Iofina expects fundamentals to take iodine prices higher

By Michael Greenfield
Published: Monday, 22 October 2018

Iofina's CEO predicts stronger iodine prices for the rest of 2018, he told Fastmarkets IM.

Iofina is anticipating a stronger pricing environment in the iodine market through the end of the year, believing that $30 per kg is a reasonable price, chief executive officer Tom Becker exclusively told Fastmarkets IM.

"In the fourth quarter [of 2018] we might see a pick up [in pricing] as stocks come down globally and we still see good demand in the market and room for the prices to move up without any significant supply coming on," Becker said.

Further into the future, pricing should continue to strengthen, "We think it is reasonable that the market reaches $30 per kg," he added.

The market currently requires an additional 1,000 metric tonnes each year to service demand, according to Becker.

"Generally there is a little bit more demand than production and that is the biggest driver in the current price increases – producers are selling a little more than they are making," Becker said.

Spot iodine, min 99.5% prices have risen from $20.50-21.50 per kg in August last year to the current range of $25.50-26.50 per kg, assessed on September 20.

Stronger pricing in the market has occurred concurrent with Iofina’s gradual ramp-up of production.

As previously reported by Fastmarkets IM, Iofina increased production 12% year on year in the first half of 2018, although the company missed its internal six-month target.

Production was at 264.1 tonnes for the six months ending June 30 this year, which was revised down "from the low 300s," Becker said.

The revision was due to "some downtime issues" and problems with the weather that affected production in the first two months of the year.

The 12% year-over-year increase is on the 235.5 tonnes in the first half of 2017 and the new capacity has allowed the company to establish new customers.

The company’s recently ramped up IO#7 plant is currently operating at the same rate expected for 2019, although Becker shied away from giving a production forecast for next year on the basis it was too premature.

Over 300 tonnes is expected to be produced in the second half of 2018.

Stronger performance

The greater production, and subsequent sales, has helped the company increase its earnings before interest, taxes, depreciation, and amortization (Ebitda) by 6% to $725,000 in the first six months of 2018 up from $683,000 in corresponding period of 2017.

The company was operating at a loss for the first half of the year, although the loss margin has decreased to $47,000 from $331,000 in the first half of 2017.

The options for restructuring debt is being assessed to fund the construction of a new plant, IO#8.

Becker did not want to speculate on how that debt may be restructured until a decision had been made internally.

Iofina is assessing several sites for IO#8 but has not yet made a decision on where the new plant will be located.