Here's some food for thought.....can't post the full thing but a good read.
Mineral Sand Forecasts
Research Analysts SECTOR FORECAST
Matthew Hope
61 2 8205 4669
[email protected] Price cycle has turned up at last
■ Zircon & TiO2 feedstocks both start to climb: Pigment prices lifted in
2016, but mineral sand prices remained dire—2016 prices were the lowest
since 2010 in real terms. But at last the price upturn has reached zircon
and TiO2 feedstocks. For zircon, Iluka announced a $130/t increase in its
list price for 3Q, and that follows a $50/t increase on 15 February. Price
increases are also occurring for rutile but at a glacial pace: Iluka expects its
IH17 contracts to lift 4%, but we expect 6%, due to China price strength.
Figure 1: Revised mineral sand price forecasts
1Q-17 2Q-17 3Q-17 4Q-17 2017E 2018E 2019E 2020E LT real
Zircon New US$/t 870 910 1,040 1,150 993 1,313 1,300 1,300 1,250
Premium bulk Old US$/t 860 860 880 880 870 925 1,000 1,000 1,250
FOB Chg % 1% 6% 18% 31% 14% 42% 30% 30% 0%
Rutile New US$/t 750 770 830 850 800 895 950 1,000 1,250
Bulk FOB Old US$/t 775 825 850 850 825 895 900 900 1,250
Chg % -3% -7% -2% 0% -3% 0% 6% 11% 0%
Synthetic New US$/t 700 700 725 725 713 750 825 875 1,100
Rutile Old US$/t 725 725 725 725 725 825 825 825 1,100
Chg % -3% -3% 0% 0% -2% -9% 0% 6% 0%
Ilmenite New US$/t 130 150 160 160 150 175 200 200 200
(sulphate 54%) Old US$/t 115 115 115 115 115 130 150 180 200
Chg % 13% 30% 39% 39% 30% 35% 33% 11% 0%
Titanium slag New US$/t 620 650 700 700 668 745 800 850 1,000
(SA Chlor 86%) Old US$/t 650 700 725 725 700 745 750 750 1,000
Chg % -5% -7% -3% -3% -5% 0% 7% 13% 0%
Source: Credit Suisse estimates
■ We have increased our price forecasts, but have modest peaks. We
expect the zircon price peak to be 60% higher than 2016 and occur in
2H18. That forecast is subdued compared to 2011-12, but we believe
producers will not want to repeat that period, which saw a permanent
demand destruction and mine supply started. We expect cautious price
increases. With global pigment prices continuing to lift, we expect high
grade feedstocks to follow. However, China pigments have increased
penetration into western markets, so pigments prices are climbing slowly.
That will limit feedstock increases, but may allow the higher price to be
sustained, rather than boom & bust. We also remain cautious about
feedstocks due to latent TiO2 slag capacity available to increase supply.
■ Mineral sand prices are not counter cyclical despite increasing out of
sync with other commodities. Demand factors—housing and industrial
production—are the same as other metals. It is the small market and large
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