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Sunday 17 July 2016

Eve Economic Report for June - Trade down 42% since February

The monthly Economic Report for June is out.

In summary:

Trade is seriously down.  23% down in June, 42% down since February.  Sort of hoping this is the Summer Lull.  Otherwise, events are moving back to pre-World War Bee levels.  The new ISK Sinks are making themselves felt - June was the third month that ISK left the game, i don't think we have ever seen ISK leave the game for three months in a row.  And that has a bearing on the Plex price.

Items of note from Regional Activity

Trade - down 23%

I am hoping this is the summer lull - trade was down 23% in June on top of a 14% fall in May.  To put this in perspective, Total trade in June was 567 trillion ISK vs February of 977 trillion, that is a fall of 42%.

I actually had to check the trade in The Forge (Jita) to make sure i was not making a mistake given it fell 23% to 399 trillion from 517 trillion in May (and 708 trillion in February!).

Going through the Trade Hubs: The Forge (Jita) has fallen 44% since February; Domain (Amarr) has fallen 41% since February; Sing Laison (Dodixie) has fallen 50%; Heimatar (Rens) has fallen 44%; and Metropolis (Hek) has fallen 38%.

Of those of significance that have held up compared to February: Providence has only fallen 4%; Lonetrek has fallen 11%;

I have put the top 10 trade Regions for each of June, May and April below to allow readers to see how far trade has come back:

Below is the top 10 Trade Regions in June

1 The Forge 399.2
2 Domain 67.1
3 Sinq Laison 21.2
4 Heimatar 12.4
5 Lonetrek 11.9
6 Metropolis 9.7
7 Providence 4.2
8 Essence 3.8
9 The Citadel 3.3
10 Tash-Murkon 2.5

Below is the top 10 Trade Regions in May
1The Forge517.1
3Sinq Laison30.0
8The Citadel5.2

Below is the top 10 Trade Regions for April:

1The Forge597.7
3Sinq Laison34.8
7The Citadel7.1

Nothing much changed in terms of Region ranking in June.  The Trade Hubs dominate though Lonetrek looks to have secured its position ahead of Metropolis (Hek).  Metropolis (Hek) looks secure in its position as the 6th largest trade Region but that is starting to look a dull place to be.

Perhaps two items of note here:

Firstly; hats off to Providence for maintaining its Trade levels since February.  Hard to say why that is when the main Trade routes are taking a pasting.  Why would the Trade Hubs be down 40-50% but Providence hold up to only down 4%?  There are plenty of Low and Null sec Regions that are actually up since February but they tend to be small Trade zones anyway.  For example, Catch is up 11% since February but it is only 1.5 trillion ISK of trade.  Likewise Geminate is up 50% but only to 1.2 trillion ISK of trade.

Secondly; Lonetrek is still battling hard to replace Hek as the number 4 Trade Hub.  I thought it may recede now that World War Bee is scaling down - perhaps not.

As a reminder to new players, the main 5 Trade Hubs in the order we know: The Forge (i.e. Jita); Domain (i.e. Amarr); Sinq Laison (i.e. Dodixie); Heimatar (i.e. Rens); Metropolis (i.e. Hek).

In the next 5: the expected Essence and Tash-Murkon are there, known secondary trade hubs.  But also Lonetrek and Citadel (both Regions that are one jump out of Jita) and Providence (null sec space that borders several highsec Regions: Domain / Tash-Murkon / Devoid / Derelik).

The dominance of The Forge (Jita) reigns supreme though - Jita shows no sign of losing its dominance.  It is no surprise that citadels in High-Sec are parking themselves close to Jita as they fight for its business.

In other Trade news, Deklein (home region of the losing side in World War Bee) has seen Trade fall 74% from 2.6 trillion in February to 0.7 trillion in June.

Trade was up 375% in Fade to 2.3 trillion vs February.

Production - down 17%

Production fell 17% after a massive 39% rise in May (likely on the back of building Citadels and rebuilding destroyed items in World War Bee).

Still, Production remains a good 18% above February levels - suggests we are still seeing the effect of Citadel building.  Interesting though that Production remains high but Trade is in freefall.  Suggests that either Corporations are mining and processing their own raw materials rather than buy them from the market, or that the purchases were made in prior months.

I have put the top 10 Production Regions for June, May and April below.

Top 10 Production Regions for June:

1 The Forge 22.9
2 Lonetrek 15.0
3 The Citadel 11.2
4 Domain 6.7
5 Providence 5.1
6 Sinq Laison 4.3
7 Catch 2.8
8 Geminate 2.6
9 Malpais 2.6
10 Black Rise 2.5

Top 10 Production Regions for May:

1The Forge32.7
3The Citadel15.1
6Sinq Laison5.3

Top 10 Production Regions for April:

1The Forge19.6
3The Citadel11.8
5Sinq Laison5.3

Nothing of substance to say about the rankings.

