Commodity markets, supply, demand, and relationship to the BGS

[Ian Doncaster]

The operation of the commodity markets is an often observed part of the game, but most analysis so far has been on how to use it to gain influence. The fine details of its operation as a mechanism in itself have received less attention (since they're rarely relevant to either BGS influence control or optimal trade profitability). Below I summarise what's known, suspected, and unknown, based on my research so far - if I've missed other work that answers some of these questions, please let me know.

Known:

• Commodity markets can either supply or demand a good, dependent on the economy of a station. In a single-economy station, this is largely dependent on the good only, though certain Military goods are more complicated.
• Commodity supply or demand levels have a "natural" equilibrium point. If disturbed from this by trading, they will return to it gradually over time. The time needed to return to equilibrium varies depending on the type of good. Supply and demand recovery rates are not the same - demand recovery rates are generally 2-3x slower than supply recovery rates for the same commodity.
• Recovery rates are generally slower the more expensive the good is - from around 500 days for Painite demand to around 2 days for Synthetic Meat supply. [1] This appears to have been an adjustment made in the 3.0 release. A reasonable estimate for the rate seems to be "2 days + 1 minute per credit of galactic average price" for supply, and 2.5x this for demand.
• Supply and demand levels influence the generation of trade missions.
• Overall across the galaxy (which will mostly be baseline supply/demand rates) demand levels are much higher than supply levels. (At time of writing, approximately 90 billion tonnes supply, 400 billion tonnes demand)
• The absolute position of the equilibrium point (adjusted for BGS state, see below) is generally higher for higher-population stations, related to Sqrt(population). However, other factors can affect this - stations have relative specialisations in some goods (sometimes very significant ones) and the sum of economic size in multiple station systems is often not that close to the population (though it's usually the same order of magnitude)
• The supply and demand levels appear to be stored internally as percentages of the equilibrium point. This is then overlaid by a multiplier dependent on the BGS state [2] to produce the current absolute level. If the BGS state changes, the supply and demand levels immediately jump to the new absolute level implied by the current percentage level. The BGS state does not appear to affect the percentage rate of return to equilibrium, though it does proportionally affect the absolute number of goods consumed or produced. Conversely, trade actions affect the absolute level which is then back-calculated into a change in the percentage level. [3,4]
• In general, only the Boom state increases production over the None state, for almost all goods. All other states are at best neutral. Demand effects are more varied.
• Conflict-elsewhere counts as the Conflict type, not None, for the multiplier.
• In general, Refinery, Agricultural and Extraction economies export more than they import, with all others importing more than they export (Industrial and High-Tech are closer to balance). The other economies may well make up the money either in subsidies from elsewhere or through trade in services.

Suspected but not yet confirmed:

• In a multiple-economy station, both parts of the economy are treated separately, then added together according to the ratio between them. This may lead - if the effects on supply and demand are different for a BGS state - to goods being supplied in some states and demanded in others. Industrial-Refinery or HighTech-Refinery combinations (due to specialisms?) often sell just one or two refined metals from the Refinery side, while importing the rest.
• Pure Military economies may in effect count as multiple-economy for the goods both imported and exported to Military, again leading to goods being selectively imported, exported, or neither, depending on BGS state and specialisation levels. This can also apply to goods like Tobacco (export: Agri, import: All) in Agricultural economies.
• Recovery rates are static and not influenced by trade activity in other goods produced or consumed by the station (beyond that trade potentially causing state changes).
• Different goods have different ranges of specialisation possible. Hydrogen Fuel does not appear to have any significant specialisation and can be used to establish baselines. There appears to be no correlation between specialisations in different goods.

Unknown:

• How much effect does supply and demand have on trade mission generation? Would it, e.g., be possible to stop Biowaste missions putting an Agricultural station into Outbreak by proactively delivering Biowaste through trade to meet the demand? Is the Palladium shortage causing a reduction in Palladium delivery missions / a rise in Palladium fetch missions?

[1] Where I have the data, the estimated recovery rates can be seen at https://cdb.sotl.org.uk/reserves - even with several months of trade data, most goods are traded too infrequently to be certain at this stage, and some of the estimates have a large margin of error.
[2] List of effects for each commodity where known at https://cdb.sotl.org.uk/effects
[3] A demonstration of both these effects can be seen in the Palladium stock levels at Bascom's Pride in June 3304. https://cdb.sotl.org.uk/stations/66/trade/54?minrange=3304-06-01&maxrange=3304-06-30
[4] Worked example of trade stock.

e.g. a good has a restock rate of 3 days, and in Boom production is increased by 50%, while in War it is decreased to 20% of normal.

