The Syrah (ASX:SYR) share price is down 25% in a month: What’s happening?

A man stands in front of a chart with an arrow going down and slaps his forehead in frustration.

The Syrah Resources Ltd (ASX: SYR) share price is pushing higher on Thursday.

At the time of writing, the graphite producer’s shares are up 2.5% to $1.03.

However, despite this gain, the Syrah share price is still down a very disappointing 25% since this time last month.

Why is the Syrah share price down 25% in a month?

Investors have been selling down the Syrah share price since the release of an announcement in the middle of September.

That announcement revealed that the company has been struggling to ship its product from the Balama Graphite Operation in Mozambique.

This isn’t a demand issue but rather a container ship shortage. Syrah advised that approximately 12kt of natural graphite sales from Balama were planned to ship from the Port of Nacala in late September. However, due to container shipping market disruption, this shipment was delayed to October.

As a result, the company’s third quarter natural graphite sales are only expected to be 17kt. This compares to its previous guidance of 29kt for the quarter.

Will things improve?

The good news for the company, and potentially the Syrah share price, is that management expects the situation to improve in the near term.

It advised that it expects container shipping constraints impacting its sales and operations to ease through the fourth quarter. This is due to additional vessel capacity and container equipment for East Africa being added.

Syrah certainly will be hoping this proves accurate. The company is experiencing strong demand and forward contracting for Balama products.

Management advised that its sales order book is currently underpinning 45kt of natural graphite sales in the fourth quarter. That’s almost 200% greater than its third quarter sales. Furthermore, there is additional spot sales demand evident according to the update.

Time will tell, but judging by the Syrah share price performance, not everyone is as confident as management.

The post The Syrah (ASX:SYR) share price is down 25% in a month: What’s happening? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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