The Regions of The Forge and its neighbours Lonetrek and Citadel dominated - they were always big production centers but now take on the role as being where Citadels are being focused in High Sec to take business away from Jita.

For new players - The Forge remains the top slot - makes sense, many people will produce near where they buy the raw materials and/or intend to sell.

Domain and Sinq Laison are the other two major Trade Hubs - hence would expect Production to be there.

Providence, is a Low Sec Region but borders several highsec Regions: Domain / Tash-Murkon / Devoid / Derelik and has a more inviting stance for players - hence we would expect to see it be up there in the Production rankings.

Deklein (home region of the losing side in World War Bee) saw a 61% rise in Production in June (someone moving back in?) though still down 64% since February.

Also, whilst High Sec Production was down there were plenty of Regions where Production was up substantially in June: Branch; Tenerifis; Tribute; and Vale of the Silent.

Mining - up 1%

Mining was up 1% (contrasts with Trade being down 23%).

Below is the top 10 Mining Regions in June:

1 The Forge 1.5
2 Malpais 1.4
3 Providence 1.3
4 Cobalt Edge 1.2
5 Domain 1.2
6 Lonetrek 1.1
7 Metropolis 0.9
8 Geminate 0.8
9 Tash-Murkon 0.8
10 Everyshore 0.7

Nothing special of note in mining this month, again.

Perhaps worth noting that we are seeing notable rises since February in Catch, Cobalt Edge, Geminate, Omist, Paragon Soul and Malpais.  Either Null / Low sec is a lot more safer to mine or everyone is busily replenishing after World War Bee and to build Citadels.

Deklein, which historically had been a Top 10 mining Region remains down at position number 46.  In its great days we would see 1.0 trillion mined in a month, now it is barely 0.3 trillion.  How the mightly have fallen - though it is rising again.

The Forge and Domain at the top given being major Trade Hubs - so people mining near where they intend to sell and Lonetrek being next to The Forge and itself a major production Region.

Providence is up there given it is nullsec space that is very connected to several High Sec Regions and has a more neutral policy to neutral players.

Destruction - down 14%, at pre World War Bee levels

Looks like World War Bee is winding down.

The top table is the top 10 Destruction in June:

1 The Forge 2.0
2 Lonetrek 1.8
3 Black Rise 1.8
4 The Citadel 1.4
5 Providence 1.3
6 Querious 1.0
7 Domain 1.0
8 Catch 0.9
9 Vale of the Silent 0.8
10 Sinq Laison 0.8

The table below is the top 10 Destruction in May:

2The Citadel2.2
3The Forge1.9
5Black Rise1.4
7Sinq Laison1.1

The table below is the top 10 Destruction in April:

2Pure Blind2.3
3The Forge2.3
4The Citadel1.9
5Black Rise1.6
10Sinq Laison1.1

Life seems to be returning to normal where Destruction is focused on High Sec.

Catch and Querious, though they are now in the top 10, have always seen Destruction around the 1 trillion level.

In March we saw Vale of the Silent enter the top 10 given a large battle, in April Deklein and Pure Blind entered the top 10 as the war moved on.

Otherwise, nothing to note in June.

Life as normal of course means that Destruction follows Trade - for that, read ganking.

For The Forge, during May there was 658 trillion ISK of goods imported into the Region and 628 trillion ISK of goods exported.  Out of all that, a mere 2.0 trillion was destroyed.  A drop in the ocean really, only 0.2% of all traffic value.  Though annoying if you happen to be amongst that drop.

In fact, all the major Trade Hubs don't see more than 0.2% of their import+export traffic destroyed in May.  Ganking is clearly there but just not the threat it is made out to be.

Imports and Exports

I normally watch the Imports and Exports as an indicator on the travel of goods or, more recently, the movement of war.

In all, Imports were down 18% and Exports were down 18% following rises of 14% in each of March and April followed by a slight 2% dip in May.  To me, the March and April rises were due to war mobilisation.  The May flat level i suspect is due to a wind down in war countered by an increase in movement of goods to build Citadels and the June fall reflects the fall in Trade.

Otherwise a couple of items to note:

Firstly, last month for the first time i can recall we have saw net exports out of The Forge (Jita).  That reversed in June to the traditional net import balance.  I suspect that May blip of net exports reflected hauling raw materials from Jita to build Citadels.

Secondly, there are a number of Low / Null sec Regions seeing big sized net imports: Branch; Catch; Deklein; Immensea; Malpais; Placid; Tenerifis; and Tribute.  The only really new addition to this list would be Immensea and Tribute.  I don't have any views on all that for now.

Items of note in the Sinks and Faucets

We are back to the traditional trend of the net of Sinks and Faucets adding ISK to the economy after April and May saw rare examples of ISK contraction.  However, whilst this added 24.5 trillion ISK, it was more than offset by 26.7 trillion ISK leaving the game as players retired.  Hence, the ISK in circulation in the economy is back to February levels of 951 trillion having peaked in March at 972 trillion.

