Iluka expects coronavirus situation to sap 2020 zircon demand

By William Clarke
Published: Monday, 24 February 2020

Mineral sand miner Iluka expects the consequences of the novel coronavirus infection to weigh on the already sluggish zircon market in 2020.

In quarterly results released on Thursday February 20, Iluka reported "short-term softness" in the zircon market. The company left its zircon reference price unchanged through 2019, at $1,580 per tonne, and said that "prices received were relatively stable."

But this reference price, which is based on premium zircon, did not necessarily reflect the price paid by regular customers, which have access to a loyalty system which repays some of the purchase price, based on buying behavior.

Iluka reported that it had expanded its reward system in response to the market softness.

On February 20, Fastmarkets reported the price of zircon, premium grade, 66.5% ZrO2 min, bulk, cif China, at $1,500-1,600 per tonne, compared with $1,550-1,650 per tonne a year earlier.

Although the company believed that consumer destocking activity had largely come to an end, considerable uncertainty remained about demand, thanks to negative sentiment sparked by the novel coronavirus outbreak in China.

"The mixed market conditions experienced in 2019 were expected to continue into the start of 2020," Iluka warned.

"What we’ve observed with our Chinese customers," chief executive Tom O’Leary told investors on February 20, "is that fewer than half have recommenced industrial production at this stage, and the majority are planning to do so at the end of the month. This requires a resolution [to the] current [problems affecting] transportation limitations and worker availability."

The picture for titanium dioxide feedstocks was more positive, thanks to a global shortage of production.

The shortage of supply meant that market conditions "remain conducive to price increases for this half[-year]," O’Leary said.

Fastmarkets assessed the price of rutile concentrate, 95% TiO2 min, bulk, cif China, at $1,150-1,250 per tonne on February 20, up from $1,050-1,150 a year earlier.


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