'and the point I am making is that any floor price now would surely be lower than the floor in 9-12 month time'
Floor price is generally always linked back to a percentage above your cost of production / delivery, which acts as a safety net should the price of the product you produce collapse ; should the price collapse below any particular companies cost of production pricing then , by it triggering up the floor price clause, you are not required to sell your agreed tonnage of product below that 'floor' price which otherwise would open you up to going bust and the financier losing his cash.
'any floor price now would be lower than the floor in 6-12 months'
No ,not really unless AVZ came up with and implemented other ideas that would lower the cost of production and they choose to share these saving with the off-taker and subsequently reduced the floor price....highly unlikely IMO or if they put in a floating floor price....which is a bit pointless as it basically just keeps dropping with LME as pricing drops before it finally get back to that fixed floor i.e the one just above cost of production
anyway, hope that helps, theres been enough time wasted trying to explain this. Best thing to do if you have any issues with any of the answers you recieved from us subordinates in here would be to ring the company or any company for that matter...but you'll basically get the same explanation .
AVZ Price at posting:
8.9¢ Sentiment: Buy Disclosure: Held
