THE PRICE COMPOSITION & RISING FACTORS OF TUGNSTEN CHINA, 2017

PART VII OF X

Analysis of Butterfly & Resonance Effects

September 6, 2017

As mentioned in this article, the so-called brick family has read a lot of nonsense about all kinds of tungsten concentrate. It has to be because people are also black and involve the crazy Black Swan incident. In fact, people's black swan is beautiful. What does it have to do with it!

The Butterfly Effect

At present, the production and operation decision-making of tungsten products is such a situation, which is very simple: (1) you have goods, do you want to sell them? The world is so big, you really should make some money to see; (2) you have orders, do you want to buy materials, and other guests queue up?

To tell the truth, the problem faced by all business decisions in the tungsten products industry is that there are three possibilities for the price of tungsten products: rise, fall and balance. The corresponding decision should be to buy, sell and wait and see. Based on this, we use the butterfly effect and resonance theory to analyze the decision logic of the current tungsten products industry.

The First Situation: the price of tungsten will continue to rise for a long time.

I believe people in the industry know that the current price of tungsten products has reached a high point in recent years. Although it seems to rise rapidly, it seems to be the end of a strong crossbow. More importantly, many downstream manufacturers have been difficult to maintain. Whether they support long-term orders on hand or currently receive orders, it is difficult for customers to accept changing the established price or accepting the same products in the short term The reason is very simple. When the price of tungsten concentrate rises sharply by more than 40% in a short time, no end customer can accept such a sharp rise in cost, both in terms of gross profit and psychology. Therefore, such a rise is difficult to continue in the economic law and actual operation. Therefore, if you are a seller, the rational choice at this time should be to take profits and keep profits The profit-making part under the existing price market; as a buyer, the reasonable choice should be to negotiate with the customer to postpone the delivery or make the minimum raw material reserve to maintain production under the condition of necessity, and negotiate with the customer to deliver in batches to wait and see the change, so as not to fall into the embarrassing situation of buying high and selling low.

The Second Situation: the price of tungsten products may fall in the short term.

According to pure mathematical theory, there are at least three possibilities. But in fact, in addition to the existing shocks and fluctuations in the market, psychological factors will play a great role in determining whether the price falls. That is, after the price rises rapidly, the probability may not be less than 50%. This psychological factor may be due to an accidental event, an individual merchant's more than 20 tons of tungsten The profit-making sale of the mine may also be due to an inadvertent phone call or an insignificant WeChat! In this article, we try to explain and explain it with butterfly effect and resonance effect.

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