due to reduced supply, the price of magnesium climbed to all-time highs, almost USD 10,000 per ton, compared to around USD 2,700 in mid-August.