China in the Shadows

[jk]

Re: China in the Shadows

as i recall, dalio's "beautiful deleveraging" was no fun.

[GRG55]

Re: China in the Shadows

as i recall, dalio's "beautiful deleveraging" was no fun.

Hangovers rarely are. :-)

[touchring]

Re: China in the Shadows

This is one of most complete photo of the blast site that I've seen. It's amazing to see so many apartments just next to the blast site and occupied with residents when it is 30 miles from Tianjin city and in the middle of an industrial zone.

Is there no better place to live in? What about those ghost cities?

[Chris Coles]

Re: China in the Shadows

This is one of most complete photo of the blast site that I've seen. It's amazing to see so many apartments just next to the blast site and occupied with residents when it is 30 miles from Tianjin city and in the middle of an industrial zone.

Is there no better place to live in? What about those ghost cities?

First thought; a scrap merchants wet dream

Second; with regard to the mass of local housing - where else do you house your local workers?

Third; what the devil are they using such massive quantities of calcium carbide for? As soon as written, the question answers itself; all that iron ore based industry needing cutting and welding materials. But why import it? Again, do they not have any chalk in China?

[Chris Coles]

Re: China in the Shadows

Yes, the Japanese bubble was much smaller than the one that Beijing has engineered. So were the US centric bubbles created in the past 20 years that EJ has written about so extensively (tech, telecom, real estate).

The Chinese have created and dispensed credit through the government owned banks to government owned companies on a scale that dwarfs anything we have seen before (recall Jim Chanos' quip about "Dubai times 1000"). That sponsored a rather large influx of foreign direct investment (no small amount of it from the large Chinese diaspora abroad) which in turn spawned a rather significant shadow credit system (to work around the fact that so much of the economy is controlled by SOEs).

China's outsize growth rates were the result of outsized credit creation and misallocation of capital on a scale that has been both breathtaking and entertaining to witness. That was the point of this thread which was started more than 5 years ago.

Significant amounts of the credit dispensed to SOEs went abroad, with Beijing's official blessing, to buy low grade assets at outrageous prices (the poorest of Canadian oil sands companies for example) and to be re-lent to perpetually bankrupt EM governments (hello BRI*S) ostensibly to construct supply chains for the raw materials needed to build more empty cities in China.

At some point there has to be a deleveraging. Having skillfully engineered bubbles in virtually everything, the question is whether Chinese officials can engineer what Ray Dalios describes as a "beautiful deleveraging". Or will it be something else?

The size of the population would seem to have little to do with any of this. A nation of a Billion consumers isn't worth much when very large percentages of them remain dirt poor. Ask VW, BMW, Unilever, et al how their rush into China's Billion consumer market is working out these days.

The underlying problem is the air pollution. Which in turn creates vast areas of stagnant air mass with no convection. No convection means no rain clouds. No rain means no food crops.

The sudden stop will be caused by a lack of sufficient food to feed the nation.

[touchring]

Re: China in the Shadows

The size of the population would seem to have little to do with any of this. A nation of a Billion consumers isn't worth much when very large percentages of them remain dirt poor. Ask VW, BMW, Unilever, et al how their rush into China's Billion consumer market is working out these days.

Sounds pretty much like India. But depending on the product sold, a billion poor consumers remains a sizable market. A typical American millionaire doesn't spend a lot more on toothpaste as compared to a factory worker in China or a programmer in India.

[astonas]

Re: China in the Shadows

Third; what the devil are they using such massive quantities of calcium carbide for? As soon as written, the question answers itself; all that iron ore based industry needing cutting and welding materials. But why import it? Again, do they not have any chalk in China?

Calcium carbide is not made from chalk (calcium carbonate) but from lime, usually quicklime (calcium oxide).

Calcium carbide is produced industrially in an electric arc furnace from a mixture of lime and coke at approximately 2000 °C. This method has not changed since its invention in 1892:

CaO + 3 C → CaC₂ + CO

The high temperature required for this reaction is not practically achievable by traditional combustion, so the reaction is performed in an electric arc furnace with graphite electrodes.

