What:
After positive commentary at Iluka Resources Limited's (ASX: ILU) Annual General Meeting yesterday, the share price jumped 6% to $ 9.08. The company is the world's biggest zircon producer and the second largest producer of titanium dioxide products.
So What:
Managing Director and CEO, David Robb painted a very favourable view of the medium to longer term demand for zircon. This demand is supported by global urbanisation, consumer led growth in emerging markets and alternative uses for zircon sand and its derivatives. However, he did caution that conditions overseas have been and remain subdued.
I would suggest the share price rise was largely due to commentary on the titanium dioxide market, where again improving demand may lead to improved sales opportunities for both rutile and synthetic rutile. Mr. Robb even mentioned the possibility of a decision before year-end to reactivate part of Iluka's idled synthetic rutile capacity.
In addition, volume guidance for 2014 was maintained and costs are running below budget.
Now What:
Iluka Resources Limited's dominant market position in mineral sands can have some influence over supply and prices by reducing production and allowing inventories to increase while world growth is subdued.
It is this measure of control over pricing along with current indications of improving demand that, in my opinion, make this a great time to be buying for the medium-to-long term.
