Syrah Resources Share Price Falls on Shipping Delays (ASX:SYR)

12kt of natural graphite sales from Syrah Resources Ltd’s [ASX:SYR] flagship Balama Graphite Operation in Mozambique planned to ship this month has been delayed to October 2021.

Balama product shipments have been affected by the disruptions in the container shipping market.

Investors did not receive the news well and SYR shares took a hit.

SYR share price is currently exchanging hands at $1.23 per share, down 2.8% at time of writing.

ASX SYR - Syrah Resources Share Price ChartSource:

Despite today’s drop, SYR shares have performed well this year.

SYR shares gained almost 160% over the course of 12 months, reflecting positive developments from Syrah’s Balama Graphite Operation.

The bad news: Balama shipping delays

Roughly 12kt of natural graphite sales for Syrah’s Balama Graphite Operation has been delayed to October 2021.

The shipment from Nacala was expected in late September 2021, but the disruptions in the container shipping market affected the Balama product shipments schedule.

September sales were already constrained by shipping availability.

Sales expected to be approximately 29kt prior to the scheduling delay are now expected to be approximately 17kt.

That said, the weighted average sales price for the September 2021 quarter is expected to be higher than the June 2021 quarter.

But this will make the delayed shipments tougher to take as Syrah cannot fully capitalise on rising prices.

Syrah assures investors container shipping constraints will ease through the December 2021 quarter, with additional vessel capacity and container equipment for East Africa being added.

Syrah noted:

The Company continues to work closely with its shipping service providers to urgently secure increased container shipping capacity and meet strong customer orders for the December 2021 quarter.

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The good news: demand remains strong

Syrah was quick to counteract the bad news with some positives.

Namely, strong demand for its Balama product.

‘Syrah is experiencing strong demand and forward contracting for Balama products, with the Company’s sales order book currently underpinning 45kt of natural graphite sales in the December 2021 quarter, with additional spot sales demand evident.

Natural graphite production at Balama is set to be lower in the September 2021 quarter compared to the June 2021 quarter.

But SYR wanted it known operational performance following the restart decision in February ‘demonstrates that the company is well positioned to increase production, while maintaining product quality, recovery and cost focus, to meet customer demand.

Syrah share price outlook

No doubt wishing to couch today’s delays as a temporary setback amid long-term potential, Syrah cited some encouraging statistics on EV sales and anode demand.

SYR noted that monthly global EV sales sat at 0.5 million units in August 2021, representing 100% growth on prior corresponding period (pcp).

Chinese anode production was at about 60kt in August, representing 50% growth on pcp.

Of course, strong demand for your product is essential for success.

But demand is redundant if you cannot meet it.

Investors will likely hope Syrah can resolve its shipping delays soon to make the most of rising demand.

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Kiryll Prakapenka,

For Money Morning

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Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.

Money Morning Australia