Unlike comparatively boring calcium carbonate, calcium carbide is always extremely explosive (fire hazard rating 4/4) since it contains a barely-stabilized carbon triple bond. Adding water to form acetylene barely affects the flash point (305 C vs 300 C).

This wasn't a non-explosive material that reacted to become explosive when firefighters came in spraying water. It was a huge store of highly explosive material, that was insufficiently protected. Water would still be a big mistake when fighting a fire, since acetylene gas would allow the fire to spread far more quickly. But even without that, this was a huge bomb just waiting for a spark.

[GRG55]

Re: China in the Shadows

Sounds pretty much like India. But depending on the product sold, a billion poor consumers remains a sizable market. A typical American millionaire doesn't spend a lot more on toothpaste as compared to a factory worker in China or a programmer in India.

As a %'age of income the American millionaire probably spends much less. On an absolute price basis he/she is undoubtedly spending considerably more.

The last time I was in India for an extended period I made a habit of going down to the bazaar every morning. For the equivalent of 35 Canadian cents the local barber would start with a hot towel, followed by hand mixed lather, a shave with a straight razor, a second lather and straight razor, and a splash of aftershave lotion to finish. Sometimes I wonder if we perpetually short of time North Americans really know how to live...

[touchring]

Re: China in the Shadows

Calcium carbide is not made from chalk (calcium carbonate) but from lime, usually quicklime (calcium oxide).

Unlike comparatively boring calcium carbonate, calcium carbide is always extremely explosive (fire hazard rating 4/4) since it contains a barely-stabilized carbon triple bond. Adding water to form acetylene barely affects the flash point (305 C vs 300 C).

This wasn't a non-explosive material that reacted to become explosive when firefighters came in spraying water. It was a huge store of highly explosive material, that was insufficiently protected. Water would still be a big mistake when fighting a fire, since acetylene gas would allow the fire to spread far more quickly. But even without that, this was a huge bomb just waiting for a spark.

To be honest, I would have made the same mistake, I've never known that mixing water with another substance can cause an explosion! Who would have known that unless he or she is a chemist.

[touchring]

Re: China in the Shadows

As a %'age of income the American millionaire probably spends much less. On an absolute price basis he/she is undoubtedly spending considerably more.

The last time I was in India for an extended period I made a habit of going down to the bazaar every morning. For the equivalent of 35 Canadian cents the local barber would start with a hot towel, followed by hand mixed lather, a shave with a straight razor, a second lather and straight razor, and a splash of aftershave lotion to finish. Sometimes I wonder if we perpetually short of time North Americans really know how to live...

It has been a long time since I've been to India, but I think China and India can complement each other very well from an economic point of view. China does manufacturing and infrastructure very well while India is good at services.

Actually, this has already been done at a smaller scale if you think of Singapore as mini-China outside China, there's a huge Indian expatriate community of 300,000 professionals here employed in IT and banking.

[Chris Coles]

Re: China in the Shadows

Calcium carbide is not made from chalk (calcium carbonate) but from lime, usually quicklime (calcium oxide).

Having lived for most of my life over thick layers of chalk, (right now over ~ 300 metres of it here in East Hampshire), I opened with the raw material; chalk, as it is always, certainly here; the precursor to the production of lime. As chalk is so much easier to work with, being soft and easily crushed to a powder, I automatically assumed that chalk would be the first stage raw material to use for the production of calcium carbide. Regardless, whatever you use it still has to be crushed to a powder and burnt, so the question remains, does China have any chalk deposits?

The rocks and minerals from which these materials are derived, typically limestone or chalk, are composed primarily of calcium carbonate. They may be cut, crushed or pulverized and chemically altered. "Burning" (calcination) converts them into the highly caustic material quicklime (calcium oxide, CaO) and, through subsequent addition of water, into the less caustic (but still strongly alkaline) slaked lime or hydrated lime (calcium hydroxide, Ca(OH)₂), the process of which is called slaking of lime.

https://en.m.wikipedia.org/wiki/Lime_%28mineral%29

So the next question is: Quicklime or Slaked? From your formula above it is quicklime, so all one would need to do is feed chalk into the system, leave the vent open until the water, sorry H2O, is expelled and then close the system to produce Calcium Carbide.

