It hasn’t been a good day for Syrah’s shares…
The post Why the Syrah (ASX:SYR) share price is tumbling 7% lower today appeared first on The Motley Fool Australia. –
The Syrah Resources Ltd (ASX: SYR) share price looks set to end the week with a disappointing decline.
In early trade, the graphite producer’s shares are down over 7% to $1.17.
Why is the Syrah share price sinking on Friday?
The weakness in the Syrah share price on Friday has been driven by the release of an announcement this morning.
According to the release, the company has been struggling to ship its product from the Balama Graphite Operation in Mozambique due to container ship shortages.
The release explains that approximately 12kt of natural graphite sales from Balama were planned to ship from the Port of Nacala in late September. However, container shipping market disruption means that this has been delayed to October.
As a result of this disruption, third quarter natural graphite sales are only expected to be 17kt. This compares to its previous guidance of 29kt for the quarter.
One positive, though, is that the weighted average sales price for the September quarter is expected to be higher than the June quarter.
Another positive is that management expects container shipping constraints impacting its sales and operations to ease through the fourth quarter. It notes that additional vessel capacity and container equipment for East Africa is being added.
This may allow the company to take advantage of the strong demand and forward contracting for Balama products it is experiencing. Management advised that its sales order book is currently underpinning 45kt of natural graphite sales in the fourth quarter. Furthermore, there is additional spot sales demand evident.
Looking further ahead, management appears confident that demand will remain elevated for some time to come. This is due to outlook for electric vehicle and anode demand remaining strong. It highlights that monthly global electric vehicle sales reached 0.5 million units in August, which represents over 100% growth year on year. Whereas Chinese anode production was ~60kt in August, up 50% over the prior corresponding period.
The Syrah share price is up 19% in 2021 despite today’s decline.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.