Why Is Steel So Expensive?

[goldstar31]

Might I really surprise and say that I came from a coal mining family in depressed County Durham with a father as a blacksmith in the coal mining which supplied the coking coal to feed the blast furnaces in Consett, Co Durham where my father and his 2 brothers were apprenticed at the age of about 12. The other side of the my family was from Cumberland where there was was Workington Iron and Steel and my grandfather and his ;large family; had worked in the mines and moved to County Durhan where there was some work. After conscription, I ended up back in Cumberland - with its iron and steel and coal- long gone.
I know precisely what it really was like and am appalled by the studied ignorance of conditions in the UK in my lifetime.
The difference between the North of England and India and China is little different and only a few years actually separates the conditions. Unquestionably, I had no education but whatever there might have been was made worse by WW2. We lived on food ration books and clogs which only needed 2 clothing coupon points - for growing folks..
One of my dear friends, in Rotary has the funds for poor local children to actually buy them footwear. It's in his and my lifetime!

My father forbid me to go into 'engineering', he's been injured so many times both down the mine as a blacksmith/farrier. Indeed, children of 14- my school leaving age worked underground.
For whatever represented an education then was supplemented by us growing and selling spinach in the local Newcastle market. I'm a peasant- and damnably proud to be so! I went to a sort of better school which the garden sales allowed.
It was not until I was conscripted into the Royal Air Force that I found that I had an intelligence quotient of 135, was offered a commission from the ranks but couldn't afford. 135 is the sort of magic figure which is is just outside the three standard deviations- of the rest of the peasants. Whatever being Goldstar31 was, I was able to retire at 55 and live quite happily for the next 33 years and have been to the USA and Canada and onto HongKong and found the people there surprisingly as well off as me and certainly better fed than we were and much the same as me now.
OK, I was once a millionaire but my grandchildren will not have to sell spinach or go about barefoot.

With some amusement, I'm sort of accepted the local Chinese community and quite a lot of ethnic circles. I live with them in harmony and understanding. We might live in half or three-quarter million pound homes and have three od four very new cars in the drives and out children in private and very expensive schools and colleges but somewhere in the back of our memories is the times which we understand and I have written about.

Instead of getting the worst case scenario by someone who is paid for column inches - and buggers off to the bank and then the next assignment, look at a man's hands.

Invariably they were buckled and each of us can tell the subtlety between 'Entropy' and plain honest 'Enterprise'

Have a nice Day

Just another peasant

 

[Entropy455]

Goldstar31, you and I are more alike than you know. I joined the military out of high school (enlisted ranks). I got out, got a degree in in Mechanical Engineering – while working a full-time job to pay my bills. Everything I have I've earned.

Because you’ve asked multiple times - Entropy is the measure of the quality of work extraction from a thermal reservoir (the glass half-full explanation). Or Entropy is the increase in thermodynamic disorder from a thermal source during work extraction, due to system inefficiencies (the glass half-empty explanation). Mathematically, the partial derivative of Entropy is equal to the partial derivative of internal of internal Energy, divided by the absolute temperature of the thermal reservoir in which work is being extracted.

In layman’s terms, Entropy is simply a thermodynamic property. Mechanical Engineers will use Entropy to predetermine the ultimate thermodynamic efficiency of a coal or nuclear-fired powerplant (mathematically) before it's built.

In super-layman’s terms, the lesser the Entropy generation, the better the gas mileage of your heat-engine. That being said - Entropy is not necessarily a bad thing, it’s just a thing - and happens to be an unavoidable properly of nature. Like gravity, and heat flowing from hot-to-cold. . .

And the 455 is simply my favorite engine - the Pontiac 455, manufactured between 1970 and 1976.

 

[deeferdog]

Anyone know where all this is heading?

 

[goldstar31]

Anyone know where all this is heading?

Haven't a clue. As I was sentenced by the judge, I simply replied that it seemed a good idea at the time.

N

 

[Anatol]

Remember, Trump is not a politician. He's a self-made cutthroat billionaire businessman.

Agreed, Trump is certainly not a politician, he's also not a statesman or a diplomat - both qualities we usually expect of a president. Nor is he 'self-made'. If any of us on this forum got a million dollar startup package from daddy, we might be doing ok too! But Donald has a documented history of huge debts and failed deals and he was regularly bailed out by his daddy. Fred Trump was, I think, "self-made". He was also a notorious slumlord and racist. (Woody Guthrie wrote a song about him!) FYI, here is a fact check from the Washington Post in 2016 (call it fake news if you like) -

... a recent Wall Street Journal on Sept. 23 reported that a 1985 casino-license document showed that Donald Trump owed his father and father’s businesses about $14 million.

