Metamaterial Prices Gone Wild

Disclaimer:

This is not meant as a serious analysis of the EVE Online Market but it is my view and conclusions that I have made with regard to how things are and may be in the future. Your opinion and conclusions may be different and as such no claim of accuracy is made by me.

As part of my daily dashboard I monitor the prices of the four different metamaterials and I've seen a sharp drop in the per unit price over the past three months.

This is especially interesting for me as I produce Terrahertz and Photonic Metamaterials and the drop has seen my profit margins drop from 2 billion to just over 1.1 billion per month in this time and if there is something an industrialist hates, it is losing money.

Market Conditions

Using the Market History Display (provided by Fuzzworks) it is easy to see and compare several market factors 

Nonlinear Metamaterials price since 1st June 2014

Plasmonic Metamaterials price since 1st June 2014

Terahertz Metamaterial price since 1st June 2014

Photonic Metamaterial price since 1st June 2014

Much like any market product there will always be volatility but I've been trying to work out why there has been this drop in price and whether or not to stay I should stay with these metamaterials or move to something else.

Volume is still very good, with over a million units per day being sold, usually a lot more, but it is Photonics have seen the most price drop (from around ~11,500 to ~9,000) even with a large volume being sold daily.

So far there has been no price rebound and the price continues to decrease

Supply and Demand

Supply and demand will impact any price, but if there is a large demand then we'd expect to see the price increase not decrease. Consequently should there be a large supply then we'd expect the price to drop and this is what we're seeing.

I checked the number of Orders and was surprised to see that there was far more Photonic Metamaterial for sale than any other metamaterial, nearly three times in some cases but usually at least double, and as a result there is a lot more market competition for people selling.

In fact checking the other metamaterials I see that they all have a lot more for sale than they have in previous weeks and that the demand is only slightly more than previous weeks. As a result this is most likely why we're seeing the price of each metamaterial dropping so much.

Over Supply or Market PvP

The market is showing that we have an over supply of Metamaterials and this is causing the price to drop, some more so than others, but is this going to continue or is it just a short term result of the Crius expansion being released?

Changes in the Crius expansion have increased the material requirements for T2 blueprints (copies/originals) and this has had the result of more metamaterials being needed per blueprint, so this will drive the demand up. 

However this cannot solely explain the continuous drop in price, I believe that people are Market PvP'ing these materials rather than selling to buy orders (which is logical as the difference between Buy and Sell for MM is usually between 800 and 900 per unit) and this is causing the price to drop continuously as people update their orders and lower their price to be below the "current lowest".

Conclusion

This 0.01 ISK dropping is at times followed by a significant price floor drop of between 1 and 10 ISK which just causes the price to get even lower. There has, a couple of times, been a "White Knight" of sorts who has reset the market buy buying all the low priced orders and reestablishing a higher price, but this person hasn't appeared in recent times and the price has continued to drop.

I'm still not convinced that I need to change anything at the moment, as always I am looking at other sources of income to supplement my reactions, but I still have a few weeks of inputs remaining and the price has not yet hit the level where I feel action is required.

Of course I'd like a higher price as this means more profit for me which means I can invest this ISK elsewhere, pay bills and buy shiny stuff to fly but I'm still making money. Just not as much as two/three months ago, that's market volatility for you.