CONTRARY to the hyperbole, the dollar is not so much plunging, as gently tapering to around parity -- and not before time, either.
Iluka is one of many miners who won't be mourning our loss of national pride: mineral sands are priced in US dollars, while Iluka derives royalties from greenback-denominated iron ore produced by BHP Billiton. A US1c decline lifts Iluka's net profit by $8m- $10m. Broker JPMorgan has chalked in a $100m result for 2012-13.
We wouldn't buy a stock on the strength (actually, weakness) of currency alone, but in Iluka's case there are signs other things are falling its way.
A dominant producer, Iluka has deliberately constrained supply, resulting in March-quarter output (of zircon, rutile and synthetic rutile) falling 33 per cent to 110,000 tonnes.
Last month, Iluka reported strengthening orders for zircon.
Foster Stockbroking says China is moving from infrastructure building to consumer demand for commodities: "Zircon and titanium are more reflective of consumer spending than other commodities."
Long-term buy.
the australian
ILU Price at posting:
$10.82 Sentiment: LT Buy Disclosure: Held
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