En Passant

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Topic: En Passant (Read 24672 times)

Fritz
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Re:En Passant
« Reply #45 on: 2010-01-15 15:05:45 »

A note worthy consequence to the snowy weather in Europe; just a reminder I guess of other adventures ahead this year .... don't forget those emergency food supplies ?

Cheers

Fritz

The price of salt: Salt sellers

Source: The Economist
Author: The Economist print edition
Date: 2010.01.14

A common commodity in short supply

THE stuff is everywhere, but in snow-blanketed Britain there is not enough of it. Fears grow that the gritting salt that is keeping the country’s transport system open is running out. Britain’s salt mines are working round the clock and rationing is on the cards.

Prices for different types of salt vary widely. The lowest grade of gritting salt for de-icing roads generally sells for around $40-50 a tonne in America and Britain. Refined salt used by the chemicals industry is more expensive, at up to $150 a tonne. At the top end of the range discerning gourmets pay the equivalent of $70,000 a tonne or more for fleur de sel, the highest-quality French sea salt, harvested by hand at picturesque locations but still the same sodium chloride.

The huge price differences are not the only things that distinguish salt from other commodities. Salt is not traded on any exchanges, there is no derivatives market and there is not much international trade. Because salt is cheap and plentiful in many parts of the world, yet bulky and expensive to transport, it is a heavily regional commodity. China, the world’s biggest saltmaker, used the 60m tonnes it produced in 2007 at home. Where salt is exported it is to countries that cannot meet their own needs. Japan’s chemicals industry imports most of its supplies from Australia.

Demand for industrial salt is steady and predictable. As a rule of thumb, the chemicals industry grows (or contracts) at roughly the same pace as the wider economy. Gritting salt, by contrast, is susceptible to large short-term fluctuations in demand. In countries such as America and Britain, where the weather is changeable, the chemicals industry accounts for some 40% of annual salt production and a similar proportion goes on slippery roads. (The rest goes on things like food and agriculture.)

Local governments generally sign contracts for gritting-salt supplies in the summer but heavy snowfall, such as Britain is experiencing at the moment, can exhaust stockpiles rapidly. Shortages boost prices, diverting salt set for industrial use to de-icing and encouraging imports from warmer climes. But because most traded salt is tied up in contracts, getting fresh supplies from abroad is a lengthy process. And by the time the salt arrives all that snow may have melted anyway.