Salvage Futures - A Market Analysis (Full Disclosure: Vested Interest)


(Sabriz Adoudel) #1

Disclaimer: I have followed the advice in this post and have tens of billions of ISK worth of salvage; while this isn’t intended as a pump and dump post, you should at least entertain the possibility that it is.

Consult independent financial advice before acting upon this information, I reserve the right to scam you out of your ISK, yadda yadda.

The introduction of drilling platforms will shake up the salvage market.

Salvage Supply

Salvage is mostly produced by highsec mission runners and their minions (Pro Synergy etc); explorers; and the odd nullsec multiboxer who will run as many ratting ships as they can actively control, running salvagers on other accounts.

A small amount of salvage is produced by salvaging wrecked citadels, but not enough to make this a lucrative source.

Nothing much is changing on the production front for salvage on the immediate horizon.

Importantly it only scales with player active effort, which is a limited resource in EVE, and salvaging doesn’t lend itself overly well to massive multiboxing.

Salvage Demand

Salvage is generally used for three main things.

Rigging Small Ships; Rigging Large Ships; Rigging Structures.

Small ships can be mostly ignored as the salvage consumption is pretty low.

If you don’t believe me, check out the cost of Contaminated Lorentz Fluid (CLF), a major component in hybrid DPS rigs. Prices of CLFs do not correlate at all with the price of Light Neutron Blaster II over the last year, despite a high correlation in use between hybrid DPS rigs and LNB2s. CODE in particular use a lot of both and prices do not fluctuate with CODE’s activities, despite the alliance being (probably) the largest consumer of small ships in the economy.

Large ships historically dominated the demand for salvage. Battleship rigs use a lot more salvage than frigate rigs, and carrier rigs use much more again.

There’s been a moderate increase in demand for large ships lately which can only help salvage futures overall. But I don’t believe this is the decisive factor overall.

Structure rigs are the new kid on the block.

Other than Astrahus citadels that are used as disposable staging posts in war, new structures pretty much all require at least one rig to be useful at anything. And those rigs require enormous amounts of salvage to build, starting at ~300m for a medium rig, x5 for large, x5 (again) for XL, and x5 (approx) for T2.

It’s reasonable to expect the same to be true of drilling platforms, when they are released. I expect the vast majority of DP owners to invest in 1 or 2 rigs for each of their new shiny structures, with a moderate minority using 0 or 3.

Some of these rigs may be ones that exist now (for example, the missile precision rigs, while not popular at present, will likely do at least something useful on a drilling platform). However I expect new rigs - ones not currently in the game - to make up the majority of rigs fitted to DPs.

Relative Supply

It’s completely in CCP’s hands which particular salvage pieces are used most in the new rigs.

Historically, however, each time a new class of structure has been launched, the most in-demand salvage pieces have changed.

Prior to the first structures, it was Alloyed Tritanium Barsa and Armor Plates that were in the shortest supply gamewide.

After Astrahuses were introduced it was the various Power Circuits (Tripped, Charred) that jumped to the top.

Now, it’s CLFs.

I’m making an 11 figure gamble that this trend continues.

I’ve purchased a basket of tens of billions of ISK worth of T1 salvage pieces that are presently at low prices (1000-20000 ISK), and T2 pieces that are under a million.

I don’t expect each of these gambles to pay off individually, in fact I expect that the majority of them will lose me ISK. However, if one of the salvage pieces I have bought tens or hundreds of thousands of (or better yet, millions) becomes the next Contaminated Lorentz Fluid, I will be very, very happy indeed.

It’s up to you whether you try to follow in my footsteps, or discover flaws in my analysis that allow you to profit at my expense.


Salvage Price Spike - What's Driving It?
(Fade Redemption) #2

memed


(Styx Saken) #3

I believe that you believe your analysis to be correct.

So why not use the salvage that you bought as collateral for a loan to buy even more salvage?

(I know, you wish you’d had this idea before you wrote your post. But that doesn’t mean that it’s too late now. Salvage prices have mostly been stable; you could still multiply your profit.)

I happen to be offering collateralized loans. Feel free to contact me if you want to discuss the details.


(Sabriz Adoudel) #4

Had the same idea, decided against it because I’m somewhat risk averse, and because that volume is difficult to acquire without distorting the market.


(Jori McKie) #5

There is one major problem you will have to face.
Right now no one with a sense of efficiency is salvaging in LvL 4 thus the volume is very low. I can remember Armor Plates for 3m per unit etc. back then the drop rate was low compared to today. Now when prices for salvage rise to a certain point it will be worth to salvage again in LvL 4 and it is freaking easy today with Marauder or Noctis.

What i’m trying to say is, at a certain price point “everybody” will salvage again means huge volume means price will be depressed or crashed so the window for profit will be very short.


(Sabriz Adoudel) #6

I agree completely.

That imposes a limit on how high the price of a basket of salvage can get. We are nowhere near the point where players not interested in highsec L4s feel a pressure to run and salvage them (the way highsec incursions, null Rorq mining and null carrier/super ratting are strong pulls).

Your point is why I didn’t buy into salvage pieces that are already high in price hoping they’d go higher.