Trump joined his father’s thriving real estate business after college and that he relied on his father’s connections as he made his way in the real estate world.

For instance, Fred Trump — along with the Hyatt hotel chain — jointly guaranteed the $70 million construction loan from Manufacturers Hanover bank, “each assuming a 50 percent share of the obligation and each committing itself to complete the project should Donald be unable to finish it,” according to veteran Trump chronicler Wayne Barrett in his 1992 book, “Trump: The Deals and the Downfall.”

Trump also benefited from three trusts that had been set up for family members. In 1976, Fred Trump set up eight $1 million trusts, one each for his five children and three grandchildren, according to a casino document. (That today would be worth about $4 million in inflation-adjusted dollars.) The casino document lists several other loans from Trump’s father to his son, including a $7.5 million loan with at least a 12-percent interest rate that was still outstanding in 1981.

In a 2007 deposition, Trump admitted he had borrowed “a small amount” from his father’s estate: ‘I think it was like in the $9 million range.” And as Trump’s casinos ran into trouble, Trump’s father also purchased $3.5 million gaming chips, but did not use them, so the casino would have enough cash to make payments on its mortgage — a transaction which casino authorities later said was an illegal loan.

 

[Anatol]

Our Industries have been picked apart to pieces by other Countries.

Hang on ... The biggest economy in the world (and only military superpower) allowed its industries to be 'picked apart' by other countries ?! I can't see how that could happen unless the USA chose it. After WWII, Japan, Taiwan, Korea, China, Germany, Austria and other countries rebuilt with more efficient industries. USA let its steel industry become uncompetitive, and imported from these countries. US heavy industry has dwindled to almost nothing. Meantime, the US economy has got rich on computer technologies. One industry dies, another thrives (for now).

 

[Entropy455]

Elections have consequences. . . . ​

It is true that Trump got a million dollar loan from his dad, which he turned it into a billion dollars (plus he paid back the loan). I have to ask Anatol, if I gave you 1000 dollars, could you turn it into a million dollars? (it's the same order-of-magnitude). Or is the starting buffer for successful investment begin at the one-million dollar mark?

Goldstar31, I find your posts cryptic and difficult to follow. Perhaps I'm not smart enough to keep up? You seem like a nice guy nonetheless.

 

[goldstar31]

I try to be decent! Always remember the background, I'm not an engineer and have studied things like political economy, social and economic history, accountancy and - clears throat- constitutional law---- and some of it was American. So I'm a bit of an odd bod.

A million dollars only buys a house and I'm not the village ***** that pisses off the neighbours with a bloody big set of cheap jack machinery which is going to devalue their property-- and mine. Yea, I've got a little lathe or three tucked away
but not, NOT to bugger up the works. I came out of the gutter but I have no intention of going back.

Meantime my best wishes.
Norman

 

[Entropy455]

Who's implying you're destine to go back to the gutter? What prompted you to make such a statement?

 

[Hopper]

You missed the most important meaning of entropy: a gradual decline from order into disorder, resulting eventually in complete disorder. Seems more relevant.

 

[Entropy455]

How is it more relevant to the high cost of steel?

 

[Cogsy]

Entropy455, I really would hate to see environmental regulations being rolled back, even slightly. We need to reduce emissions from all sides and industries, not ramp them up again. I stand by what I said though - consumerism has created this issue. If consumers did not purchase the cheap imported product your trade imbalance wouldn't exist. Consumers wanted it cheap, so they bought from the cheapest source, supply and demand. It's similar to the little Mom 'n Pop grocery stores being driven out of business by the big chain supermarkets - everyone is sad to see them go and their livelihood destroyed but the prices at the supermarket are just too good to pass up. What happens if tariffs were to double the prices at supermarkets? - I think the Mom 'n Pops would raise their prices to just under the supermarket prices and enjoy the situation whilst the consumers cried foul.

I have to comment on the $1000 to $1M order-of-magnitude too. It may be the same order of magnitude increase but it's entirely different. $1m allows diversified, substantial, investment opportunities and the ability to live for an extended period on some of the principal. It also opens doors to all sorts of deals and opportunities that the average person has no access to. $1000 is chump change and anyone would be lucky to make more than current bank interest rates. I don't think there's a single person in the USA, or any developed country, who could be stripped of everything they have, including contacts, who could turn $1k into $1M. But there's many who could turn $1M into $1B.

