ILU 1.51% $9.15 iluka resources limited

The Area C royalty has often masked poor markets and/or poor...

  1. 89 Posts.
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    The Area C royalty has often masked poor markets and/or poor management and the same thing is happening at the moment.

    With all the focus on the demerger of the royalty, there seems to be little discussion about the collapse in Iluka's zircon sales. Q3, 2019 zircon sales of 51kt were less than half the 108kt in the same period last year and were the worst Q3 sales since 2012. Iluka has blamed Trump, Brexit and anything else it can think of, but the fact is other zircon producers haven't seen their sales fall as far or as fast. Major competitor Tizir reported they sold exactly the same volume of zircon in Q3, 2019 as they did in Q3, 2018 (15kt), while Image Resources seem to have no issue steadily growing their sales.

    To make matters worse, Iluka then increased zircon production in the quarter. Production for 2019 YTD now exceeds sales by 70kt and total stock of zircon probably now exceeds 180kt and will probably exceed 200kt by year end (equivalent to 8 - 10 months worth of stock). No wonder there is pressure on prices and their realised price in Q3 was US$64/tn lower than H1.

    Sadly its shaping up to be another cr*p year for Iluka shareholders, but thank god for the Area C royalty !

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