Following excerpt from Iluka's quarterly production report. In a...

Following excerpt from Iluka's quarterly production report. In a nutshell, 2nd half demand is not as strong as first half and they have softened their production accordingly. Overall they appear to be bullish leading into 2014 which suits my time frame:



MINERAL MARKET CONDITIONS
After a first half recovery in demand for zircon in a number of markets, especially China, the third quarter saw more subdued market conditions in most markets relative to their robust first half run rate, reflecting both normally quarterly variations and continuing fragile business confidence levels, with the latter still impacted by prevailing and new economic and political uncertainties. This was reflected in a more cautious approach to ordering by customers during the quarter.
Demand in the United States, which is mainly manufacturing related, remained on the whole robust, while demand in other regions - while higher than 2012 - is still volatile reflecting the aforementioned business confidence levels and fragile consumer sentiment.
Iluka previously advised that it did not expect the typical second half zircon sales weighting to be evident in 2013 sales volumes and this has now been confirmed, with lower demand in the third quarter unlikely to be offset in full by stronger sales volumes in the fourth quarter.
As the company has previously indicated, the pre-conditions for a recovery in pigment, and in turn high grade feedstock demand, are becoming evident. This is reflected in pigment producer commentary in relation to the reduction of pigment inventories to more usual levels and the intention, over time, to move back to higher yields at pigment plants and pursue higher prices.
However, seasonal factors in the northern hemisphere mean that the industry is entering its typical lower demand period and it remains Iluka’s expectation that clear signs of recovery in high grade feedstock demand may not become evident until late 2013 or into 2014.
Iluka’s expectation is supported by increased customer inquiry levels regarding future supply, especially for 2014, which are at levels not seen for over 12 months.
Iluka’s full year sales expectations for high grade feedstock volumes are subject to further discussions with customers but remain at this stage as previously indicated, which is roughly in line with annual production of rutile and synthetic rutile of approximately 200 thousand tonnes combined.
While year-to-date rutile prices to the end of September are in line with the commentary provided by Iluka at the half, the current pricing environment has weakened, based on some producers unable or unwilling to await demand recovery, to a level approximately 20 per cent below the first half rutile weighted average price level of approximately US$1,200 per tonne.