Economic implications of a SARS/Coronavirus outbreak

[Knobby22]

View attachment 135699

Energy & stuff.

Energy and goods.

 

[divs4ever]

My mrs is an accountant. She's been doing 70-80 hour weeks since the pandemic began.

(She's completely burnt out but different discussion).

well i invested in KPG a while back @ 88 cents and CUP which has been a roller-coaster ride over the last decade , but you can get where i was leading in the investing discussion , there should be room for growth in the better companies

but your Mrs , might need a holiday soon , because i can't see a big drop-off in workload in the foreseeable future

OR if she is a fair stock picker . finances analyst i could think of some other income streams ( legal ones , of course )

 

[over9k]

well i invested in KPG a while back @ 88 cents and CUP which has been a roller-coaster ride over the last decade , but you can get where i was leading in the investing discussion , there should be room for growth in the better companies

but your Mrs , might need a holiday soon , because i can't see a big drop-off in workload in the foreseeable future

OR if she is a fair stock picker . finances analyst i could think of some other income streams ( legal ones , of course )

Oh she's absolutely retarded financially. She's an accountant and thinks like one (basically just games the tax system). Her knowledge of economics and investing etc is literally non-existent. It's both stupefying and hilarious just how economically/investing illiterate she actually is. I give her endless grief about it all the time.

To be fair, she is a VERY good ACCOUNTANT, but only at accounting.

Simple example: Buys a 3 bed 2 bath house. Lives in it ON HER OWN for 12 months so she gets the first home buyer's grant (gotta live in it for a year before it's counted as personal place of residence) and a couple of other tax advantages that I can't remember off the top of my head. Doesn't realise that even adding the first home buyer's grant in she's still better off living in a 1 bedroom apartment walking distance from work and just renting the place she's bought out as she'll make way way more in the difference in rent and saved commute costs (not to mention the time) than the first home buyer's grant is worth. Stuff like that.

Like I said, both stupefying and hilarious. I was genuinely shocked when she told me told me about it. I mean she literally works with/manages clients' finances all day every day and was doing this. Just amazing.

Then try explaining taking these numbers she's costing herself and investing them with compound interest over 30 years or whatever... just forget it.

 

[over9k]

Energy and goods.

Burnout fuel & tyres

 

[divs4ever]

Oh she's absolutely retarded financially. She's an accountant and thinks like one (basically just games the tax system). Her knowledge of economics and investing etc is literally non-existent. It's both stupefying and hilarious just how economically/investing illiterate she actually is. I give her endless grief about it all the time.

To be fair, she is a VERY good ACCOUNTANT, but only at accounting.

Simple example: Buys a 3 bed 2 bath house. Lives in it ON HER OWN for 12 months so she gets the first home buyer's grant (gotta live in it for a year before it's counted as personal place of residence) and a couple of other tax advantages that I can't remember off the top of my head. Doesn't realise that even adding the first home buyer's grant in she's still better off living in a 1 bedroom apartment walking distance from work and just renting the place she's bought out as she'll make way way more in the difference in rent and saved commute costs (not to mention the time) than the first home buyer's grant is worth. Stuff like that.

Like I said, both stupefying and hilarious. I was genuinely shocked when she told me told me about it. I mean she literally works with/manages clients' finances all day every day and was doing this. Just amazing.

Then try explaining taking these numbers she's costing herself and investing them with compound interest over 30 years or whatever... just forget it.

there are a few pages on Investopedia she should read then , on DRP and the math in compounding

did she keep the 3 bed 2 bath house , or did she sell it later , maybe she intended low wear'n'tear and a cheap flip ( bad tenants can wreck a place and lower the area reputation )

but real estate is a quirky game , i knew a guy ( he's dead now ) built a block of single bedroom units , in an area then known for family homes , it turned out to be just in front of the curve and perfect for his investment needs ( that area now is awash with units , duplexes and town houses )

but before you give her too much grief remember the Storm Financial Crisis , and the plantation timber tax scams , tax minimization has always had a special allure to some

 

[over9k]

there are a few pages on Investopedia she should read then , on DRP and the math in compounding

did she keep the 3 bed 2 bath house , or did she sell it later , maybe she intended low wear'n'tear and a cheap flip ( bad tenants can wreck a place and lower the area reputation )

but real estate is a quirky game , i knew a guy ( he's dead now ) built a block of single bedroom units , in an area then known for family homes , it turned out to be just in front of the curve and perfect for his investment needs ( that area now is awash with units , duplexes and town houses )

but before you give her too much grief remember the Storm Financial Crisis , and the plantation timber tax scams , tax minimization has always had a special allure to some

Like I said, she's an excellent accountant (has made partner etc), just a complete potato with everything else.

