RE: RE: So it's true Fairly subtle there imo.
Softening prices are not good for any industry, but they certainly serve to sort the wheat from the chaff. I've modelled FMS down to $700/t graphite prices and it can still make a quality margin (my calcs 57% gross margin) compared to many industries and a healthy profit, so even if Europe fails and China goes into full recession, FMS imo would and could weather the storm. Commodity prices go up and down, be it iron ore, oil, gold or graphite. Graphite is no different to any other industrial material, the industry is no more 'shaky' than any other. Prices are softening with reduced Chinese demand, it is as simple as that. The Chinese will though bounce back, that is a fact.
Look at Iron Ore the last month, so see what is going on:
https://www.foxbusiness.com/news/2012/09/18/new-aussie-mining-projects-at-risk/
Mine life is just that, 25 years and more. If a project is economic, it must be viable in the bad times, if so it is a more of a certainty it will last the course, through a number of full economic cycles. Take NGC as an example. BFS revenue range of $2,100 to $2,800 is crazy, that model is fully reliant on a number of assumptions pertaining to continued increases in price, adoption of new technology, over forecasted (imo) uptake of electric vehicles, increased Chinese export controls etc...etc. This will be in stark contrast to FMS, if needs be we can undercut the competition, not ideal for anyone, but if necessary it can be done.
I would not be surprised to see FMS model down to well under $1,500 and why not. It proves the robust nature of their model, that of cost leadership. The cycle is the cycle, there will certainly be boom times again in the future. In the good times, the lowest cost producers also have the greatest margins, same as the bad time, but their success is not inextricably linked to postive factors that may (or may not) appear in the future.
IMO/DYOR