As a child 1940's - 50's, everyone was familiar with calcium carbide as it was used on older cars to provide vehicle lighting with a small flame kept going by a simple water drip mechanism. https://en.wikipedia.org/wiki/Carbide_lamp

[thriftyandboringinohio]

Re: China in the Shadows

...This wasn't a non-explosive material that reacted to become explosive when firefighters came in spraying water. It was a huge store of highly explosive material, that was insufficiently protected....this was a huge bomb just waiting for a spark.

The video strikes me that way too, astonas. I see:

1. a fire burning steady
2. a smaller primary explosion
3. a brief delay of 1 or 2 seconds
4. The huge secondary main explosion.

Whatever blew up in step 4 went all at once with high energy. Perhaps a BLEVE from propane or LNG.

[ProdigyofZen]

Re: China in the Shadows

I have been writing since the beginning of 2013 that when the Fed began to end QE and subsequently begin a tightening cycle by raising rates it would cause international capital flow to reverse out of emerging market economies.

This is now being accelerated with 1) the collapse in oil prices, 2) China demand crash and possible economic crash and 3) Fed tightening off of zero as they do not wish to be at zero in the next crisis.

It looks like the Fed smells a crisis coming, will be forced to raise rates to at least 1% during the next year so they can quickly lower rates to ZIRP and enact another QE as the global economy crashes due to China.

Or a second scenario, everything happens faster than they anticipate and they are forced to enact QE before they have the ability to raise rates.

[astonas]

Re: China in the Shadows

Having lived for most of my life over thick layers of chalk, (right now over ~ 300 metres of it here in East Hampshire), I opened with the raw material; chalk, as it is always, certainly here; the precursor to the production of lime. As chalk is so much easier to work with, being soft and easily crushed to a powder, I automatically assumed that chalk would be the first stage raw material to use for the production of calcium carbide. Regardless, whatever you use it still has to be crushed to a powder and burnt, so the question remains, does China have any chalk deposits?

The ease of crushing rock is not really a significant determinant of desirability of precursor, compared to purity. That's why most lime (>90%) comes from limestone, not chalk. The UK, which has relatively little high-quality calcium carbonate rock compared to larger low-quality reserves, has to resort to using the lower-purity chalks because the purification costs get weighed against the cost of shipping very heavy and inexpensive stones very long distances. Even there, chalk makes up a minority of lime production. In general, one wouldn't choose to use chalk if one didn't have to. Most of the world doesn't, preferring to exclusively use limestone.

China doesn't need to resort to chalk to get lime. It has plenty of actual limestone:

China is one of the limestone ore resource-rich countries in the world. Besides Shanghai, Hong Kong, Macao, in various provinces, municipalities directly under the central government and autonomous regions have distribution. According to the original center of national building geological statistics, the distribution of limestone area of 438000 KM2 (not including Tibet and Taiwan), about 1/20 of the land area

So the next question is: Quicklime or Slaked? From your formula above it is quicklime, so all one would need to do is feed chalk into the system, leave the vent open until the water, sorry H2O, is expelled and then close the system to produce Calcium Carbide.

Unfortunately it's not quite so simple. The suggested process of just taking a lime kiln, drying, and closing it, wouldn't produce calcium carbide at all. It not only leaves out the coke, but it ignores the rather extreme heat requirements.

A Lime kiln runs at only ~1000 °C, and usually less. Simply adding coke to a dry batch and closing it wouldn't do anything but contaminate your quicklime. The calcium carbide synthesis reaction requires ~2000 °C. That's exactly why you need the considerable extra expense of an electric arc furnace in the first place. As I cited earlier:

Calcium carbide is produced industrially in an electric arc furnace from a mixture of lime and coke at approximately 2000 °C. This method has not changed since its invention in 1892:

CaO + 3 C → CaC₂ + CO

The high temperature required for this reaction is not practically achievable by traditional combustion, so the reaction is performed in an electric arc furnace with graphite electrodes.

