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Do you have any citations explaining this in more detail, perhaps with some argument supporting intent or collaboration? I ask because it directly conflicts wit

by saulrh 6y ago

Do you have any citations explaining this in more detail, perhaps with some argument supporting intent or collaboration? I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To whit: The chemical engineering department at my university was full of extremely bright people working on incredibly complex machinery and wacky fluid-dynamics tricks to eke out an additional tenth of a percent yield or purity in basic chemical processes. I presume that this could only be even faintly economical if the industry is so competitive that minuscule improvements are a major advantage. Similarly, my understanding is that putting together and running a chemical operation is an astonishingly complex and expensive proposition. Like, I wouldn't be surprised if the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. I know for a fact that it takes decades for new chemical plants to come online, which makes the supply extremely inflexible; I'd be more surprised if new sources of demand didn't cause prices to explode.

baybal2 6y ago
> Do you have any citations explaining this in more detail, perhaps with some argument supporting intent or collaboration? I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To whit: I do not, but I mingled a lot with EV engineers from BYD, with some of whom I used to spend Fridays. > the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. The cost of benzene is 50% and more tax in most Western countries. > The chemical engineering department at my university was full of extremely bright people working on incredibly complex machinery Indeed it is, but there are far more harder to synthesize, and work with chemicals sold at single digit margins, largely thanks to Chinese factories steamrolling chem monopolies for the last 2 decades. And battery materials are by far not that tricky to make.
thaumasiotes 6y ago
> I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To w[]it: > I wouldn't be surprised if the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. > I know for a fact that it takes decades for new chemical plants to come online, which makes the supply extremely inflexible; I'd be more surprised if new sources of demand didn't cause prices to explode. I don't understand how you think this conflicts with the parent comment. You seem to be in near-total agreement. Compare: >> The raw material cost of metals used even in the biggest batteries around is at maximum $1k-$1.5k, and usually just few hundred bucks. >> What makes it expensive is the big chem, and it's stranglehold on processing them into cathode, and anode materials. >> Plain graphite, while also being dominated by an oligopoly, still only costs $1 per kg, but the moment it becomes an industrial chemical, its price shoots n-fold. >> Lithium is by far not the cost factor at all, with the amount used, and no scarcity prospect is in sight, despite speculations of the stock market lemmings, but the moment it is put into some chemical relevant to battery making, it too shoots up in price n-fold. >> Cobalt was one of few things which really used to be pricey, but not much now. The cost was approaching $200 per kg at the top of the Cobalt bubble, but then it felt to $20, and below. And again, the moment it becomes a cathode material, it costs 10*n-times as much.
- saulrh 6y ago
  The parent comment claimed that prices of finished products were higher than the costs of raw materials because a "big chem" cartel has a price-fixing agreement. I disagree with this. My knowledge of the field and personal observations imply an extremely competitive market (-> viability of expensive R&D for small improvements) and a field whose basic engineering problems (-> near-zero price elasticity) would naturally yield the observed prices (-> extreme variation when new demand is found). Both of these argue against widespread anticompetitive behavior.

by saulrh 6y ago

baybal2 6y ago

> Do you have any citations explaining this in more detail, perhaps with some argument supporting intent or collaboration? I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To whit: I do not, but I mingled a lot with EV engineers from BYD, with some of whom I used to spend Fridays. > the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. The cost of benzene is 50% and more tax in most Western countries. > The chemical engineering department at my university was full of extremely bright people working on incredibly complex machinery Indeed it is, but there are far more harder to synthesize, and work with chemicals sold at single digit margins, largely thanks to Chinese factories steamrolling chem monopolies for the last 2 decades. And battery materials are by far not that tricky to make.

thaumasiotes 6y ago

> I ask because it directly conflicts with everything I've seen about the economics arising from the fundamental physics of chemical engineering. To w[]it: > I wouldn't be surprised if the cost of using a tanker full of benzene is 5% the benzene itself and 95% safety measures, regulatory compliance, purpose-built equipment, and specially-trained employees. > I know for a fact that it takes decades for new chemical plants to come online, which makes the supply extremely inflexible; I'd be more surprised if new sources of demand didn't cause prices to explode. I don't understand how you think this conflicts with the parent comment. You seem to be in near-total agreement. Compare: >> The raw material cost of metals used even in the biggest batteries around is at maximum $1k-$1.5k, and usually just few hundred bucks. >> What makes it expensive is the big chem, and it's stranglehold on processing them into cathode, and anode materials. >> Plain graphite, while also being dominated by an oligopoly, still only costs $1 per kg, but the moment it becomes an industrial chemical, its price shoots n-fold. >> Lithium is by far not the cost factor at all, with the amount used, and no scarcity prospect is in sight, despite speculations of the stock market lemmings, but the moment it is put into some chemical relevant to battery making, it too shoots up in price n-fold. >> Cobalt was one of few things which really used to be pricey, but not much now. The cost was approaching $200 per kg at the top of the Cobalt bubble, but then it felt to $20, and below. And again, the moment it becomes a cathode material, it costs 10*n-times as much.

saulrh 6y ago
The parent comment claimed that prices of finished products were higher than the costs of raw materials because a "big chem" cartel has a price-fixing agreement. I disagree with this. My knowledge of the field and personal observations imply an extremely competitive market (-> viability of expensive R&D for small improvements) and a field whose basic engineering problems (-> near-zero price elasticity) would naturally yield the observed prices (-> extreme variation when new demand is found). Both of these argue against widespread anticompetitive behavior.