RE: Maxwell on the coming energy crisisFrom Marketfriendly.com
“Beyond the organic growth in global oil and gas drilling ranging from 9-12 % annually,
which drives a level of molybdenum demand for use in drill steels and casings, and beyond the
increased molybdenum content required for steels used in the presence of sour gas, there is an
even higher growth rate for molybdenum demand indicated by the increased interest in offshore
exploration and production. Leverage on molybdenum in the offshore case relates to
•
higher molybdenum content of the steels – in the order of 3x
•
deeper holes – in the order of 5x
•
an increase in the relative amount of drill steel and casing per foot in offshore drilling and
•
an increase in molybdenum use in the construction of hardware and ancillary equipment
as production processes are moved from above ground to the seafloor.”
Metals Outlook
“Structural changes have taken place in the demand for metals. China and India are important but they're not the whole story.
”Part of it is safety. There's been a quantum change in society's relative valuation of safety. Some demand a zero-tolerance for risk. Maslow's hierarchy has changed! For building structures that never needed reinforcing bar before, it is now specified in the building code. And where carbon steel used to be found, it can now be galvanized or even stainless. There is stainless steel used in food-processing applications where carbon steel was adequate in the past. And now researchers are experimenting with a nickel-phosphorus coating for stainless steel in this same application in order to make it even more bacteria-resistant. These are just a few examples wherein safety is demanding more metals.
”Part of it is security. Trinidad and Tobago just ordered a fleet of patrol vessels to protect their gas plants from terrorist attack. Countries like this never needed a navy before. Local police forces in the United States, even down to sheriffs' departments in sparsely-populated rural counties, are investing in rotary wing aircraft in the name of homeland security. Small town deputies can have four separate communications systems in their cars. Drones are the fastest growing element in the aerospace sector and they all need superalloys for their turbines. These are not just for military use but for homeland security, border patrol, and drug enforcement as well. And this product development is not isolated to the United States. We have shifted the metals demand curve as in a wartime build-up. It's just known by a different name this time: Security is demanding more metals.
”Plus there are other factors. To name some of them; higher operating temperatures lead to greater efficiency in power generation and this requires more robust metal parts and hence richer alloys. More corrosion resistant metals are being specified for cooling water systems; that means more highly-alloyed steels. And the corrosive atmosphere in China's cities is destroying their buildings at an accelerated rate, indicating an enhanced future demand for metals in replacement.
”But the bottom line is that metals' intensity of utilization is changing and demand analyses based on conventional paradigms, even those sophisticated enough to employ cycles, will tend to understate demand going forward.
”Moreover, years of underpricing (forced transactions below replacement cost) for most producers will require an extended period of rehabilitative pricing for the exploration and development sector: Corporate purchasing philosophies in the '90s, like single-sourcing for example, have had an impact all along the supply chain.
”Once consumers start to self-confirm that there is a structural change in the metals, they will start to become investors. And investors who get a glimpse of it will increase weighting in the sector”
https://marketfriendly.com/outlook.htm