I agree that factories desperate to have diesel to run their own generators are going to buy as much diesel as possible from distributors. Eventually that will lead to a shortage. A shortage, by definition, means the entire supply chain periodically run out of diesel. When a distributor, like LPH, runs out of diesel, they can't make any sales to the endusers.
I agree that there are positives that can come out of this for LPH but comparing LPH to rare earth is a stretch. LPH does not have supplies of a material that no one else can get. They have contracts with refineries that I am sure will give them all the diesel they can produce or import. But LPH cannot avoid the consequences of a true diesel shortage.
I would expect some temporary increase in sales but will it be dramatic? 10% 20%? If it's much over that, how can there be a shortage? If there is unlimited supply of diesel to LPH, then there isn't a shortage.
Again, the big difference here is that LPH is in China, where energy prices are controlled. So LPH cannot charge more for the product. They can increase their inventory turnover and sell more product but if there is really a diesel shortage, how can they get that much product? There wouldn't need to be rationing if there was unlimited supplies of diesel.
We won't have to wait too long. LPH will publish their Q1 in a few days and they will likely comment on the situation.
I am holding LPH so I am all for a big boost to the P&L but I can't see LPH getting rare earth status because of this diesel shortage.
Please post stock symbols first in all your posts. If it's a foreign stock, please list the US pk equivalent symbol.
If the Commodities Boom is Over, I am just a Gold Bug headed for the Windshield of LIFE
AI
