Metals Trader Calls Venezuelan Plan On Prices Crazy

August 27, 2013


Reuters today had this piece about Venezuela’s new plan to get a “fair price” for its metals under Maduro’s new “Sovereign marketing Plan”. The plan is simple, nobody is going to come and set the prices for Venezuela. Nobody is going to come from abroad and set the price of what belongs to all Venezuelans. We want fair prices.

WE will set the price, you hear!

This is really revolutionary, Venezuela from now on will sell all of its metals well above international prices, using their own proprietary formula for what fair prices is.

Comments so far by traders:

“The government has no idea what it’s doing … They put up so many obstacles that clients are losing faith in Venezuela”

“This is crazy, it’s never going to work,” said a metals merchant based in the United States. “People are leaving Venezuelan minerals in the ports”

What’s next? Venezuela will only sell oil at US$ 200 per barrel?

Now, that would be truly revolutionary, no?

25 Responses to “Metals Trader Calls Venezuelan Plan On Prices Crazy”

  1. Its Really Feel nice to me when i land on this Page , since i am collecting info on this topic from long , as i search many other website for this but fail to get and you stand for me to provide this valuable info….thanks to Author for sharing this information.

  2. So are you still hanging on to those Venezuelan bonds? After this you’re still thinking the government understands its economic self-interest well enough to avoid doing something utterly crazy (like refuse to pay a bondholder it can afford to pay)?

  3. NorskeDiv Says:

    I’m guessing this will be a one way deal, too bad! There are a lot of farmers around here that would love Veneuela to start offering “fair” prices, 2000 per ton of rice sounds good.

  4. xp Says:

    Same old, same old.
    the central disagreement between economic ideologies can be viewed as a disagreement about how powerful the “invisible hand” is.
    It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest. (Book 1, Chapter 2) , etc etc Adam Smith

    >>> What’s next? Venezuela will only [babble hysterically &] sell oil at US$ 200 per barrel? because syria’s gassing its citizens? and warships will drive the oil up? Dream on.. dream on.

  5. Mike Says:

    No sense of perspective on anything. Venezuela and its 21st Century Socialism has become the center of the universe in their eyes and therefore rules over global basic economics. The fact is however that Chavismo is just an insignificant, yet somewhat annoying ankle biter with oil.

    Another example is their believe that with all the $ Billions of junk military equipment they bought from Russia, they are now ready to defend the country against an invasion by the US empire, never mind that it will never happen.
    It would take the US maybe a week to take out some basic infrastructure elements (e.g. Guri, major ports / airports, major highways etc.) and the country would come to a standstill.

    But such is Chavismo’s believe of ultimate wisdom possessing grandeur, although I am sure that there are many Chavistas who see through this “the emperor has no clothes” scam. But they will just shut up as long as corruption money is flowing their way.

    • Goose Says:

      Mike, I have a different opinion on military purchases. I doubt anyone in the know believes they can defend. Deter maybe. These purchases are for many reasons starting with the US embargo on arms and related since 2006. Once they where on the US shit list, it made little sense to buy European (Western). Case in point the Navantia missile boats. They somehow managed to buy four missile boats (aka corvettes/destroyers/frigates/patrol boats) with the combat management system computers and radars minus the Mark-41 Vertical Launch System (Mk 41 VLS). These four boats have a big hole where the VLS missile system is supposed to go. The total price for the 8 Navantia boats (four of which are missile boats) was 1.2 billion Euros of which 42 milion Euros was siphoned for commissions. Venezuela received 4 white elephants as these boats will never receive the VLS missile system because the US will not allow. The boats cannot be modified or retroffitted with Chinese or Russian missiles. The boats and the CMS are specifically designed around the Mk-41 VLS. Venezuela touts in Wikipedia and in it’s propaganda (Youtube) that these boats will have missiles fitted later… yeah right. The devil is in the details

    • Goose Says:

      the first russian purchases where choppers and combat jets. Gotta keep your flyboys happy. They believe that air power key to staying in power. Lessons from the past. The Sukhois have been problematic. They are rusting, lacking trained crews, high down time,high maintenance, the engines last half as long as the F-16 engines meaning replacement every 1,500 hours vs. 3,000 hrs. However, The money that exchanges hands and the positioning of Venezuela as a Russian satellite are of primary and paramount importance.

    • Goose Says:

      They are currently working on a air-defense-missile-system that covers national airspace and is inteconnected. A scary proposition for anyone flying overhead knowing their are dozens of missiles capable of shooting you down and all it takes is an errant operator. There will be dozens of ‘kids’ manning these systems. I don’t trust these brainwashed kids with my life. This poor man’s ADMS supposedly being put together by Belarus. It should be pretty good with mobility and capability. Once in place, only B2 and F22 aircraft will be able to probably penetrate unchallenged. This system does allow the Bolivarians to sleep at night. For the US, the existence of such a system does not mean anything (por ahora). All the system do is deter. In the event of hostilities, this system does not stop missiles from entering and finding their targets. Nor does it stop the F22 or B2 bomber. It does not stop the Colombians or the Americans at the end of the day.

