This post belong to a series, that I advise you to read it. Part I, Part II, Part III, Part IV, Part V, Part VI, as important is this one.
I was recently talking to a friend and I literally said, even with a “second brain”, a streamlined analytic framework, among a few other things, things are cascading much faster than I can keep up. Might need to rework some things.
We truly find ourselves at a math defying moment.
European Industry Starts Shutting Down as Energy Prices Soar
Demand destruction could be on another scale: Rystad Energy
Fertilizer, steel and paper industries are curbing production
European industry is showing the first signs of shutting down as Russia’s invasion of Ukraine boosts energy costs for steelworks, fertilizer plants and paper mills to unsustainable levels.
The war in Ukraine, combined with sanctions and counter-threats from Russia, have upended commodities markets, pushing European gas prices to fresh records and triggering one of the biggest oil-supply shocks since World War II. That’s starting to throttle demand from smelters and other energy-intensive plants across the region, which were already struggling before Vladimir Putin unleashed his military machine.
And here we find ourselves, weeks, and in some aspects months, after warning and forecasting, giving scenarios with probability of coming to be. Many of my previous posts covered aspects of this, but now we all will live it.
Demand has been consistently high since Q3 2020, but supply couldn’t keep up, and disruptions came one after another. There will be a consistent, and growing shortage of, quite literally, every single thing. From here.
…fresh rise in prices had created a “very oppressive environment” for every energy-intensive industry in Europe, with aluminium right at the “top of the list”.
High power prices resulting from the soaring gas price have already taken 900,000 tonnes of aluminium and 700,000 tonnes of zinc smelting capacity offline in Europe
Plants to have been mothballed include two-thirds of capacity at Glencore’s Portovesme zinc smelter in Italy, while production has been cut by 60 per cent at Nyrstar and Norsk Hydro’s Slovalco aluminium smelters in Slovakia. Dunkirk’s Alvance, Europe’s largest producer of aluminium, has reduced output by 15 per cent.
Snowdon said he expected this capacity to remain offline beyond the end of the year and said there was the potential for further closures of smelters that did not have long-term power contracts.
“If prices stay at these levels, we should expect further closures and increased import dependency.”
The biggest worry for executives, however, is supply disruption. Ukraine and Russia are key exporters of steel, and both ArcelorMittal and Metinvest last week stopped production at their Ukrainian plants.
You should read the entire piece above, it basically put numerous of my previous posts into one, well sourced, article. The impacts of the current disruptions are monumental, and go far beyond what is described here.
You can expect commodities to go ever higher, until demand destruction sets in, I doubt a good portion of these factories, and smelters will come back online. Which puts the entirety of the EU at the hands of Eastern nations, since they will be even more import dependent, giving more geopolitical power to China.
European gas stock, and everything else is low, and I doubt they will be able to replace their needs, because between me, and you, the reader, this is the year of hybrid warfare and resource nationalism. You can expect crazy energy prices for the entire year.
The wild swing in prices also have systemic effects.
India's Russian coal imports could be highest in over two years in March
India's coal imports from Russia in March could be the highest in more than two years, data from research consultancies showed, as Indian buyers continue buying the fuel from a market that is now increasingly isolated by sanctions
India is dependent on many of China and Russia exports, specially Fertilizer, and coal. No country with an ounce of common sense will collapse itself, or alienated those who can keep the government afloat. Now, here is how you play the hybrid game.
If you use advanced algorithms and complex analysis to predict possible scenarios, you can come up with all sorts of strategy.
Foreseeing the cascade effects, you can ally yourself with another big producer of X, and squeeze the market. Go on Google and see if India had any problems with fertilizers in 2021.
Energy import freeze from Russia would hit German GDP hard - ministry source
A short-term freeze on energy imports from Russia resulting from its invasion of Ukraine is likely to cause a collapse in German gross domestic product similar to that prompted by the COVID-19 pandemic, a German economy ministry source said on Thursday.