(Alvain Awrthyr) #7

Hey, I wish you luck in your salvage endeavour. Salvage made me a trillionaire and I still have to liquidate 35 mil units of various salvage I bought for 100-500 ISK back when it was all way cheap around 6 years ago. Didn’t play EVE in the last 5 years, but when I saw that salvage is expensive now, I started logging in from time to time to liquidate a bit and bask in the glory of my wallet. :smiley:

Also bought some more to help dry up the supply.

And you are right, having millions of something like CLFs is probably the easiest way for single individuals to get rich. Had ~3.5 mil of them.


(Sabriz Adoudel) #8

I’m interested to know how well you are able to liquidate such enormous supplies of CLFs, as this will be something I need to figure out if my salvage purchases work out.


(Alvain Awrthyr) #9

Liquidating the salvage types that had a big price & a sharp and permanent volume increase was actually quite easy. I just sold a moderate amount every few days for 3-4 months or so. I’m sure quite a lot of people were liquidating old stockpiles at the time, so the fact that prices didn’t drop is an indication of real demand. I think most of that demand is/was coming from structure rigs. I guess most of the CLF stockpiles got sold off by now, that might explain why the price is quite stable, despite higher incentives to salvage and (probably) decreasing demand for structure rigs.

Quick rundown of what I still have and how the market is looking…

Charred Micro Circuits: Nearly no increase in actual demand, might be one that gets a boost from new rigs etc… Guess most of the demand spikes in the last few months are speculators buying from impatient bagholders.

Conductive Polymer: The price history actually looks a bit like a prolonged pump & dump. Or better, artificial accumulation for a long time making the price go up and now a slow release, dampening the price again, as demand was never “real”.

Damaged Artificial Neural Network:
Defective Current Pump:
Malfunctioning Shield Emitters:
Scorched Telemetry Processors:
Smashed Trigger Units:
Thruster Console:
Those charts are basically all the same. Moderate increase in demand with the patch last year that didn’t lead to immense price increases, but it might just be that it took until now to dry up the old/cheap stockpiles and thus we could see a nice and steady increase in price now. I’m sure some speculators are also helping with that. :stuck_out_tongue: Let’s just hope that most people that had stockpiles did decide to sell them by now, or that the new patches might bring increased demand.


(Sabriz Adoudel) #10

Starting to see some increases in price here. My stockpile is up 8 billion on the purchase price.

I’m still buying more, I feel the analysis still holds (although I am also selling a little when the spreads get large)


(Do Little) #11

Material requirements for the reaction rigs have been up on Singularity for a while now. I suspect the big players have stockpiles and buyback programs to encourage their ratters to salvage.

Also CCP have said that existing reprocessing rigs will be dismounted and can be reused.

I don’t think prices will drop between now and patch day - speculative pressure will continue to build; but there is a reasonable argument that you’ll do better selling to speculators before the patch than selling to builders after!


(Sabriz Adoudel) #12

That’s entirely possible. I’m monitoring that & am happy to dump stock on other speculators if I lose confidence in the market.


(kasvatus kaks) #13

Reprocessing rigs yes, but what about the new reactor efficiency? That will be the most important if you plan on really getting any moongoo efficiently?

How many moons are there in eve?
What about how many r64’s?

Just curious because after reading this post I really wish I had seen the rigs on sisi early and bought a bunch when salvage price was low… In my inexpirienced mind I only see one way and the way is Sabriz hitting the gold mine once patch hits… Just throwing theoretical numbers now:
If there is 300 r64 + other high value moons that are most likely to be set up a large rig then the demand will be a lot more than what Jita has to offer currently. Of course because I am late there has been some stacking up allready but within a month scale from Jita, there is not so much supply to provide all the required rigs needed EVEN if the reality was that only a fraction of all moons would be set up with a refinery?

Ps. Sabriz NICE! good post and GJ hitting the gold mine, maybe I get hang of these some day…


(Do Little) #14

Remember that you don’t need a reactor, or reprocessor at each moon. Those service modules can handle an infinite number of jobs simultaneously so you only need 1 of each. The actual number will be a trade off between fuel cost and the hassle of transporting the ore. If Rorquals can compress the new moon ore transporting it to a central reprocessing facility won’t be a big deal.


(Art Vandolay) #15

Sabriz is a sharp capitalist. I think she’s going to clean up on this one.

Too much risk for my blood, so I’m just happy I get to watch the ISK flow.


Preparing for Lifeblood - Phase 2
(Sabriz Adoudel) #16

well looks like i hit hard on 3 items.

All the Micro Circuits (the T2 salvage) I bought at 11k-15k/unit are looking pretty damn nice now. Went ahead and carried out a price shock/buyup as well because I’m still confident in this one.

Will possibly lose a bit on Charred Micro Circuits - there’s new demand there but probably not enough to consume my stockpile.

I sold 36k units Fried Interface Circuit and got more than I paid for my whole 380k unit purchase, so very happy there.

Not sure if I’ll get payed on Smashed Trigger Units or not, but if I do they are looking nice.

Mostly small losses on the rest.

Current projections are that I’ll make a few tens of billions, but we will see. It’s not made until it’s in the wallet.