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Strategies & Market Trends : YEEHAW CANDIDATES
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To: Ken W who wrote (854)1/4/2003 11:56:37 AM
From: Crossy  Read Replies (1) of 23958
 
Ken,
I calculated the current "refining spread" and found some interesting inference:

Spread historically was 15-30% but the high energy prices and bumper crops sent the spred down to very low numbers throughout 2000. We even had NEGATIVE spreads during 3 months: June and November 2000 and April 2001. since then the spread recovered nicely to 28% in 2002Q1, 23% in 2002Q2 and 20% in 2002Q3. Recently prices seemed to have firmed again.

Let's see. I get the impression that the "raw spread" is the maximum amount of gross margin that Imperial Sugar could attain each time. Production inefficiencies should reduce the gross margin available from the spread.. Reduced working capital requirements should improve the gross margin also. I'd love to see IPSU migrating to a business model where less stocks of inventory would be required. Would improve capital turnover and thus profitability..

rgrds
CROSSY
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