This means that the production of Calcium Carbide can't just piggyback off a furnace that is used for general-purpose processing limestone (or chalk) into cement.

This is not accidental, but essential. The crucial carbon-carbon triple-bond contains tremendous energy, and cheap/easy/accidental processes can't overcome the activation energy required to form it. You can't "accidentally" form acetylene from something that doesn't already contain a carbon-carbon triple bond. Making that bond is very hard indeed, and requires controlled conditions, as well as very high temperatures, beyond mere combustion ranges.


This brings me back to my original point, why I first posted here:

I posted because I was concerned with the attempt to spin improper firefighting techniques as the cause of the explosion. That narrative requires that these methods turned something comparatively inert into something that was explosive.

I was responding to the breathless narratives I had seen floating in the media, many of which looked like this one:

Initial reports described a car on fire. But the 60 or so men who first arrived at the scene — contract firefighters employed by the Tianjin Port Group, many of them as young as 17 — confronted a blaze that had spread to metal shipping containers stored nearby. The firefighters aimed their hoses at the flames and turned on the water.

That turned out to be a deadly mistake.

Roughly 15 minutes later, an explosion — fueled by a collection of volatile chemicals that emit a combustible gas when wet — ripped through the warehouse. Yang Kekai, 27, was thrown to the ground as flaming debris rained down. Another blast, seconds later, sent him hurtling more than three yards. “When I was flying through the air, my heart skipped a beat and I thought I was finished,” Mr. Yang said later from a hospital bed.

http://www.nytimes.com/2015/08/18/wo...chemicals.html

It's a dramatic story, but it implies that if the fire had reached the chemical stockpile, but no water had previously been added, an explosion might have been avoided. My point was that this was not the case, since the flashpoints of acetylene and calcium carbide are both around 300 C.

That means that what was stored there (calcium carbide) was extremely explosive to begin with. Poor firefighting simply wasn't the main issue, though it might have allowed the inevitable explosion to happen earlier than otherwise. The main problem was that a highly explosive substance had been stored improperly due to safety shortcuts. No doubt this is precisely the narrative that Chinese officials would rather not see, and the emphasis on the firefighting techniques should probably be interpreted as a smokescreen. It's just a way to push blame down to the most local, front-line, officials possible. The fact that they died and so can't defend themselves makes this especially convenient, but also particularly craven.

Properly analyzed, this one is not a simple matter of inexperienced firefighters not knowing what they were doing. That was at most a contributing factor to an already extremely dangerous situation, which was caused by loose regulatory oversight of stored chemicals.

[astonas]

Re: China in the Shadows

To be honest, I would have made the same mistake, I've never known that mixing water with another substance can cause an explosion! Who would have known that unless he or she is a chemist.

Perhaps, but I presume you aren't a firefighter.

Any firefighter would get training (pretty much on day 1) in fighting the various types of fires. Even just buying the right fire extinguisher requires knowing which class of fire you are likely to fight.

Similarly (at least in the states) any site that stores even relatively small amounts of such substances would need to know and post the fire classification for anything it stores.

This is exactly the sort of OSHA regulation that appears to be sidestepped/dodged routinely in China, and it is a systemic, not a local, problem.

In the US, any place storing Calcium Carbide would have to hang this shield where firefighters would see it:NFPA_704.svg.png a 4 in the upper (red) section would have indicated extremely explosive materials, a W with a line through it in the bottom section would have warned not to use water.

If proper regulations are in place and enforced, the firefighter wouldn't NEED to be a chemist to know what to do, and what not to. They'd look at the sign, and it would tell them: No water here, use a different technique.

I know people like to gripe about regulations strangling growth. But explosions like this one are the perfect example of why we need them, even if it does slightly increase business friction. Disasters like these are 100% preventable, but only with appropriate regulations.