Start of Day 1: stock is 100t (maximum), state is None.
1 minute after the tick, a trader buys 80t. The stock is now 20t
End of Day 1: no further trades, so the stock has incrementally recovered to 53t.
Start of Day 2: Boom state entered. Stock jumps to 77t.
Half-way through Day 2: stock has increased to 102t
A trader buys 80t again. Stock now 22t
End of Day 2: Stock now 47t
Start of Day 3: War state entered. Stock jumps to 6t.
End of Day 3: Stock recovered to 13t.
End of Day 4: Stock recovered to 20t and now at maximum.
End of Day 8: War ends.
Start of Day 9: None state begins. Stock jumps to 100t.

 

[Jane Turner]

Going to link this! Thanks

 

[Ian Doncaster]

First post updated with some recent discoveries.

• The supply/demand capacity of a station seems to be broadly proportional to SQRT(population) in systems with only a single station. In systems with multiple stations production and consumption is much higher than this would imply - there appears to be a "economy size" parameter for each station which strongly resembles population in some contexts and not at all in others. The economy size parameter for a single station can be higher than the entire system population in some cases.
• The relationship between restock rates and prices seems relatively linear. A rough estimate is "2 days + 1 minute per credit of average price" for supply, and 2.5* slower than this for demand. This may be an underestimate for very expensive goods (>10,000 credits) ... or this may just be inaccuracies in the data as it's harder to accurately estimate the slower ones and there aren't many goods that expensive in the first place.

While the economy as a whole - ignoring the effects of BGS states which tend to be bad - probably can produce more tonnes than it uses ... there's a lot of discrepancy between goods, with some having a substantial surplus production capacity, and others having much more demand than production could fulfil. The economy is also much larger than the player base (presumably by design!) - it looks like Colonia could support (across all goods!) well over 10,000 active player traders and miners, for example ... and the Sol bubble perhaps approximately 100 million of them.

 

[Jmanis]

I skim-read this (about to go to bed) but couldn't see anything about this.

Do you have any explanation why Demand for goods drops off in a Boom? I find the most profitable trade routes are never Boom to Boom, but rather Boom (High Supply) to non-Boom (High Demand). Trading Boom to Boom results in fairly mediocre profit margins due to the low demand.

I can only see reference to the increased supply effects of the Boom state, and nothing on the Demand (unless there's an increased supply for *all* goods?)

 

[Walter2]

Do you have any explanation why Demand for goods drops off in a Boom?

Because any faction in Boom is far too busy boasting about its Boom state to all and sundry to do any real work. Makes no sense: what can be so confidential that the data has to be carried by courier indiscriminately to friend and foe alike? Don't the normal patterns of production continue?

 

[Ian Doncaster]

Do you have any explanation why Demand for goods drops off in a Boom?

I don't see any significant demand reductions in terms of quantity on most goods during a Boom (if anything they're mostly slightly higher), but purchase prices do tend to be down for most goods (with a few exceptions). Table at https://cdb.sotl.org.uk/effects/s/2

Yes, most goods seem to have ~80% increased supply quantity during Boom, with most having a discounted price as well.

Boom is one of the less clear ones for why some of the prices and quantities behave as they do, certainly.

 

[shevek]

Does the supply/demand bars depend on the what economies are within a 20ly radius? I've noticed that some stations with no CMDR trading have different demand bars, such as all food being 3 bars except for 1 food type at 2 bars etc.

 

[Ian Doncaster]

I've noticed that some stations with no CMDR trading have different demand bars, such as all food being 3 bars except for 1 food type at 2 bars etc.

I have no idea what those bars represent. They do not straightforwardly represent any of:
- the absolute level of supply/demand
- the effect the current BGS state has on supply/demand
- the level of supply/demand relative to the current maximum (there is definitely some correlation here, but "full demand" goods can have only 2 bars, for example)
- the level of supply/demand relative to an average station of the same economic size

I can't see any obvious connection to what other economies are nearby, either.

