A muppet with an agenda....Will Repeat my post on other thread...

A muppet with an agenda....

Will Repeat my post on other thread (as someone seemed determined to quickly start a new thread with a catchy heading rather than any genuine discussion of ideas or substance...)

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Almost universally bleak outlook from everyone & feeling of complete capitulation.
Like many of you I'm considerably underwater & feeling the pain & frustration too.
The last quarterly was indeed very cautious & downbeat. I think management had no alternative now (after several false dawns & market projections that fell through) but to take this approach - lest they lose what little credibility they have left with their beaten-up investors.
However I do think people need to try look through the current battery materials market malaise, and focus on the strategic drivers and outcomes that are likely to come to pass. Some insights on this are best gleaned from the transcript of the recent post-quarterly analysts call with SYR management.
What we know:
* China has completely stuffed the market for graphite & battery metals at large - and this could continue for a little while longer yet.
* This has been done for largely geo-strategic reasons - to try corner the global EV market, and leave Western nations almost completely dependent on China for these future-facing industries.
* However this is not just at the West's expense - but is costing Chinese players too (most of their alternate Lithium and Graphite sources are losing money hand over fist at current pricing). They can sustain this strategically driven loss-making for sometime - but not indefinitely. As their economy continues to weaken post the property/infrastructure driven boom years, more and more productive capacity will be loss making - and the CCP cannot continue subsidising (or commanding private entities keep losing money) indefinitely. They are presumably hoping to bankrupt our independent EV supply chains, before they're in the box seat & can gradually allow prices to rise again & clean up.
* Question everyone should be asking - is will Western governments allow this to happen? Seriously? (They have already been caught asleep at the wheel in setting up their EV supply chains, everyone can now see the kind of charming global citizen China is/will likely continue to be - do we really want to be completely dependent on Chinese supply chains?)

My take (& with some insights from recent analysts call):
* The US has made a big mistake back-tracking/watering down the FEOC supply/tarrif rules for Graphite supply for EV batteries in US OME manufacturing. They have presumably been lobbied by big car makers with short-sighted profit focus only to do so, but without fully considering the impact on long-term western production & capacity.
* Syrah has been part-funded by the US gov & built Vidalia in good faith to supply the US for many years to come, with a non-chinese source of spherical graphite. There are almost no other players outside China. If the US doesn't backtrack on these rules somewhat - and tighten up the requirement of US car makers to start sourcing orders from Vidalia now/soon - Syrah will have no alternative but to shut the plant, layoff all workers, etc.
* Equally if Tesla want to play specification sign-off games to delay for short-term cheaper offshore synthetic - the same may come to pass.
* Syrah is making this reality abundantly clear to the US government (on both sides, whoever wins In Nov) - and both parties are aligned in the very real economic dangers posed by China's aggressive subsidised mercantile economy.
* It all comes down to - do you think they will listen? And Do you think they will do anything about it?
* My vote is they will, as the alternative would be unthinkable for the US long-term, and a strategic coup for Chinese control of the global annode market.
* Syrah will tell the US to stick the DOE loan (forget 45kt if US won't even support 11kt) if they don't smarten up & fix the OME graphite sourcing rules this year. I suspect they will, there really isn't any alternative that wouldn't leave the US in a terrible bind longer-term.

Guess time will tell, but I personally think Syrah's future will all come down to the Geo-Strategic policy responses put in place by the US & other Western -aligned nations. Synthetic is likely to remain a considerable part of the market to supply its own makers, but not the entire world.

Guess we'll see how it all plays out - but I'm not selling at these firesale prices - I don't believe the US will stay half-in / half-out (funding Vidalia but won't ensure US supply has a chance to succeed). They have too much invested in the outcomes through the massive IRA policy/funding. I am holding, and even one ray of sunshine could see this re-rate aggressively.