 

[Entropy455]

In the past, coal was burned throughout the Great Lakes to make cast iron & steel with essentially zero emissions controls. Neighborhood houses were black from coal ash, and many people had chronic lung problems. Then one day a politician promised cleaner air if elected, and he was, and he did. This brought the first generation scrubbers, which were essentially water nozzles that caused it to rain down within the smokestacks. The retrofit cost was low, and the impact was high (basically plumb the existing stacks with water nozzles, and modify the base to collect & filter the sludge) . Immediately the air began to clean up. It wasn't long before the next politician promised 10-times cleaner air, in lieu of just 5 times. This required the smokestacks to be extended taller. It was more expensive, but the foundries complied - or faced closure. Then it became 20 times cleaner, then 50 times cleaner - which required construction of second and third smokestacks, and more efficient nozzles. Very expensive, but still doable.

Note that during the Clinton years, US steel foundries were running roughly 100 times cleaner than the smokestacks currently operating in China today. It was during the Clinton years that the EPA mandated upwards of 1000 times cleaner air for coal fired foundries. Example: a small steel foundry that might net 25 million per year would have to invest 1.1 billion dollars to meet modern standards (basically make zero profit for 44 years). Needless to say, the foundries were shut down & recycled for scrap. This is why the US produced 115 million metric tons of steel in 1967 (China produced 14 in the same year), and now the US produces about 82 million metric tons per year, and China produces 832.

I live in Washington state. There are days when our air quality is measurably poor as a direct result of China's air pollution crossing the entire Pacific ocean. I would argue that relaxing the US clean air standards from 1000 times cleaner, back down to a more reasonable 100 times cleaner, would be better overall for our planet - considering China is burning coal to produce steel for export, with basically zero emissions controls.

And there's no free money. Generally speaking, when someone is making millions, others are losing millions. If it were easy to turn 1 million into 1 billion, we wouldn't have one-million millionaires. . . .

 

[Mousetrap]

Thankyou Cogsy for getting back to the 'big picture' issues. Yesterday I heard a depressing report from the NYTimes climate global climate change correspondent - an Indian woman. She related tales of increased flooding in Calcutta and flocks and herds dropping dead in Africa (from drought). Here in California we are in the 4th hottest year on record, and 1, 2, and 3 have been in the last 10 years. Northern Europe has also had a record hot summer. Records show these as extreme but science tell us they are more likely to be the new average! Yet CO2 emissions are still rising, partly because we (including the Chinese) continue to build coal burning power plants.

In Australia we are having massive bush fires -------- and it is winter time.

 

[Hopper]

How is it more relevant to the high cost of steel?

LOL, more relevant to this thread.

 

[Cogsy]

The thing is though - steel is still produced in the USA, so some steel foundries have been able to meet the emissions targets and remain profitable. If the consumers then used these domestic suppliers exclusively, they would have had the capital to increase supply to meet demand. Basically we are back at the 'big supermarket' scenario, except this time with a couple of big US suppliers instead of imported ones. Except they mostly didn't and went for the cheapest product instead. I don't see how it can be any other entities fault when the basic argument is just "they sold us cheap stuff so we stopped making it ourselves". It can work in reverse as well, like the island nation of Nauru. They exported all their natural resources for huge profits and enjoyed their tremendous wealth until the resources ran out. Now they have nothing to fall back on and mostly rely on foreign aid. Surely they can't now complain that they have nothing left or the world shouldn't have bought it all off them.

We're not immune to it here either. Our local car construction industry has pretty much wrapped up and (as far as I know) we now rely exclusively on imported cars instead of local product. Most people were not happy about this but the reality is that the cars we were making were too expensive and, at least compared to the European products, not of the same standard as the imports. So consumers stopped buying them, then the industry died. Again, the fault lies on the consumers that wanted the cheapest product (at the bottom end of the scale) and the manufacturers that couldn't match the quality of the rest of the market. There's no blame left to put on the countries supplying us with imports - we wanted them, so they sent them to us.

I have to agree that cutting China's emissions is a fantastic ideal, and if the tariffs help with that I'm all for it. But I'd like to see alternative energies being used instead of returning to coal - like something geothermal using the huge energy reserves you have powering Yosemite and the like. Keep the restrictions and let the engineers work out better solutions (then you get a job out of it as well!).

What I meant about the $1m to $1B is that it's possible, not that it's easy, just that it can be done. $1K to $1M is virtually impossible though, even if it's the same order of magnitude. For example, with $1M you could get a bond for another million and buy probably close to 40 apartments 'off the plan' for ~$50K each, with the remainder to be paid upon completion, but you bank on the properties appreciating during construction, then you sell just prior to completion for a tidy profit, pay back your bond and start again. During a nice boom period you can over double your money every iteration. It is risky though, and when the market crashes or you make a mistake you go bankrupt. Lots of people go bankrupt but with the backing of others, some have been allowed to have another go at it. With $1K you can buy an iPhone...

