Feedstock Sourcing

 

A consistent and dependable feedstock supply is usually more important than getting the cheapest price per volume purchased with regard to feedstock sourcing.

 

The difficulty arises when market volatility oscillates feedstock prices over a wide range for an unknown duration of time.

 

if you have a consistent volume and quality supplier, you can still run into problems if you have not pre-negotiated a per unit purchase price.

 

You can still have trouble if you pre-negotiated a volume, delivery and price per unit over a fixed duration of time if market supply of your feedstock increases to the point where you could have bought your feedstock at substantially cheaper market prices and now you have to compete against those producers who are able to take advantage of those cheaper prices.

 

In a commoditized business like fuel or energy, these factors can significantly affect your profit margin.

 

It is important to balance forward contracting with market rates when you are unable to fix a product price for a guaranteed buyer at some point or time frame in the future.

 

If you are able to guarantee a purchase price for your product, then the best tactic is to enter a long-term supply contract for price, quality and volume. By fixing your input costs, labor costs and offtake purchase agreements, you are able to stabilize your profit margins. That stability is very attractive for investors.

 

Gaiergy Corp. can help you navigate feedstock sourcing with or without a guaranteed offtake agreement so that your business optimizes its profit potential over the short and medium term time frames.