We are still seeing the effect of the Tax rises.  As a reminder on 27 April 2016, Transaction Tax (a tax on items sold) went from 1.5% to 2.0% and Broker Fees (a tax on orders placed on the market for future fulfillment) went from 1% to 3%.

Broker fees fell 37% to 11.6 trillion but still double the level in February and March.  Transaction Tax fell 16%.  Recall that Trade fell 23% in June.  The greater fall in Broker Fees is likely due to "off-shoring" whereby Buy and Sell Orders are posted from Citadels (but into NPC stations) to dodge the Broker Fee tax in NPC stations.  The fact that Transaction Taxes fell less than Trade to me indicates that plenty of Trade continues to take place in the NPC stations.

Blueprints fell 59% to 6.3 trillion ISK.  Down from the April peak of 24.8 trillion but remains above the February level of 3.3 trillion.  Suggests we are winding down now on Citadel Blueprint buying but still seeing some.

Bounty prices are up 11% to 42.5 trillion ISK confirming that World War Bee combatants are now back to ratting.

We have two new Sinks this month: "Jump Clone Installation Fee" which came in at 26.1 trillion ISK; and "Release of impounded property" which came in at 18.2 trillion ISK.  That comes on top of a new Sink last month "Reprocessing Tax" which was 90.6 trillion in May and 69.6 trillion in June.  Given there is 950 trillion ISK in the game, that is an extra 114 trillion ISK sinks to deal with.  Will be interesting to see how these additional Sinks trend in the future - will have a bearing on the Plex price.

Net insurance payments (payments to players less premiums paid to NPCs) fell 21% to 2.9 trillion having risen by a massive 31% to 4.5 trillion ISK in April (on top of a massive 21% to 3.4 trillion ISK in March).  That is war winding down.

Project Discovery rewards keep on falling, now down to 107 billion vs 340 billion in March.

Items of note in the Money Supply

Nothing to say this month other than money supply fell from 953 trillion ISK to 950 trillion.  As noted above, whilst ISK was generated into the economy to the tune of 24.5 trillion this was more than offset by players retiring and taking 26.7 trillion with them.

The greatest inflow of ISK into the game as a % of the prior day's ISK was on 17 October 2014 when 4.9 trillion ISK came into the game (=0.66% of the prior day's ISK in the game).  And indeed 18 October 2014 was the third largest day with 4.1 trillion ISK coming into the game.  Not sure why this would be: Plex went over 800m though that itself would not cause ISK to flow into the game; may also relate to SOMER Blink reimbursing prior deposits (see paragraph below).

The greatest outflow of ISK from the game occured on 20 August 2014 when a massive 32.7 trillion ISK left the game (=4.3% of the prior day's ISK in the game).  Most likely to do with the banning of SOMER Blink from the game on that day.  To put this in perspective, the next largest outflow of ISK was on 8 January 2016 when 4.8 trillion left the game (=0.52% of the prior day's ISK in the game) - again, most likely due to a banning event: The Latest IWANTISK Ban Wave.  Seems at least to be a pattern to the major outflow days = banning days.

Mapping all that onto Plex Prices

I greatly suspect players, like myself, use surplus ISK generated each month to buy Plex.  When i say "surplus" i of course mean surplus to all other requirements - where i have a choice of letting my ISK balance grow with no chance of generating further returns or i can invest it somewhere.

Normally, there is 20 - 30 trillion of surplus ISK generated which, through the mechanisms of trading, makes its way nicely up to the business owners and bankers in Eve.

They then park some of that in Plex.  That is what makes Plex an inflation hedge - where inflation is defined as money supply.  That is, the rising amount of ISK in Eve.

However, we have had three recent events which have disrupted that flow.

Firstly, World War Bee, i suspect, will have seen a higher than normal selling pressure to finance the war.  For a few months that extra ISK generated went into financing the war and i suspect hoarded reserves of Plex were sold to help out.  That i suspect is now largely over.

Secondly, Citadel building will also have seen a higher than normal selling pressure to finance the cost of building Citadels.  That i suspect has further to go.

Thirdly, the rise in Transaction Taxes and Broker Fees has added a further 8 trillion of additional ISK sink to Eve.  Worth noting that it was an additional 15 trillion ISK sink until players discovered "off-shoring".  That is here to stay though good to see player innovation minimizing its affect.

Fourthly, we also have some new ISK Sinks: "Jump Clone Installation Fee" which took out 26.1 trillion ISK in June; and "Release of impounded property" which took out 18.2 trillion ISK in June.  I am not yet sure what their run rate will be, if anything.

The net effect of all that has meant that in April, May and now June we have seen, for the first time since August 2014, ISK actually leave Eve.

ISK has only left Eve on three prior occasions - August 2014, April 2014 and March 2014.

Hence,for the last three months there has not been surplus ISK generated to invest in Plex and for the prior three months before that we had World War Bee financing by selling Plex.