It illustrates that PSH has no control over its pricing.
Soda Ash is an internationally traded commodity with very little product differentiation. PSH can only charge the landed cost of the alternative international product. They could use a shaved monkey as a sales manager.
The rise in the value of the Aussie dollar makes the international price, expressed in USD, cheaper. PSH must drop its prices to sell its product.
It can't reduce its output, the plant must run to full capacity because of the high ratio of fixed to variable costs. It must run flat out and match the international price.
Meanwhile its energy intensive costs just keep rising and the plant gets older.
Its profit margin used to be slim. Now?
I am surprised the share price has maintained the mid thirty level for so long, looks like an excellent selling opportunity to me. I can't see any blue sky for this old dog.
Bacci
PSH Price at posting:
37.0¢ Sentiment: Sell Disclosure: Not Held
