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12/04/17

00:54

Post #: 24014340
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Originally posted by ausheds ↑

Rob, let me pose you a scenario where you are Herr Schmidt, the PO for a large EU auto maker (presume you understand some CVP ANALYSIS) responsible for the material inputs for a Mild Hybrid vehicle to be launched H2 2017.

Revenue over costs first 18 months are critical to recovering invested capital, you can't control sales volume, not what your paid to do, but you can control material input costs with some certainty, and provide the bean counters a number to bake in to their profit models.

A key input is NdFeB magnets where NdPr makes up 95% of the material cost, when you look at historical prices past 7 years you see they are trending off a low base comparative the ASP over that period.

Bugger, you don't want to get stuck with +50% increase in costs sometime H1 2018 or your bonus might be cactus. Your intel also tells you the largest NdPr producer is channeling more & more production into its own vertically integrated metal/magnet operations, further limiting both supply AND the number of magnet makers you can negotiate with. Double bugger, supply security may even become an issue 2019 bonus.

Then a lady in pink boots knocks on your door, she's got a dinky chart projecting NdPr pricing running from $36kg right now thru to $56kg at the end of the 18 month period that you have to take responsibility for. "Herr Schmidt, I'm going to save your 2018 bonus and give you an 18 month contracted price of $46kg that you can pass on to the bean counters with absolute confidence, and then I'm going to save your 2019 bonus by offering to negotiate a price for a contract extension at the mid point, effectively providing 27 months of supply security".

Now you have your material inputs locked down you just need to find a magnet maker, but that's another story, lol.

Just because Lynas has been a price taker past few years doesn't mean it will remain that way, if it's not already changing it won't be long. Why would Lynas contract LT supply security in an appreciating mkt without negotiating premium? Who else are they going to turn to?

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Now THAT'S a practical example that is quite currently plausible, because we KNOW from recent Chinese RE posts that they do have undertakings to restrict at least a proportion, probably increasing, of NdPr exports.
But the one aspect Amanda will not speculate with SHs on is such negotiations, of course.
So we must just 'DYOR'.... !

LYC Price at posting: 8.9¢ Sentiment: Buy Disclosure: Held
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(20min delay)
Last $7.84		Change 0.145(1.89%)		Mkt cap ! $7.328B

Open	High	Low	Value	Volume
$7.72	$7.94	$7.70	$5.274M	671.9K

Buyers (Bids)

No.	Vol.	Price($)
8	1244	$7.83

Sellers (Offers)

Price($)	Vol.	No.
$7.84	408	3

View Market Depth

No.	Vol.	Price($)
12	2964	7.840
14	4858	7.830
11	8519	7.820
8	12074	7.810
7	14901	7.800

Price($)	Vol.	No.
7.850	761	3
7.860	4888	11
7.870	5075	9
7.880	9164	9
7.890	18099	11

Last trade - 12.41pm 08/10/2024 (20 minute delay)

LYC (ASX) Chart

todays chart, page-282

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todays chart, page-282

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