Pittsburgh Meets Beijing: The Real Story Behind “Made in America” 🇺🇸
The Sunday Essay ☕️
Steel, Headlines, and the Truth About Trade
Over the last four weeks, I’ve done my best to set the table—to outline how power is distributed around the globe through what I believe is the ultimate truth teller: trade.
Trade strength is what separates powerful nations from weak ones.
And trade strength is determined not by what people say—but by what they have.
We’ve looked at the manufacturing, processing, and refining capabilities of the world’s two most powerful nations.
We’ve also looked at how each of these countries extends its reach through resource control—whether through China’s Belt and Road Initiative or the United States’ weapons diplomacy.
Why? To offer a lens. A way to interpret headlines and current events not at face value, but through the mechanics of how the world really works.
Take a common headline: “The U.S. and China are drifting toward war.”
You now know this: the United States can’t build its own advanced weapons without access to China’s rare earth processing industry.
If I’ve got a gun pointed at you—would you sell me bullets?
Unlikely. Which makes a hot war… equally unlikely.
Here’s another headline worth unpacking.
Last week, during a rally in Pennsylvania, President Trump addressed a cheering crowd:
“This is an incredible deal for American steel workers, and it includes vital protections to ensure that all steel workers will keep their jobs and all facilities in the United States will remain open and thriving.”
He went on to say:
“Pittsburgh will be respected around the world as the Steel City again.”
Sounds great. Tariff foreign steel, revive a domestic industry, and bring back jobs. A win for America, right?
Maybe—unless you understand how steel is made, and where the ingredients come from.
If you don’t, you might believe it’s possible.
But if you follow raw material supply and demand (as we do), some problems jump out.
Because once again, headlines tell one story—but trade tells the truth.
So, what is wrong with Trump's “bring back American steel” declaration?
Let’s start with the basics: what is steel?
Steel is a highly durable metal used in everything from skyscrapers and bridges to vehicles, smartphones, and military equipment.
How do you make it?
Dig up iron ore from the ground.
Melt it in a blast furnace at over 1,500°C.
Add carbon and select alloys, depending on the use.
Pour it into molds and cool it into the final product.
Core ingredients:
Iron – The base metal. Provides strength.
Carbon – A small amount transforms brittle iron into hard, durable steel.
Some Feature-enhancing alloys:
Chromium – Prevents rust. Essential for stainless steel.
Nickel – Adds strength and thermal stability. Mandatory in very high or very low temperatures.
Manganese – Makes steel tougher and impact-resistant.
Vanadium & Molybdenum – Micro-alloys used in high-precision, high-strength parts (like engines or surgical tools).
Of all these, nickel is arguably the most critical—because it’s required for any kind of stainless or high-performance steel.
And what do we know about the supply of nickel?
As of 2023, one Southeast Asian country controls 61% of global refined nickel production, with forecasts showing it may control 74% by 2028.
Is that a lot?
Let’s put it in perspective:
In 1973, OPEC—an alliance of 13 oil-rich nations—controlled 51% of global oil production. That gave them enormous leverage.
How much leverage?
In that same year, OPEC imposed an oil embargo on the U.S. The fallout was immediate and severe:
Gasoline shortages: Long lines at gas stations. Sometimes blocks long. People waited hours, and many stations ran out of fuel entirely.
Skyrocketing prices: The price of oil quadrupled almost overnight. What cost $3 per barrel jumped to $12. At the pump, Americans felt it in their wallets.
Economic chaos: The sudden energy shock triggered a major recession. Inflation spiked, unemployment rose, and economic confidence collapsed.
The takeaway? Control over a single commodity—just 51%—was enough to rock the world’s largest economy.
Now, imagine one country—not thirteen—controlling 61% of something just as essential to global infrastructure and defense.
That country is Indonesia.
And the rise wasn’t accidental.
How Indonesia Took Over the Nickel Market
In 2012, Indonesia knew it had the world’s largest nickel reserves. But like many resource-rich, underdeveloped countries, it lacked the capital and technical know-how to build a complete industry. So it exported raw ore—cheaply—to whoever could process it.
At that point, Indonesia supplied about 19% of the world’s raw nickel, bringing in around $2 billion USD annually.
But President Joko Widodo saw an opportunity.
In 2014, he announced that Indonesia would no longer export raw nickel. If you wanted Indonesian nickel, you’d have to build refineries inside Indonesia and buy the refined product.
It was a bold move for a developing nation.
The European Union, a major buyer, wasn’t pleased. They filed a formal complaint with the World Trade Organization (WTO), claiming the policy violated international trade rules. The WTO ruled in Europe’s favor.
But Indonesia ignored it. Widodo understood a basic truth: if you have the resources, you have the leverage.
And that’s when China stepped in.
Instead of objecting, China invested. Heavily.
Roughly $65 billion flowed into Indonesia through the Belt and Road Initiative, funding the construction of massive industrial infrastructure—including the Indonesia Morowali Industrial Park (IMIP), now a global hub for nickel and stainless steel.
By 2023, Indonesia’s nickel industry had exploded.
Annual revenue jumped from $2 billion to $34.8 billion USD.
Indonesia now controls the majority of the global refined nickel supply.
Flooding the Market and Crashing the Price
Here’s what happened next: Indonesia ramped up production so fast and at such scale that the market couldn’t all the product.
Basic economics kicked in: too much supply, not enough demand = falling prices.
Nickel prices collapsed—from over $30,000 per tonne in 2022 to under $16,000 by 2024. Nearly a 50% drop.
The ripple effects were immediate:
In Australia, giants like BHP and Wyloo shut down nickel operations.
In Canada, companies like Vale began offloading nickel assets.
Across the West, nickel mines closed, workers were laid off, and projects were shelved.
Why? Because Western producers can’t compete.
Indonesia—backed by Chinese capital and tech—has lower labor costs, looser regulations, and lightning-fast permitting. While a Western smelter can take five years to build, in Indonesia, it takes less than one.
Indonesia didn’t just grow its share. It crushed the competition, cornered the market, and created a near-monopoly—not by pricing nickel high, but by pricing everyone else out.
Once the competition is gone, what do you expect they will do to the price? My guess would be precisely what OPEC did in 1973 - halt supply and charge whatever it wants.
And to be clear, although the product comes from Indonesia, 74% of the infrastructure was built with Chinese money. So the leverage is shared.
So if Trump wants to reshore American steel production, I think he should.
But he might need to call President Xi first.
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Have an epic Sunday.
Jay
Thanks Jay, very interesting comments.
You can add NIOBIUM (Nb) to your list (85% production comes from Brasil and 15% from Canada. This metal is been added to make steel for airplane, pipelines, weapons, etc
See the book "The art of investing in junior mining"
Jacques Bonneau
I always thought of nickel as just another part of the steel recipe, but I had no idea Indonesia was running the show. Jay’s article revealed that Indonesia currently controls about 61% of the world's refined nickel—and that figure might rise even higher. It’s wild to see how one country can hold such sway over a key ingredient that makes our steel strong and reliable.