Tuesday, 20 July 2010

Eve: PI Economics, part 5 The Market

PI has been in full swing for just over a month now and we are starting to see trends emerging.

P0 - Raw Materials

On the face of it there should be no point exporting these off-planet. You pay 300 isk export fees per 3000 units. There is nothing to do with these except turn them into P1. If you transform those units into P1 you only pay 15.2 isk to export the same resources. Additionally P0 are approximately 4 times as bulky. And then the buyer has to import those units and process them.

Despite that there is a brisk trade in these resources. Looking at one of the most sought after, Autotrophs, in The Forge we see that prices started high. On the first day they traded for 830 isk, dropping quickly to around 11, and now they've settled at about 3.

At the moment in the Forge if you want money for 3000 autotrophs you could sell them to the highest Buy Order for 4 isk each (at a low sec system). That would give you 11700 isk after export fees. If you transformed them into P1 you could sell the 20 P1 Industrial Fibres for 310.11 isk each. 6187 isk profit after export fees. Even just going by the high sec price it's better to sell these as autotrophs than to refine them.

This means it's much better to put down extractors and a spaceport and not do any processing unless hauling is a very significant factor. For instance I run my extraction in a nullsec system and it's rather dangerous making trade runs. It's worth my while processing.

But if you're extracting in High Sec or you're part of a corp which exports from nullsec to highsec using Jump Freighters you're probably better off putting down loads of extractors and not processing.

Currently the 5 highest P0 sell orders in the Forge region are:
Non-CS crystals 4.46 isk
Felsic magma 4.05 isk
Autotrophs 4 isk
Noble metals 4 isk
Planktic colonies 3.4 isk

Now that's particularly interesting because you would expect the top 5 to be the 5 that only spawn on one planet type. That's not what's happening.

What I don't know is whether this is a temporary blip or a long-term situation. It does seem somewhat crazy that the raw materials market is so high when the only thing you can do with these materials is process them into P1.

However if you're setting up an extraction colony and you can cope with all the hauling selling P0 to the market is probably the best money in PI right now.

To give you some idea how much hauling might be involved, my PI in nullsec could support 5 planets with about 20 extractors per planet each producing 6000 per hour for 15 hours each day. That's 90 000 cubic meters per day with three five hour cycles. In my blockade runner that's almost exactly 5 full loads. There and back. 10 trips past the gate camps from hell per day - too much for me!

P1 - Processed Materials


In general these are worth more than the P2s they make. There are exceptions. It is particularly true that where the P2 is a former NPC good large stockpiles of which exist it's just not worth processing P1 into P2.

The advantage of selling P1 to the market is that they are rather less bulky that P0. For those of us who don't want to have to haul large volumes processing into P1 cuts cargo sizes to about a quarter.

You also have less extractors if you're making P1 than if you're making P0 - a somewhat backhanded advantage that you don't have to make so many trips because you don't produce as much.

It also is likely that the P0 market will falter - it's too good at the moment. However nothing is set in stone and because the P0 market is counter-intuitive it may continue to do well as everyone and his brother gets into PI by whacking down both extractors and processors without checking profits.

The top 5 P1 sell orders in The Forge are:
Biomass 576.15 isk
Precious metals 490.18 isk
Electrolytes 410.23 isk
Proteins 410 isk
Chiral structures 401.04 isk

I suspect that these prices are mainly determined by demand. Demand for P1s is driven by what P2s people want to make from them (and to a small extent demand for Oxygen is driven by its use as a POS fuel). So demand for Biomass is high because it goes into Genetically Enhanced Livestock, Supertensile Plastics and Viral Agents. Only the first one used to be a NPC good and all are pricey P2s, currently around 9-10K isk.

So if you're interested in setting up some PI to sell P1s to the market Biomass is probably pretty good. I don't think it's just a blip that it's at the top, it's useful and it's not affected much by pre-existing P2 stockpiles.

P2 - Refined Commodities

These are rather undervalued by the market. This means that at the moment it's a bad idea to make P2 and a good idea to buy it either to hold it as speculation or to process it into something higher up the chain.

There are a number of reasons for this

- many P2s are goods that existed before PI and players bought up large quantities cheaply before the patch.

- P2 is the obvious way for beginners to set up their colonies. Most can be produced on a single planet. And beginners will generally assume (wrongly for the time being) that processing adds value.

- making P2 is attractive because volume reduces to about a quarter at both the preceding steps but the volume reduction is much less significant after. Quoting the Eve Uni wiki: "One processed batch turns 30 m³ of a P0 material into 7.6 m³ of a P1 material, resulting in a reduction to 25% of original volume. One processed batch turns a combined 30.4 m³ of two P1 materials into 7.5 m³ of a P2 material, again resulting in reduction to approximately 25% of original volume."

- a P1 can make a variety of different products, the most valuable of which will influence the P1 price. P2s are less flexible.

