The “sharing” economy and its impact on raw materials

What would happen if the American consumer, the most voracious buyer the world has ever seen, becomes more efficient at purchasing?

That is the question that could shape our future economics as the sharing of goods and services continues to proliferate with the aid of smart phones and social media.

Will ride sharing services like Uber and Lyft put taxis out of business? Will Airbnb, which connects vacationers to people with rooms — or castles — to rent, put hotels out of business?

Some believe the coming tide of the “sharing economy” will transform society with no less of an impact than the invention of the automobile. Some economists believe we are witnessing the birth of an entirely new economic system, up there with capitalism and socialism.

Sounds pretty highfalutin, and for now the phenomenon seems more applicable to services than goods. But if ride-sharing becomes as simple as an iPhone click, that second car — or even the first — may become unnecessary. Will hotel construction come to a grinding halt?

On a more basic level, does everyone on the block need an extension ladder, snow blower or even a lawn mower? If the new economy takes hold consumers may even start sharing these more mundane items. Think of the garage space!

Gazing out at the changing economic landscape, one could ponder whether supply-side economics is about to give way to demand-side economics.

Blog entry continues below…


Request a free trial of: Steel Markets Daily Steel Markets Daily
Steel Markets Daily Platts Steel Markets Daily is a leading source for scrap metal prices and iron ore news and prices. It is the only publication that publishes global metallurgical coal spot prices on a daily basis and contains two iron ore price benchmark assessments in one report: Platts IODEX and TSI 62% iron ore.
Request a trial to Steel Markets Daily

The bad news for producers of basic materials like steel is that less will be needed if consumers start priding themselves on how efficiently they are utilizing their wallets, as opposed to how much stuff they have. That would also mean less energy consumption for manufacturing, construction and transportation.

The good news for some companies, especially giants like steelmakers, is that their business is not easily encroached upon. John Q. Public cannot put an integrated mill, or even a mini-mill, in his backyard to share the output with his neighbors, who in turn are producing aluminum and carbon-fiber-reinforced composites as their contribution to Maple Street.

Furthermore, a sharing economy may direct more spending to the granddaddies of shared goods and services like roads, bridges, locks and dams and airports; in other words, infrastructure. Big time infrastructure spending would be a boon to the steel industry.

In a best-case scenario, while business and industry as we know it will be impacted — perhaps with dire consequences for some — the development of a new economy will spur the need for new goods and services. Given the robust nature of the American consumer, these could more than make up for what has been supplanted.

Share this:
Facebook Twitter Email

All blog comments are moderated before being published.

Comments

  1. Carl at August 16, 2014 4:12 pm

    Crime rates each time up. Match that with sharing. Do you invite anybody into your car with the risk of rob or rape?

     
  2. Dhruv at August 15, 2014 2:11 pm

    Interesting thought..

     

Your Comment