China slowdown not affecting iodine spot price

By Michael Greenfield, Michael Greenfield
Published: Friday, 21 February 2020

The outbreak of the novel coronavirus (2019-nCoV) and the subsequent slowdown in China, one of the world’s largest iodine consumers, is yet to have an impact on the iodine spot market, as the price held firm this week.

The country rivals markets such as the United States and India in terms of the volumes of iodine it consumes, but the lack of purchasing has not moved Fastmarkets’ assessed price for the material amid adequate stocks.

Fastmarkets’ assessment of iodine min 99.5%, spot, delivered Europe/US, cif Asia, was $35-39 per kg on February 20, flat week on week, but up by $2.50 per kg or 7.2%, since the start of the year.

"China is a huge consumer of iodine, but there has been no effect on the iodine prices," one iodine producer said.

"I was guessing that the price will drop or stop growing at least since one of the largest buyers is having a problem with iodine derivatives production [because workers have not returned to the plants]," the producer added.

The price has moved higher in four of the eight assessments so far this year, although this includes an assessment on January 2, when many market participants were still on holidays for the Gregorian calendar New Year. Prices were rolled over due to a lack of data to make a qualified assessment.

During 2019, the price rose by $8 per kg or 26%, compared with only $2.50 per kg or 10.4% throughout 2018.

The latest rally was triggered by a price war between producers, which forced some iodine output out of the market and squeezing supply. Market tightness has underpinned all the subsequent price movements.

"We buy from the iodine producer at a high price due because other regional markets have a high price. But we sell for a low margin because the Chinese iodine consumers have big stocks and factories cannot digest much inventory at the moment," one trader said.

In the long term, demand may also change, according to the trader.

Many smaller factories may not have the financial resources to upgrade sites to adhere to Beijing’s environmental restrictions and may come offline altogether, the trader said.

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