Haplo, I would tend to agree that somehow the new lower price makes a difference.
By regularly taking delivery (note: somehow no more ship availability excuses etc) plus the recent rally in Jiangte & Burwill share price, we can infer that they have resolved their converter ramp-up issues and their plants might be almost full steam ahead. If so, I am happy for them - we can only prosper when our customer is doing good. But strangely, there's no such news since the last announcement of plant ignition end Aug 2018.
Another possibility is simply sticking to their commitment, if not they face another further cut in their supply. In the revised offtake agreement in Jan 2019, Alliance have cut their ALL output rights to 50% and the new agreement party BaoJiang had committed to min of 80ktpa, which translated to 20ktpq. Taking 2 shipments (11kt + 10.5kt) seems to me is just trying to fulfill their commitment. We are not privy to the exact revised agreement details, but I understand that the revised terms are now much more tighten on taking delivery - most likely we have the rights to sell what we have produced to other parties if they delay taking them.
Some may not like that we have "lost" some revenue due to lower prices but realistically how long can hold onto fixed price offtake when all others are doing market linked pricing? I choose to focus on the long term positive side of it - which is forcing BaoJiang to take delivery timely (ie. we get our revenue booked timely too) and now we have the ability to diversify our customer base further. It is not just about making 50% (100kpta) freed up. Think about expansion - when we expand our output, the freed portion will be more than 50%!! Brilliant move IMO!!
A40 Price at posting:
18.5¢ Sentiment: Buy Disclosure: Held