The top 3 P2s as determined by my secret profit-calculating formula are, as of yesterday:
Supertensile Plastics 7069.1 isk profit over the value of the P1 components
Polyramids 4360.79 isk profit
Coolant 3815.85 isk profit

2 things to note - this does not include import nor export fees and Supertensile Plastics have dropped sharply today. Every other P2 when I took my data yesterday was not worth making, better to just sell the P1s.

(I didn't even calculate the ratio between P0 value and P2 value - I'd be surprised if any P0 material is worth turning into P2).

P3 - Specialised Commodities

This is rather mixed. Of the 21 P3 products 6 make a loss over their P2 components. The largest loss yesterday was Planetary Vehicles. They sold for just 9,000 isk yesterday despite requiring 71,000 isk worth of P2s to make each. I hope none of you are making them!

The reason Planetary Vehicles are so bad is because of large pre-existing stockpiles. It's a very good item to buy, either for speculation or because you want to make P4. They do occasionally still drop in missions. PI loot in missions isn't that common but vehicles I remember as being one of the more common drops when PI does drop. Still the amount of these generated by missions will be tiny, a drop in the ocean.

The 5 most profitable yesterday (export/import fees not included) were;
Smartfab units 24,056 isk profit
Vaccines 18,663 isk profit
Industrial Explosives 16,429 isk profit
Neocoms 16,374 isk profit
Synthetic Synapses 15,488 isk profit

The following items were loss-making:
Data chips, Guidance Systems, Hermetic membranes, Planetary Vehicles, Robotics, Transcranial Microcontrollers

Data chips and Hermetic Membranes are on the list I think because of a rise in their input P2s. They are made of 4 of the most expensive P2s. This means those two are likely to go up in price. The other 4 are stockpiled former NPC goods.

P4s - Advanced Commodities

All of these make profit over their input P3s and P1s. However the P4 market as a whole is deflating because more and more of us are bringing our P4 facilities online.

Demand is, I've argued earlier, linked to nullsec wars and nullsec stockpiles. When people start blowing up each others' SBUs and POSes in earnest I expect to see a spike in this market and a general upsurge in the PI market at all levels.

For now though my P4 maker is having a somewhat sleepy time. I try to keep all 8 on sale all the time, restocking when I sell out.

Let me digress to explain a little about using the Market in Eve. When traders first get an interest in the market they usually start playing the 0.01 isk undercutting game. It's a natural first step that maximises both volume and profit margin. Deep undercutting reduces profits without necessarily increasing volume and not undercutting reduces volume. It's a sound strategy.

However the problem with the 0.01 isk strategy is it uses a lot of YOUR time. Time better spent doing something else. Which brings me to the crest of the wave strategy.

The crest of the wave strategy is a reflection that you don't need to always be the cheapest - you just need to be the cheapest once, for long enough that your items sell. So if widgets vary in price between 35 and 41 and you sell your widgets for 40 you might not sell any today but you will sell them at some point in the fluctuation. Most goods have a weekly fluctuation, you can usually shift stuff. So my crest of the wave strategy is to undercut by 0.01 isk once then just chill until my goods sell. They might sell immediately in which case I'll stock my factories with materials again. They might not sell for a few weeks which indicates the market is depressed and it's probably not worth building more. If I don't sell by the end of the month I cancel my orders, relist at 0.01 isk under the cheapest and resume the crest of the wave approach.

I get higher profit per sale than the 0.01 isk strategy, do a lot less work and am alerted if there is high demand. It does mean that my factories sit idle a lot of the time but there's no maintenance cost or depreciation - they last forever for free.

It does mean that when the market is declining, as the P4 market is at the moment I don't do much business. I have to replace about one order for about 24 P4 items per day. Of course if the market booms I'll be busy.

The top 3 most profitable P4s as of yesterday were:
Self-Harmonising Power Cores 1,055,508 isk profit
Broadcast Nodes 929,632.8 isk profit
Wetware mainframe 888,000 isk profit

Profit margins have been dropping fast though, it's likely that people will realise how good this is soon and the profit will become negligible until the next big war.

Copyright: I realise a number of people may want to copy all or part of this. That's fine, I put it in the public domain. Please link back to this blog though and don't pass it off as your own work. Cheers!

6 comments:

  1. Thanks for this Stabs. Am learning a lot. :)

    ReplyDelete
  2. so it seems to me that one would chose how much to process their PI goods depending on how far you have to haul them. if I must make 29 jumps to get to market it would make no sense filling my cargo hold with P0, because of the time spent making the trip. it is similar to compressing value into m3 units. I can carry much more value of P2 in one hauling run than I can of P0 or P1 even.

    ReplyDelete
  3. Yes, absolutely.

    I do have a P1 production set up some 30 jumps from where I sell it but that is because I afk haul while playing my other accounts.

    I think an indy full of P1 is probably under the value a competent suicide ganker would spend sec status for. I'd be less confident with a hauler full of T2 but you'd be fine as long as you piloted manually. If you're making T2 and piloting manually a nearby market is crucial.

    ReplyDelete
  4. Its a great read, I recommended the series to my corp, thx!

    ReplyDelete
  5. Pretty accurate. Even 2 years later.

    ReplyDelete