German operators prepare for extending runtime of decommissioned coal plants
German coal power plant operators are making provisions for a runtime extension of decommissioned stations in preparation for possible energy supply disruptions as a result of the war in Ukraine, business daily Handelsblatt reports. “We’re inspecting our facilities to remain ready if the government deems such measures necessary,” a spokesperson for energy provider RWE told the newspaper. Besides RWE, operators Vattenfall, EnBW and Steag also confirmed they are reviewing their decommissioning plans
Politicians with a sense of survival and a bit of common sense are now spewing the obvious, but now it is too late in my honest opinion. The swings, disruption, and ripple effects (let alone second and third order effects) have already impacted Germany and the world in ways that it will take weeks, if not months to piece it together.
As I said a few weeks ago, everybody would come back to gas and coal, and now you can expect further constrains in the supply of coal.
Indonesia’s Coal Miners Are Bracing for New Export Curbs
Mining group sees potential disruption on domestic needs
Coal prices are surging as consumers shun Russia supplies
Coal miners in Indonesia, the top shipper, are preparing for potential new curbs on exports, a move that would add pressure to prices already at record highs.
New restrictions on overseas sales are possible in either April or August -- when mine output is typically lower -- to make sure local power plants have sufficient supply, according to Pandu Sjahrir, chairman of the Indonesian Coal Mining Association.
China, India, Japan and South Korea are usually the main importers of Indonesian Coal, one of the world's biggest producers. If there is a new export curb, it will affect both India, which is already facing enormous pressure, and China, and we will have a repeat of cascade effect in chinese factories affecting the entire supply chain, and manufacturing, which in turn feeds into everything else.
This surely feels like contagion towards cascade failure….
China urges state refiners to halt April fuel exports, sources say
Beijing has told Chinese state refiners to consider suspending exports of gasoline and diesel in April as the Ukraine war heightens concern of shortages, three sources with knowledge of the matter said on Wednesday.
Asian supplies have also been reduced by outages because of the refinery maintenance season and action by the Chinese government earlier in the year to prevent excessive production.
China reduced refined fuel exports by a third in the first two months of the year after Beijing in January cut export quotas to discourage plants from over-processing.
If you read all my precious posts, and the news above, the move is pretty obvious which… put further constrains into the system, China main importers for gasoline and diesel are Pakistan, Bangladesh, and Indonesia (in 2021). What happens when you don’t give me the coal I need to keep my economy going ? I keep my oil. And everything else for that matter.
Japan wholesale prices rise at record annual pace as fuel soars
9.3% jump in February shows inflation predates Russia's war on Ukraine
Japan's wholesale inflation accelerated in February at the fastest annual pace in roughly four decades on rising fuel costs, a sign inflationary pressures were building up even before the Ukraine crisis triggered a broad-based surge in commodity prices.
Japan was already fighting inflationary trends long before current market disruptions, but now it find itself where every other country in the planet will sooner rather than later. There is nothing much to add for you, reader, this is a marker to write down, a simple common sense analysis will tell you what is about to happen.
Inflation will be with us for a while, if by a miracle doesn’t get severely worse.
Oil Shock Hits Plastics in First Sign of Demand Destruction
Asian plants are slashing run rates as feedstock costs rise
Around 15% of Asian naphtha imports from Russia and nearby
Stratospheric oil prices are flowing through into the plastics industry with producers reducing activity as profit margins collapse, a first sign of the demand destruction that may spread to other sectors.
Several Asian operators of plants that make the petrochemicals used as the building blocks for everything from children’s toys to car interiors have cut processing rates to as low as 80%, said five traders at these companies. The facilities, known as crackers, typically run at or near full capacity.
Now we will be faced with a shortage of plastics, that are essential to most manufacturing and business, without plastic, life will feel absurdly different.
Now, here is a little gift for the reader. There is something in modern linguistic, called Natural Language Processing, using computers to understand language, its use. A subfield, or father depending on who you ask, of this is Predictive Linguistic.
It is using language, some form of algorithmic analysis, among others, to forecast large scale events. It is not precise, but it is a very powerful tool (it can be precise with a lot of investment, and refining and research).