 

[Ashnak]

I thought that, at least for supply, those bars were an indicator of the first derivative of the supply level, i.e. how fast a depleted supply will be replenished (relative to whatever). In this case, I would guess a similar role for demand goods, i.e. how fast the demanded goods would be consumed in the system after the demand has been satisfied or, in other words, how fast the demand level would go up again.

Not that I would have any observation on this. If I'm trading, I'm trading peak commodities between two points (boom/outbreak, boom/famine).

 

[Limoncello Lizard]

Do you have any explanation why Demand for goods drops off in a Boom? I find the most profitable trade routes are never Boom to Boom, but rather Boom (High Supply) to non-Boom (High Demand). Trading Boom to Boom results in fairly mediocre profit.

I think it's to mimic RL economies. When the exchange rate is low, it's good for export, but bad for imports. Kind of the opposite of Boom though - but so much of ED logic is back to front.

 

[Ian Doncaster]

I've revised the economy-state analysis to take production rates and relative quantities into account more - see table at https://cdb.sotl.org.uk/effects - and this gives a much healthier picture of the economy than a brief glance would give.

Agricultural, Refinery, Extraction: primary production economies which make a substantial trade surplus in goods
Industrial, High-Tech: economies which have a trade deficit in goods, though not necessarily a large one, but by making more complex goods are presumably also able to sell associated service contracts.
Military, Colony: economies with a substantial trade deficit in goods, but which are presumably subsidised by outside organisations (or for Colony perhaps by taxing residents who make income elsewhere). Terraforming is probably also in this category.
Service: again a substantial trade deficit in goods, but presumably a very substantial trade surplus in services which we don't see.

I've also started to assess "specialisation" - why do some refineries produce more Indium than Gallium, and some the other way round. I have a limited sample set, but so far:
- if more than one economy type handles a good in a particular direction, their ranges of possible specialisation appear to be the same (or at least overlap a lot)
- some goods vary a lot more than others: the range between highest and lowest production, relative to the size of the economy, varies between almost constant (e.g. Synthetic Reagents) to over two orders of magnitude difference (e.g. Resonating Separators)


There's also an interesting phenomenon: in the Sol bubble, if you add up the economic sizes for the various stations (based on their production of Hydrogen Fuel, which seems to be an entirely unspecialised good) you tend to get a value smaller than the total system population, though usually at the right order of magnitude - not surprising, with settlements, stations without markets, and perhaps hidden stations on non-landable planets accounting for some of it.

In Colonia, there are single stations with an economic size considerably greater than the entire star system they're in (e.g. Aragon Silo in Carcosa has trade quantities suggesting approximately 1.5 million people, in a system with a 350k population and two other stations) - this presumably reflects the advantage of all the factories using the latest production technology, and gives Colonia a per-capita ~450% productivity advantage over the Sol bubble.

I thought that, at least for supply, those bars were an indicator of the first derivative of the supply level, i.e. how fast a depleted supply will be replenished (relative to whatever). In this case, I would guess a similar role for demand goods, i.e. how fast the demanded goods would be consumed in the system after the demand has been satisfied or, in other words, how fast the demand level would go up again.

Doesn't seem to be - replenishment rates are dependent on the price of the good. And goods which are at full demand can have just a single bar while other full demand goods have three. I thought they might reflect recent player trade activity, but checking a few markets that seems very unlikely.

 

[CMDR Endincite]

This is superb Ian.
The sort of study/discussion I had dreams of doing when trade was my ingame life back in 2015.

Have more rep than I can give you.

 

[Ian Doncaster]

I've added some graphs linked from the specialisation page https://cdb.sotl.org.uk/specialisation per-economy, that show the "shape" of the specific economy. e.g. for Extraction https://cdb.sotl.org.uk/specialisation/2

The stations are the horizontal lines, with the commodities being consistently positioned vertically, and the size of the circle representing the production or consumption of that commodity relative to the station's economy size and type.

Unfortunately the chart library I'm using doesn't like adding category labels to this chart type ... so until I can figure out a workaround, you'll have to hover individual bubbles to see what they represent. More interesting to those not invested in those specific stations, however: if there is a correlation between specialisations it's really not obvious - I can't see any patterns like "stations which export lots more Gallite also import lots more Fish", and stations with a similar shape in one part of the chart have very different shapes in other parts. So every station economy may - in this sense - be entirely unique.

