Thursday, January 17, 2008

Why the price of steel and concrete will continue to rise

Chinese construction continues to put pressure on world steel and cement prices. Indian demand, especially for concrete, is beginning to enter the picture. At the same time, increases in the price of crude oil put pressure on the price of mining and processing raw materials. The manufacture of both steel and concrete produces large amounts of CO2. Attempts to limit CO2 output will inevitably effect both the manufacturing costs and the availability of cement and steel. Producers will be forced to either pay for new post carbon technologies, or pay a tax or fines for the right to emit CO2.

In addition to concrete and steel there has been a dramatic increase in the prices of copper and nickel, as well as the price of finished metal products. The New York Times reports that the price of high-pressure piping for steam has increased by 60 percent in the last two years. Wind electrical generation has been also dramatically effected by the inflation in materials cost. Puget Sound Energy reports that in 2006 it paid from about 8 cents to 10.5 cents a kilowatt-hour for wind generated electricity, up from 2004, when it paid 4.5 to 6 cents.

Demand for steel concrete and other materials for post-carbon electrical generation facilities will directly compete with Asian demand. How long will the Asian development boom last? Don't count on it ending before 2050, which many scientist feel is the last chance deadline for controlling the rise in atmospheric CO2.


DV8 2XL said...

This concern is has somewhat the same flavor as the 'nuclear isn't carbon neutral' argument that antinuclear types have been singing for the past few years.

Yes there will be pressure put on these resources, but the market will be able to supply them, as it always has.

The rise of the automobile after WW II put pressure on steel and concrete as well and supply rose to meet demand. It's not as if the raw materials to make these two commodities are limited.

As for the carbon dioxide issue, there is no doubt that legislation will be enacted to license these emissions for material that will go to low carbon power projects.

As for the price - well we will just have to pay it, that is the way it has always been in these situations. War is expensive too and the money is there. Economic stimulus from large infrastructure projects has a positive effect on GNP anyway.

This whole line material cost is IMHO just another red herring being dragged through the debate in an attempt to FUD the issue.

Charles Barton said...

I don't know if you understand yet where I am going with this line of reasoning. My basic argument is that energy sources which make modest demands on materials like steel and concrete are going to have significant price advantages over generating technologies which demand more materials. Cost advantage thus is another reason to go with molten salt reactor technology.

DV8 2XL said...

Sorry Charles, I should have made myself clear. I do understand your point - and of course it is valid. I was commenting on (or at least countering the arguments) that have come out of the other side on this topic.

And by 'the other side', I mean the antinukes because they have brought up the issue in their propaganda.

You can see it in the article from the The Tampa Tribune with the inflammatory title Nuclear Costs Explode where the author make the ludicrous statement that the costs concrete and steel have 'soared' because of plans to build 30 new reactors.

To the papers credit they also quote Jeff Lyash, president and CEO of Progress Energy Florida, who pointed out that: "The price of any construction project you undertake today is going to escalate based on commodity prices. That's not a nuclear issue."

We have got to stay alert to these BS arguments because although we dismiss them quickly between ourselves, they do have traction with the public.

BTW,For the record I have always been a supporter of molten-salt reactors from the day I heard of them.

Charles Barton said...

I also looked at the Tampa Tribune story, which ignored the effects of materials inflation on the cost of renewables. You are quite correct that the anti-nuclear crows ignores the effect of materials inflation on the price of renewables. My posts of the last few days point to this being a even bigger problem for renewables, than for LWRs. Estimates of the cost of solar power coming out of Europe are not nearly as bubbly as those coming from America.

I am going to post on my other blog "bartoncii" a discussion of the inflationary effect of Americas large foreign debt. What we are seeing in the price of materials is the first wave of an inflation that is about to sweep through the American economy. This is not a political blog, so I won't point the finger of blame, but it would have to be a mighty big finger anyway.

Last year, an eternity ago it seems, I had thought that the Molten Salt Reactor could wait until after 2030 before before arriving on the scene. That is no longer the case. We need the MSR now. We need an assembly line that churns the suckers out, like Henry Ford produced model T-Fords. We need to ship them out on trains, barges and ships, and plunk them down, set them up, turn them on, and start churning out clean, CO2 free power. I keep telling Kirk Sorensen to get ready. He is going to be the man


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