Try writing down, or keep in your mind how often you’ve seen demand destruction being mentioned here, or in social media/sites.
Russia bans exports of wide range of equipment amid Western sanctions
Country bans export of more than 200 items, including telecom, agricultural, medical, electrical and tech equipment
Russia to suspend grain exports to Eurasian Economic Union until Aug 31
Sanctioned Russian nickel could slow global EV adoption
Sanctioning Russian nickel will slow the adoption of electric vehicles (EVs) and hinder the decarbonization of Western economies, according to a new report from GlobalData.
The result – such actions will simply mean Western countries will be more reliant on Russian oil and gas for longer,” the analysts argue.
According to GlobalData’s Mining Commodity Analyzer, Russia was the third-largest nickel producer in 2021, producing over 200,000 tonnes. As nickel is used in the production of EV batteries, any sanctions placed on Russian nickel will cause EV manufacturing prices to increase further, threatening adoption and decarbonization.
“Geopolitical issues such as the Russia-Ukraine situation disturb the fine balance of battery metal supply chains. A skyrocketing nickel price would have major repercussions on countries’ climate ambitions worldwide and will ultimately hamper the adoption of EVs,” said the group’s thematic research team analyst, Daniel Clarke, in a press statement.
We will get into the grain disaster further down, but anyone who reads this Substack, or have common sense still intact, knew that Russia would respond in kind, in fact, they already have been doing such things, alongside China before, but now they don’t need excuses, and can do it in a broader sense.
What makes me scratch my head is the third article, of which I was aware. Western elites, are quite literally, ostracizing poor and middle class people to use green tech, they are still pushing the elite grift, formally known as ESG. Yet, their geopolitical decisions in regard to Russia are literally hindering the progress to a green future.
In fact, and I argued about it before, the last 2 years, in a very chaotic way, feels like it is disrupting the entire agenda of elites and WEF/Atlantic Council types, while benefiting Eastern alliances. Perhaps it is just the conspiracy minded part of me, reading too much into it…
Chile a step closer to nationalizing copper and lithium
Chile’s constituent assembly, in charge of writing the country’s new Constitution, approved on Saturday an early-stage proposal that opens the door to nationalizing some of the world’s biggest copper and lithium mines.
The motion by the environmental committee, which gathered over the weekend for the first time since its creation as a deadline to wrap up proposals looms, received 13 votes in favour with three against and three abstentions.
The proposal, targeting mostly large-scale mining of copper, lithium and gold has yet to be approved by two thirds of the full assembly to become part of Chile’s new charter, which will be put to a national referendum later this year.
Oh… You mean the Western elites possible source of the materials they need to further their agenda could be nationalized ? What a shame, and in no way, shape, or form, an angle of hybrid warfare by non-state or state actors.
Now we go back into the grain pain. I said countries would either find a excuse, or outright just horde whatever they need to keep civil society functioning. Resource Nationalism, everywhere.
Bulgaria to bolster up its wheat reserves, producers fear export ban
Bulgaria plans to beef up its grain reserves and buy enough grain from local producers to ensure domestic needs for a year ahead as it weighs in risks from Russia’s invasion of Ukraine and volatility of grain markets, its deputy premier said.
Grain producers in the Black Sea country said the state plans to buy about 1.5 million tonnes of wheat out of 3 million tonnes that are still in the country’s silos and might restrict wheat exports until it has carried out the planned purchases.
Serbia to ban exports of vegetable oil, wheat, maize, flour
War in Ukraine: Crisis is unleashing 'hell on earth' for food prices
The head of the World Food Programme, David Beasley, has warned the conflict in Ukraine could send global food prices soaring, with a catastrophic impact on the world's poorest.
My biggest worry is the tweet above by Man_Integrated (a very solid follow when it comes to logistics, and possible, tangible solutions). If this happens (and I believe it will, either now or in a few days), this has disastrous, systemic effects and implications.
The world already suffers from a precarious protein security, with both avian flu, which keeps spreading and getting worse and countries can’t stop it, and African Swine Fever, which now has plenty of wild reservoirs, and a human helping hand here, and there.