 

[MaxG10]

Standing ovation Ian. That was quite some work involved in analysing the model.

 

[Deareim]

Could we assume it is working the same way for the BM ?

Normal trading for Bust effect :
1. Simple loss trading on any kind of goods ?
2. loss trading on goods the stations is exporting ? Meaning selling biowaste to a station that normally export it.

 

[Konan]

Dont know if this helps your study but i have noticed some relationships between systems ans stations. In Tujila is a refinery station, Vonnegut. It specializes in explosives. I am allied with all factions. I developed a trade route between Vonnegut and Ferguson station in Acawar system, only 6ly jump. Ferguson is an extraction system. I think it took less than 10 trips with explosives to develop a trade route. The more i haul explosives, the more i get missions valuing 5-12 millions credits, 180t, going back to Tujila, Fernao Do Po terraforming station hauling gold, silver, and palladium. I also get missions from Ferguson to Vonnegut with explosive making materials, usually valuing 1-3 million. If i stop for a week the missions taper off drastically, only to be reinvigorated if i resume the explosive hauling. Those 3 stations are now linked together in a supportive manner. Being doing it for a few years now. I also started hauling from Vonnegut to other systems and have had the same results. I now have a 6 system trade "alliance" going with each receiving and supporting Vonnegut...except for Fernao Do Po which is a terraforming station amd only buys goods.

 

[Konan]

So, basically that one little refinery station supports several extraction systems and one military system with its exports. They in return support it with explosive making materials, except for the military station. The military stations missions picked up and began exporting non lethal weapons to all surrounding stations. When the new mining gameplay came about, i saw an increase in mining missions in Fernao Do Po. Also the refinery station pays atm appx 987M for a ton of LTD....with a pristinse icy ring in system to mine from. My question now is to figure out how the LTD helps the refinery station.

 

[FrogsFriend]

Dont know if this helps your study but i have noticed some relationships between systems ans stations. In Tujila is a refinery station, Vonnegut. It specializes in explosives. I am allied with all factions. I developed a trade route between Vonnegut and Ferguson station in Acawar system, only 6ly jump. Ferguson is an extraction system. I think it took less than 10 trips with explosives to develop a trade route. The more i haul explosives, the more i get missions valuing 5-12 millions credits, 180t, going back to Tujila, Fernao Do Po terraforming station hauling gold, silver, and palladium. I also get missions from Ferguson to Vonnegut with explosive making materials, usually valuing 1-3 million. If i stop for a week the missions taper off drastically, only to be reinvigorated if i resume the explosive hauling. Those 3 stations are now linked together in a supportive manner. Being doing it for a few years now. I also started hauling from Vonnegut to other systems and have had the same results. I now have a 6 system trade "alliance" going with each receiving and supporting Vonnegut...except for Fernao Do Po which is a terraforming station amd only buys goods.

That's something I've noticed over time too. Never had enough concrete testing to confirm it here but I've seen it often enough. In a system with little historical player traffic the mission board starts out almost totally filled with assassination/salvage type missions day after day, but if I start hauling goods in and out regularly and bump up the economy then the mission types gradually change to mainly cargo source and demand. The end point systems for all those cargo missions and hauling then start to turn to source/demand missions too, creating a linked cluster of trading systems.

 

[Konan]

That's something I've noticed over time too. Never had enough concrete testing to confirm it here but I've seen it often enough. In a system with little historical player traffic the mission board starts out almost totally filled with assassination/salvage type missions day after day, but if I start hauling goods in and out regularly and bump up the economy then the mission types gradually change to mainly cargo source and demand. The end point systems for all those cargo missions and hauling then start to turn to source/demand missions too, creating a linked cluster of trading systems.

Yep, seeing the same as well. Supposedly there is a hidden wealth variable with systems or stations. The game doesn't tell you directly what it is but it does indirectly. Such as when my terraforming station has received several loads of gold, palladium or silver....i notice that the luxury class passenger missions increase. Im assuming thats why. Maybe im wrong but thats what i see. I would like to see Fdev work more on this. Id like to see some info from someone how some of these missions relate to system states.

 

[Ian Doncaster]

Interesting - do the missions change without the BGS state changing, or is this a change which happens when the system moves into Boom/Investment from None?