    • Goose Says:

      The threshold for military action is very high. The middle east and africa chockfull of examples. The bolivarians have lots of leeway. You can see from Egypt and Syria that there’s a long way to go in Venezuela. However, Cuba does fear the wrath of the US shown by reckless Snowden’s Snowden decision to go to Cuba. Cuba caved-in to Obama. That decision saved Cuba about $2 billion annually. So yes, the US does have leverage without having to resort to arms. It’s a matter of priorities.

    • Roanldo Says:

      Venezuela infrastructure is deteriorating fast on its own. Guri is pushing its limit and may still have several generators down. Roads cannot handle current traffic. The fighter jets are not getting proper maintenance and are saved for parades only. The military is corrupt from the top down and cannot put up a respectable fighting force even though they may look tough in those parades. Hell, what Venezuelan soldier is going to risk his life (or leisure time for that matter) following orders from a Cuban general?

      The best and most ironic way to speed the destruction would be for the U.S. to stop selling petroleum products to Venezuela and stop buying Venezuela oil. The economy would crash in minutes if not sooner. The best part would be that all the corrupt officials at the top would be fighting among themselves for what little graft was left for taking.

      • Mike Says:

        Goose and Ronaldo
        Interesting details re the Venezuelan military etc. My point however was the ideology driven idiocy of beating basic macroeconomic forces, or by spending a few billions of dollars in military equipment which they believe now shields them from a US military invasion, always baselessly propagandized to happen any moment, yet never does – just like Cuba for 50+ years.

        • Goose Says:

          they are shielded from US military action period. The threshold for US unilateral military action is high. In order for the US to intervene milItarily two things: WMD or genocide. None of which will happen. correct they’re following the Cuban script.

      • Goose Says:

        Ronaldo, whatever scenario that could be possible under, executive order, sanctions stemming from narcotics indictments or state supportet terrorism, what you suggest would eventually lead to military confrontation. “All paths lead to war.” This is why the United States will not force the issue. The evidence is there what do you think no son sordos y ciegos. It’s a matter of priorities. Maybe if it was the 80s under Reagan and Casey at the CIA or Bush 41 maybe Venezuela would get action but times have changed.

      • Goose Says:

        There’s tons of commerce between the US and Venezuela. We got around 16,000 Americans down there. US assets in Venezuela in the billions. Venezuelan assets in the US in the trillions. You cannot screw everyone over just just like that.

  6. Ronaldo Says:

    Maduro believes that enabling laws will allow him to repeal both the law of gravity and the law of supply and demand.

    Artificially high prices will put Venezuela out of the metals exporting market. It is sad that thousands of Venezuelans will lose their jobs.

  7. TV Says:

    Stupid, certainly, but also indicative of just how empty the coffers are.

  8. Roger Says:

    Year ago US Customs found Aluminum Ingots from Venezuela filled with cocaine. That’s the only way you get an above market price for raw aluminum! I suppose there might be other markets for that hybred product!
    Back in the early 90’s I was trying to start an electronics plant in Venezuela. One of the things we needed were large aluminum heatsinks to cool the power devices. We took samples and engineering datasheets one of the companies there that extrudes aluminum and they knew exactly what we were talking about and were very interested in not only our project but also exporting to other countries the same product. Well we all know what happens to good ideas in Venezuela!
    This brings up the subject that if you want to make more money from your raw product you have to make something with it. Now Venezuela might not be able to make computer chips or 6 layer mother boards but, it can make heatsinks, housings and other metal products. These have a better profit margin than some hi tech items that you attach to them. Its called global trade!

    • Wanley Says:

      The goverment wants the dollars, if they sell to local companies they get bolivars. So they make it very difficult for local companies to buy cement, aluminum, etc.

  9. Morpheous Says:

    If they did not learn economics 101 after 15 years in power, they never will. …they just don’t get it.

    • geronl Says:

      Economics 101 or even basic reasoning power. They should see Thailand and their rice scheme. Still sitting on millions of tons of rice they bought from farmers at inflated prices, but the international price is lower because other countries just grew their own rice. Brilliant. lol

  10. m_astera Says:

    I still remember what I read about Switzerland, a small country without a lot of raw material resources, back in grade school. The book said that the Swiss bought raw iron for a few cents per pound, turned it into high quality steel, then made precision watch springs from the steel that were worth many hundreds of dollars per pound.

    If a country can turn its raw materials into high quality finished goods that are in high demand, they can pretty much set the price for their metals. If all they are capable of is hiring someone to dig ore out of the ground for them and load it on a ship for transport, they will be competing with Zimbabwe and Nigeria, not Switzerland.

  11. Bill S. Says:

    Someone is going to discover that it is a really big planet that, with the possible exception of platinum, gold and rhodium, contains a lot of metal in quite a few locations. There are several very large metal deposits inside the USA that are just sitting in the ground, as the environmental studies are slowly being done. Imagine what is in Canada and Australia. They hardly have any roads in Alaska. You think there might be some undiscovered metals up there?

  12. HalfEmpty Says:

    This is likely about the newly discovered Red Mercury deposits. Very difficult to price that stuff.

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