We're actually a pretty formidable combo put together as we both know the side of things that the other doesn't. You know, combination being better than the sum of the parts & all that.

 

[over9k]

Anyway, back on topic:

PPI data in today, which unlike CPI was way worse than expected, so tech took it in the a$$.

As I've pointed out before, the CPI is only running below the PPI because wages have remained so suppressed. Should something set them off, it's armageddon.

 

[Smurf1976]

I remain convinced that one long term consequence of the pandemic is that we've seen the bottom for Australian manufacturing and there'll be a greater focus on it going forward.

I've posted that comment previously and I'm well aware it's a minority viewpoint but I see more evidence emerging.....

Nyrstar, the world's second largest zinc smelting company:

*Has cut production at the company's Budel (Netherlands) and Balen (Belgium) smelters by 50%.

*Has now placed the company's smelter at Auby (France) onto a care and maintenance basis. That is, production has ceased completely although it's not expected that the closure will be permanent (assuming power prices come down, see comment at end of post)

*Is proposing to invest $350 million upgrading the company's zinc smelter in Tasmania, presently the world's third largest zinc producer. This is additional to other upgrades in recent times. The project is now at the stage of obtaining development approvals - it's not simply an idea, it has gone beyond that and is now actively being progressed and has been publicly announced.

The Hobart operation at present produces ~250,000 tonnes of zinc and around 340,000 tonnes of sulphuric acid per annum with the new investment raising zinc production capacity to 300,000 tonnes or about 2.35% of world production.

So I think the corner has been turned. Go back some years and the Tasmanian plant was practically broke as a standalone operation but it seems to now be on a much firmer footing financially going forward with money being invested into the future.

Whilst it's not yet a goer and is less advanced than the Tasmanian project, the same company is actively investigating a $750 million development at its lead smelter in South Australia which, via product shipping in both directions, is operationally integrated with the Tasmanian plant producing zinc.

If it goes ahead then the SA project just happens to produce hydrogen as a convenient by-product for which there seems to be a growing market, noting that producing oxygen is a key objective as the smelting process needs that (versus most hydrogen production where the oxygen will be a waste by-product). The full project, if it goes ahead, needs about 440 MW of power to run it - that's a 28% increase in total consumption in SA averaged over 12 months so it's major in that regard, it'll become the largest electricity user in the state.

So zinc smelting, hydrogen and using lots of power. Sounds fine to me.

As for the situation in France, well from the company's announcement on that:

Power prices, already at historically high levels across Europe, have continued to rise in recent weeks in France, in excess of neighbouring European countries. This is as a result of low availability of nuclear power, high carbon-related costs passed on by power companies and reduced fixed-price allowances for industry. The price outlook for electricity prices in France in early 2022 indicates continued high prices and significant volatility.

Although they're working on the basis that prices will come down at some point and production can then resume.

Whilst that's all about one company, I've posted it in this thread since it's a foreign company not an ASX listed one and I do see the overall circumstances as being ultimately due to the great upheaval in world economics at present. My point's more about the shift in focus back toward making things in Australia, something I've been expecting since all this started, than this particular company which is just an example. An announcement to invest in a factory isn't something that's been common in Australia over the past few decades now.

There being a few other big industrials fishing around for bulk energy supply in Australia at the moment too....

PS - Almost 20 years ago I donated some work to the Tasmanian plant when they were pretty much stuffed financially and on the edge. Payment = well I've got a hat with the now defunct company name on it and a miniature zinc ingot..... So more than happy to see it's going well - doubt they'll send me a cheque now though.

