Friday, February 8, 2013

NOTEC WTF

Just want to do a brief write up about the NOTEC announcement.  I'd do an in-depth analysis, but by the time I finish, this market anomaly will have shaken out, and the greater markets will be settled into their new normal.

If you're interested in digging down the rabbit hole on this one, I have to point at Blake's blog on estimated moon distribution.  Pair that with T2 component build values, and you'll too understand what the full economic impact of this change looks like.

TL;DR

T2 ships are going to get more expensive.  I predict +15% increase in T2 ship prices from where they are today, with a return to normal by mid april.  Margins on building ships are currently halved, and I expect it to take two weeks to shake out for the highest volume products.  Most T2 modules will be untouched or slide up slightly (+5%).  Weapons and ammo will go untouched, ewar will rise the most.

The longer term?  I think NOTEC is going to have a harder time keeping a stranglehold like OTEC did.  Neodymium can be replaced by Platinum, and if you're building Nanotransistors, odds are you have access to Platinum already.  Also Platinum is 6x more plentiful than Neodymium.

Dig a Little Deeper

Neodymium (neo) is the other half of Nanotransistors, Technetium being the first half.  Nanotransistors are ubiquitous across T2.  As Ripard Teg pointed out back when OTEC was announced, a Hulk is 70% Technetium by value.  The problem is that Neodymium is an "R64" material, the most rare.  And all R64 materials have had alchemy reactions for years as part of the effort to release the death-grip Dysprosium had on the T2 market.

But also remember that OTEC was announced the same time the removal of drone refinables was being announced.  This resulted in a one-two punch that bumped ALL prices up, T1 and T2.  So, though it became more expensive to get T2, the usual "relief valve" of T1 was also jammed shut.  Today, mineral supplies are stable, and the T1 ship landscape should see a short term bump in volume as people avoid replacing those shinier T2 hulls.

This new cartel means that we will see a bump in the price of Nanotransistors, which will go into the pockets of OTEC rather than NOTEC 2:1. Items that use the most Nanotransistors and Microprocessors (ships, EWAR mods, missiles) will see some not-insignificant price bump.

The problem is these price bumps are going to be largely temporary.  Once the speculative bubble pops on Nanotransistors, all prices will slouch back to pre-NOTEC values.  Nanotransistors have been on a slow decay since May, and there isn't anything to worry about.

Crazy Predictions

If I may be crazy for a second, I wonder what this will do to Zealot doctrines.  I predict the largest price fluctuation on Zealots, and with T1 cruisers being a 3:2 advantage... I start to wonder how much ISK people are willing to lose.

This is a 1% kind of prediction.  I totally understand why you would bring Zealots over Omens... but when Zealots die, they die in large batches.  Not that I mind.  As long as Zealots remain a go-to source, I pocket 500M every time a big group of them get whelped.