Lack of any of these substances will severely impact animal raising and protein production, protein of lower quality, and more animal loss. In that tweet you can find who produces most of the world amino acids and vitamins (China, the answer for almost anything is always China…).
FBI: Ransomware gang breached 52 US critical infrastructure orgs
The US Federal Bureau of Investigation (FBI) says the Ragnar Locker ransomware gang has breached the networks of at least 52 organizations from multiple US critical infrastructure sectors.
"RagnarLocker ransomware actors work as part of a ransomware family, frequently changing obfuscation techniques to avoid detection and prevention."
China-aligned APT renews cyberattack on European diplomats, as war rages
As Russia's war on Ukraine intensifies, China-aligned threat actor TA416 has been detected ramping up its cyberattack campaign against European diplomats.
Proofpoint cybersecurity researchers have identified ramped-up activities by China-aligned APT (advanced persistent threat) actor TA416, targeting European diplomatic entities as the war between Russia and Ukraine intensifies.
TA416 (aka RedDelta ) is known to have been targeting Europe for several years using web bugs to profile target accounts, according to a research report by Proofpoint.
Also known as tracking pixels, web bugs hyperlink a malicious object within the body of an email which, when activated, attempts to retrieve a benign image file from the hacker server. This provides a "sign of life" confirmation to the bad actor establishing that the target account is valid and inclined to open malicious emails with social engineering content.
"The use of the web bug reconnaissance technique suggests TA416 is being more discerning about which targets the group chooses to deliver malware payloads. Historically, the group primarily delivered web bug URLs alongside malware URLs to confirm receipt. In 2022, the group started to first profile users and then deliver malware URLs," a researcher at Proofpoint said in a press statement.
Hybrid war, is also Cyber war. You can inflict many types of damage by using cyber war, psychological, infrastructural, and even physical.
That Ragnar Locker news cought my eye, because of the scope of it, after learning and reading about Daxin (Chinese linked cyber weapon, you can read about it in this post), this is also quite alarming, and from a sophistictated group.
As expected, give the current state of world affairs, and all eyes in the Ukraine conflict, efficient cyber attacks with big scope or high value targets would increase. In a matter of weeks, high level threats from China were uncovered.
I can only imagine, after Red Attack and Daxin, how many others, and worse threats the Chinese have in stock.
Flipping Wrong Switch and Not Hackers Caused Outage in Taiwan
Report finds poor communication to blame for power failure
Key semiconductor hub suffered regional blackouts last week
Flawed design and poor communication -- including an operator’s decision to flip a switch marked “Do Not Operate” -- were the main causes of an island-wide power outage in Taiwan last week, according to a government investigation.
A failure at the Hsinta coal-fired power plant in Kaohsiung last Thursday led to blackouts across multiple regions, including the capital Taipei and parts of the chip-making hub of Hsinchu.
Humans will always be the singlest, easiest point of failure in any system, and easily exploitable. This is even worse than I previously thought, if I was Taiwanese I would sleep better if this was a cyber attack.
Rather, this just signaled to the Chinese, inserting a few operatives in specific nodes of a complex system, and they can blackout the entire country, disrupt parts of it, or blackout the entire coast.
I often wonder if bad design is mad on purpose.
And as I outlined in the previous post, we are step by step, at some level, mimicking The Year Without a Summer, or 536, known informally as The Worst Year to be Alive. I recommend you to read the entire Wikipedia article, specially the possible explanations section.
Wouldn’t it make more sense if there wasn’t a unique, sole explation, but all of those contributed to the follwing years, and the volcanic winter ?
In the past few days, these came to pass. The eruption, or magma isn’t the concern, it is the SO2 particles being put in the air.
Explosive activity continues. Volcanic Ash Advisory Center (VAAC) Washington warned about a volcanic ash plume that rose up to estimated 15000 ft (4600 m) altitude or flight level 150 .
Nevado del Ruiz Volcano Volcanic Ash Advisory: ONGOING VA EMS to 19000 ft (5800 m)
Explosive activity continues. Volcanic Ash Advisory Center (VAAC) Washington warned about a volcanic ash plume that rose up to estimated 19000 ft (5800 m) altitude or flight level 190 .