 

[SirRumpole]

I remain convinced that one long term consequence of the pandemic is that we've seen the bottom for Australian manufacturing and there'll be a greater focus on it going forward.

I've posted that comment previously and I'm well aware it's a minority viewpoint but I see more evidence emerging.....

Nyrstar, the world's second largest zinc smelting company:

*Has cut production at the company's Budel (Netherlands) and Balen (Belgium) smelters by 50%.

*Has now placed the company's smelter at Auby (France) onto a care and maintenance basis. That is, production has ceased completely although it's not expected that the closure will be permanent (assuming power prices come down, see comment at end of post)

*Is proposing to invest $350 million upgrading the company's zinc smelter in Tasmania, presently the world's third largest zinc producer. This is additional to other upgrades in recent times. The project is now at the stage of obtaining development approvals - it's not simply an idea, it has gone beyond that and is now actively being progressed and has been publicly announced.

The Hobart operation at present produces ~250,000 tonnes of zinc and around 340,000 tonnes of sulphuric acid per annum with the new investment raising zinc production capacity to 300,000 tonnes or about 2.35% of world production.

So I think the corner has been turned. Go back some years and the Tasmanian plant was practically broke as a standalone operation but it seems to now be on a much firmer footing financially going forward with money being invested into the future.

Whilst it's not yet a goer and is less advanced than the Tasmanian project, the same company is actively investigating a $750 million development at its lead smelter in South Australia which, via product shipping in both directions, is operationally integrated with the Tasmanian plant producing zinc.

If it goes ahead then the SA project just happens to produce hydrogen as a convenient by-product for which there seems to be a growing market, noting that producing oxygen is a key objective as the smelting process needs that (versus most hydrogen production where the oxygen will be a waste by-product). The full project, if it goes ahead, needs about 440 MW of power to run it - that's a 28% increase in total consumption in SA averaged over 12 months so it's major in that regard, it'll become the largest electricity user in the state.

So zinc smelting, hydrogen and using lots of power. Sounds fine to me.

As for the situation in France, well from the company's announcement on that:



Although they're working on the basis that prices will come down at some point and production can then resume.

Whilst that's all about one company, I've posted it in this thread since it's a foreign company not an ASX listed one and I do see the overall circumstances as being ultimately due to the great upheaval in world economics at present. My point's more about the shift in focus back toward making things in Australia, something I've been expecting since all this started, than this particular company which is just an example. An announcement to invest in a factory isn't something that's been common in Australia over the past few decades now.

There being a few other big industrials fishing around for bulk energy supply in Australia at the moment too....

PS - Almost 20 years ago I donated some work to the Tasmanian plant when they were pretty much stuffed financially and on the edge. Payment = well I've got a hat with the now defunct company name on it and a miniature zinc ingot..... So more than happy to see it's going well - doubt they'll send me a cheque now though.

I hope you are right Smurf, fingers crossed for a government interested enough to give it a pathway to success.

 

[qldfrog]

I hope you are right Smurf, fingers crossed for a government interested enough to give it a pathway to success.

Yeap just hope you are right but 2 y after the start of the crisis,we have nationwide shortage of rat, our local Brisbane manufacturer is shipping these contractually to the state.while we import our rat by plane.. probably from china.workforce is decimated by covid measures..so gov med tape: we need a new colour to add to the red and green tapes..
A nice dream ...hope you are right.
The only explanation i can find of a company moving their production here from Europe is they expect a major fall in the AUD.or just incompetence due to lack of local knowledge.

 

[wayneL]

@Smurf1976 could power capacity be a limiting factor in that whole scenario?

 

[qldfrog]

@Smurf1976 could power capacity be a limiting factor in that whole scenario?

The way i see it, with hydro..water not H2, Tasmania has plenty of power can be stamped green and zip population so that is the good part..
but a site in Malaysia for example with Brunei oil and gas would make more sense imho but we are talking French Belgian company and Asia is unknown to them economically. could be just their next F.U.
As long as we get some bits and pieces and some Australians get work: all good..ohh and not costing us billions please

 

[Smurf1976]

@Smurf1976 could power capacity be a limiting factor in that whole scenario?

The only explanation i can find of a company moving their production here from Europe is they expect a major fall in the AUD.or just incompetence due to lack of local knowledge.