 

[Entropy455]

Geothermal does not work for large-scale power extraction. This is because the thermal conductivity of the Earth is too small. Yes, you can hit hot temperatures by drilling a hole into the ground, however the moment you establish a coolant loop to draw out heat, the hole goes cold. (core heat does not "flow" fast enough through rock). Even if we drilled literally into a magma chamber, we'd start forming solid rock around the thermal well-head during the first few hours of running.

Solar does not work either (for large-scale power), for the same reason you do not burst into flames when you walk outside. Solar flux on a sunny day is about 1 kW per square meter. A good solar panel might convert 15% of that into electricity. This means to get the same power out as a typical nuclear plant (1000 MW electrical output), you'd need a solar panel about 2.6 x 2.6 km square. Add some cloud cover, and you'd need twice that. And don't forget that the higher efficiency solar cells burnout faster (i.e. plastics that don't hold up well to sunlight - go figure. . . .)

It is simply cost-prohibitive to construct new steel foundries in the US - because we've got over-the-top environmental laws. We have energy shortages for the same reason. This is not the consumer's fault (where we disagree).

 

[Cogsy]

Fair enough, I know nothing about geothermal, except there's a lot of energy there, but obviously extracting it is another issue altogether. Solar I know a bit about, and that 15% seems a little low (especially from the 55% theoretical) but large scale it's not going to work either.

Probably best if we let this one die - somehow I don't think we're going to solve the issue just between ourselves.

 

[Entropy455]

High efficiency solar cells die an early life. The cells that have a decent lifespan are 15% to 20% efficient. The world record (per Wikipedia) is 46% efficient. Again, this 46% is not a longevity product. Nonetheless, you would need a 46% efficient panel approximately 1.5 by 1.5 km (square), to obtain 1000 MW (typical nuclear power plant electric output). What irritates me most about solar power, is that the idea continues to be sold to the public as some future cure to the current energy crisis. The reality is that once R&D funding assistance stops, so will the solar industry. . . Again, for the simple reason that you don't burst into flames when you walk outside. . . . The energy density (solar flux from the sun) is simply too low to have meaningful impact.

Just for chit chat, a kilogram of uranium will produce about 1000 MW of thermal power, for 24 hours. Assuming a typical 20% thermodynamic efficiency for nuclear power (Rankine cycle), a 1000 MW electrical output requires 5000 MW of thermal input - or 5 kg of uranium per day.

The US has about 250 million registered cars. About half are daily driven. Assume 1/20th of those are on the road at a time - that's 6,250,000 cars. Assume the average car requires 35 horsepower (actual steady-state power to the road), which is equal to 26 kW electrical power. Assuming a typical 5% power loss in the battery/inverter, and 15% loss in the motor/driveline, that 26 kW becomes 31 kW - i.e. the actual power consumed by a 35 horsepower electric car. The average daily power consumption for 6,250,000 electric cars on the road at a time would be 1.9375 x 10^11 watts, or equal to roughly the power output of (qty 194) 1000 MW nuclear power plants, requiring a total daily fuel consumption of 970 kg of uranium - - - that's 970 kg of uranium per day, just to get cars off of gasoline. . . .

I have my opinions about electric cars also - which should be pretty clear based on the above. . . .

There's no reason we should not talk about it. Ultimately it is up to the people of Earth (all people) to clean up the planet - not just Americans. . . .

 

[Cogsy]

Agreed entirely that it's everyone's' problem to solve. Where I live solar is a very handy addition to the grid, with many homes having their own arrays connected to the main grid. Depending on usage and array size, up to 75%(ish) reduction in power costs can be achieved. Considering the per unit credit you get for uploading to the grid is much smaller than price charged per unit for consuming from the grid, many of these systems are actually producing more than they use. Figures quoted here (which would obviously be completely different for you) have the systems paying for themselves in the 5-10 year range depending on usage. The PV guys at my uni are working towards high-efficiency, long(er) life panels but I don't have figures on those either (not my area).

Your estimates make me think engineers are quite similar to physicists in back-of-the-envelope calculations, though you omitted the spherical cow reference entirely. Again, I have no figures to hand, although here I think most cars don't see that sort of duty cycle, but still they use a lot of energy. I'm almost willing to bet Australians and Americans are likely close to the top 2 countries for wasting energy on personal transport though. Our public transport systems are limited here and we could save a lot of energy if it they were improved. Plus we could work closer to home, telecommute, walk, cycle, etc. instead of jumping in cars.

This problem has almost the same cause - consumers want big houses on big blocks of land so cities spread out, distances that need to be covered increase and infrastructure can't contend with sprawling settlements properly. I figure I can't control what any other person, let alone country, does, but I try to do what I can to save resources. If every person who cared did a bit, we would make a large difference at least. Not ideal, but we have to start somewhere.