Metal Markets? Go East Old Man!

Graham Analytics (12/22/2008)
. . .current trends in the automobile sector suggest that the Chinese market will represent the next huge opportunity for both production and selling. If, and I recognize the size of that word, the Chinese economy passes by the American economy as early as 2015 (as cited by some estimates), and if the infrastructure growth there matches this general economic growth, it would suggest the 'potential' for as many as 80 million new cars to be sold in China to bring China just to the current number of autos in the U.S.

. . .Given the dismal state of Western economies, and the growth (so far and expected) in the East, operating any automobile manufacturing business in the United States in the current framework may only be justifiable in the very near future in a tightened protectionist market. Now, frameworks change, and we have no reason to expect the current framework not to change. This said, economies of scale and an unstoppable shift into a globalized economy leave little doubt that entry into markets like China and India (among others) on the part of GM, Ford, and Chrysler (or whatever they're called when the dust settles, if they’ve not become part of the dust, that is) will not be merely a matter of 'growth', but rather a matter of survival.

. . .Relative inefficiencies in productivity in the West will increasingly impact on the viability of its manufacturing sector, and not favourably. The relative purchasing power of Western currencies will, in turn, be affected, also not favourably. Who wants to survive, let alone thrive, will be setting up both production and marketing activities elsewhere.

. . .Any middle to longer term projections for world markets for base metals (in the least) must look first to the East, not the West. Those who still look to the American economy to point the way for the future are looking in the rear view mirror while approaching a very busy intersection.

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