Energy's a big part of the reason.

Tasmania - annual output from wind + hydro presently matches consumption almost exactly but the state has an aim for 100% growth in output progressively by 2040. That's a "build it and they will come" economic strategy since there's no committed use for the energy, just an assumption that one will be found or worst case sell it to Victoria.

SA - highest use of wind and solar of any substantial grid in the world and the new project would of itself assist in increasing that from a technical perspective. There's some work to be done with transmission, storage etc but ultimately it's doable and the proposal is a staged development anyway so there's time available to get things done.

In both cases the state government is supportive of such industry as well.

Europe - energy price crisis going on right now has completely wrecked the economics of various manufacturing and processing operations, hence the shutdowns.

Noting that with energy it's not just about physical supply but price certainty. In both cases in Australia, fixed price contracts should be doable whereas they don't seem to have managed to achieve that in Europe. That bit's the key - the ability to get stability and certainty over a key input cost.

I'm not expecting that Australian manufacturing's going back to it's 1960's heyday but I do think we've probably seen the bottom. The pandemic etc has exposed the folly of relying totally on imports or on trade with a single country meanwhile for various reasons companies are looking to diversify their base of operations. If we're smart then Australia should be able to pick at least a few things up is my expectation. Noting that it'll be the states and private enterprise, not the federal government, that's key to driving that.

 

[wayneL]

For a bloody long time now, I've made two broad macro arguments as far as Australian manufacturing is concerned.

1/ buy off showing a manufacturing to China we are handing them economic (and therefore eventually military) hegemony on a silver platter.

2/ our only competitive advantage as far as cost inputs are concerned was cheap energy. It seems to me that our politicians and more particularly our bureaucrats are intent on on decimating that advantage, therefore destroying any and all advantages that we may have.

Perhaps in light of the discussion here, my second point could be argued.

But... That is still only valid in a low complexity economy and I think we ranked down about 95 or something like that at the moment.

We have no prospects in the higher complexity spectrum of manufacturing; 3 essentially p¹ssed that away about 20 or 30 years ago.

We have smart people here and we really need to find a way, in the macro sense, to stop fleeing to other jurisdictions that willingly play to their higher complexity thinking.

Otherwise we eventually end up as the sick man of Asia.

IMNTBCHO

 

[wayneL]

For a bloody long time now, I've made two broad macro arguments as far as Australian manufacturing is concerned.

1/ buy off showing a manufacturing to China we are handing them economic (and therefore eventually military) hegemony on a silver platter.

2/ our only competitive advantage as far as cost inputs are concerned was cheap energy. It seems to me that our politicians and more particularly our bureaucrats are intent on on decimating that advantage, therefore destroying any and all advantages that we may have.

Perhaps in light of the discussion here, my second point could be argued.

But... That is still only valid in a low complexity economy and I think we ranked down about 95 or something like that at the moment.

We have no prospects in the higher complexity spectrum of manufacturing; 3 essentially p¹ssed that away about 20 or 30 years ago.

We have smart people here and we really need to find a way, in the macro sense, to stop fleeing to other jurisdictions that willingly play to their higher complexity thinking.

Otherwise we eventually end up as the sick man of Asia.

IMNTBCHO

ETA... At the risk of sounding like a broken record, I absolutely hate autocorrect. I hope you all can figure out what I was saying. LOL

 

[over9k]

AU is the world's quarry. Supply of rocks, coal etc has actually remained pretty solid through the pandemic on account of the mines being naturally isolated in the middle of nowhere.

 

[over9k]

Dip buyers have emerged before all the futures change hands tomorrow, triple witching tomorrow as well I think but I'd have to go & check, not much else to report. Just the standard SNAFU.

 

[over9k]

Just one of many examples. For the technical guys, this is your buy point.

 

[wayneL]

Yep the main drivers of the market haven't really changed, not really. Just a few political prognostications and points of sentiment..

That of course could change pretty rapidly but I do think the mythical PPT will spring into action at any moment

 

[sptrawler]

Tourism and entertainment wont be the only ones feeling the pinch, due to covid. It will be hitting other sectors too.

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