Intense explosions from four vents at Stromboli volcano, Italy
High-level eruption at Manam volcano, ash to 15 km (50 000 feet) a.s.l., P.N.G.
Several eruptions took place at Manam volcano, Papua New Guinea on March 8 and 9, 2022. The largest sent volcanic ash up to 15.2 km (50 000 feet) above sea level, drifting W and toward the main island.
I will insisit, while there are numerous events for you to pay attention, that we are living to a repeat of history, in regards to a volcanic winter, which in the current circumtances will be catastrophic, every time manking went through one, it was.
But this time we have to many people. And this entire post lead me to repeat myself, word for word.
I said this publicly on Twitter, but I will repeat here to the reader. If you were planning to buy any sort of eletronic device, either for work, or pleasure, I would do it RIGHT NOW. Don’t think about it, don’t try to find reasons not too.
The amount of disruptions and cascade effects from the last 10 days are, quite literally, beyong mathematical odds, we left the realm of what is logical. The price, and supply of eletronic devices will increase, and you have other things to worry about (food, fuel, electricity).
If you own or work for a company, you should read all the posts linked, and write down, on paper, the points that popped on your mind and hedge accordingly to the best of your ability, or financial reach. Big companies can weather some of this, but not all, and it will affect everything.
I would keep a extremely close eye on your suppliers, and go back to how much clients have been buying/using your services. Start trying to think ahead using these posts as a start for a road map.
This post is long, and complex enough, as it is, specially if you go read all the other parts, and attempt to absorb the whole picture, on the next one I will touch in a shortage few are talking about, and it is more important than the lack of raw materials.
If the follwing addnedum, given the current new information we now have, I still mantin you should buy whatever you need to work, or for pleasure, you should buy as soon as possible, inflation won’t leave us anytime soon, the proccress from normal goods, until luxuty goods getting out of reach for many, with low supply and high prices, will come to pass.
The second point are tools, I din’t touch on this topic in all the parts of this series, but there is a growing (and by my observations, from now on exponentially) shortage of tools, repair tools, all type of tools. If you need those to work, or “just in case”, make a list, and buy them NOW.
If able, and specially if not to buy the expensive “stuff” , you should stock some non-perishable food. You still have a few goods weeks in my opinion before the prices start to raise at such a level, and supply dwindle on a perceptible mamneter, that it will trigger normal people into “hording”.
If you enjoy or take value from my independent, interdisciplinary analysis, consider becoming a free or paying subscriber, my work and autism is fully support by you. Sharing also helps me tremendously. Appreciate all supporters.
Beyond Mathematical Odds VII - The year without everything
Thanks for the heads up!
I have been working off the "100 things to disappear in an economic collapse" since April 2020.
With two weeks left... Shelf stable food (corn meal, wheat berries and small grain mill, dry beans, rice, sauces, syrups, olive oil, dry pasta, spices, canned meat) ** bulk is still fairly inexpensive ** food safe buckets with gamma lids ** garden seeds, garden soil, peat moss, pearlite and utility/tools including drip lines and grow lights ** Portable solar to run a small refrigerator and charge batteries (Goal Zero or DIY mobile-solarpower.com). 5 Gal Reliant Water Containers, DIY Rain barrel, 2- 32 Gallon trashcans with spigots, bulkhead fittings and extra hoses for overflow, concrete blocks for rain barrel stands. 20 lb. propane containers, 10 ft adapter hose and Portable Indoor 4000/9000 watt heater. Hot plate or skillet. Foam Ice chest, ice maker and DC fan for DIY AC. 3-6mil plastic sheeting 10x25' and double sided tape for insulating windows. Fasteners, plant stakes and cages, twine, 1" wood for cold frames & drying racks. KI pills, Hacksaw and Decorative Gasmask for Fast Eddy. God speed!
In Hungary 2 days ago the biggest fertiliser producer (nitrogénművek zrt) shut down operation.
They supply 60% of the Hungarian market...