|So with the Chile circs stacking up and the history of the last chaos as above, why would IOF need to expand now and potentially be sat on inventory.
The oil and gas boom is quiet now. IOF can get supplies and the teams to build plants now and no doubt at better prices than when demand was very high.
If the wheel comes off in Chile IOF will be happy to build a plant or two for anyone that wants to sign a good contract for an iodine supply.
Looking at panic stations circs before they may even pay for it to be built to secure the supply.
This time around IOF plants are proven to produce iodine not a promise that tests show they can. IOF were buyers back in the chaos days not self-sufficient producers.
So a case of keeping close eye on Chile imo, and the dollar. If the dollar starts to lose ground at any time, then imports prices are higher and Chile costs go up. In those circs you want local supplies and the US imports 80% of it's iodine.
So back to watching very closely and waiting, however long that may be.|
|On another point
Note the production and sales figures below. In particular 2010 through 2012. The 2010 sales jump is simply down to customers in the 2009 crash letting their own inventory empty, then the need to rebuild in 2010.
You can see how SQM sales in volume terms dropped 1700 mt in 2013 v 2012 and by 2,900 tonnes compered to 2011.
A key point is prodcution v sales and having just looked exports v sales. SQM reported sales averages were higher than export prices as were sales volumes. So clearly at that time they sold any inventory they had in their subsidiary in Belgium. A lot of iodine went cheaply to Belgium in Q3 2012 around $45 per kg. I'm assuming a tax dodge legal or otherwise and it was then marked up on the Belgium sales.
2006 Produced 9,800 t sold 9,800 t (zero change)
2007 Produced 8,100 t sold 9,100 t (inventory -1000 t)
2008 Produced 8,300 t sold 10,500 t (inventory - 2,200t)
2009 Produced 10,100 t sold 7,200 t (inventory + 2,900mt)
2010 Produced 8,800 t sold 11,900 t (inventory -3100 t)
2011 Produced 10,000 t sold 12,200 t (-2,200 t)
2012 Produced 10,900 t sold 11000 t (-100 t)
2013 Produced 10,800 t sold 9,300 t (+1500 t).
2014 Produced 9,600 t sold 8,800 t
So looking the complete picture SQM whacked the price up considerably and well over what their competiors were doing. Q3 2102 they did a run on exports as Algorta and Bullimne got up to speed. End users say SQM ran out of iodine and their normal supply ate resumed after Q3. 2012 figures show production more or less matching sales.
Then through 2013 you now have Bulline and Algorta on a rate total of about 3000 mt betweem them.
SQM sales dropped by that amount compared to 2010 and 2011. Sales in 2014 1700 mt less than 2008.
The iodine market grew by about 3% pa in the period or by 5000 tonnes or so 2008 to 2014.
New in the market were Bullmine maxing out on 580 tonnes and Algorta for 2500 tonnes It looks to me very much like customers told SQM to get lost due to the way they screwed them on a price hike and they went with Bullmine, Algorta and whoever else had some.
Then add in RB who took an export break so ended up with 1200mt plus 800 mt to drop into the market in 2014 when they were now getting short of cash.
So everyone else in the market gained custom in the period and SQM lost custom probably due to their cations pots quake in 2011.
Even on these low pirces they have still not seem material gains in sales, the small players ahve had to follow the price down.
Hence it seems to me the SQM strategy as always thought to be is to force production off the market and stop the ideas of expansion of entry by some. Imo they will keep it this way as long as it takes to kill off some and stop others.
Bullmine have gone and RB it seems should be gone by early 2017 judging by the liquidator circs. Other matters like Cosayach fraud and SQM illegal wells/threat to their main mine are yet to be resolved.
SQM want their customers back but it seems the only way they will get them is if those customers they lost can't get iodine elsewhere. At which point SQM will up the price. Especially as they know customer inventory levels are very low. In fact it seems obvious that in the high price period customer inventories would have been stuffed full in fear of a shortage which is the case in all commodities. Hence for the last year or 2 we have had 2% demand growth but 3-4% usage growth as quoted by SQM.
It's the same on all things rocketing prices and buyers pile in to stock up in fear and on dropping prices they empty the inventories not wanting to get caught with stock at higher prices than the going rate.
Interesting times ahead but if the iodine price starts to rise end users start to stock up then the cycle starts again. If some Chile events kick in the true circs of SQM inventory will reveal itself.
And to finsih think of this point.
"We have 9000mt of inventory".
End users will have heard that and no doubt said, So why did you fk us over on price in 2012 if you had such an inventory, that means you had 5/6000mt sat idle and screwed us on price.
Well they didn't did they, and sit back and watch ALG and Bulline take their custom selling all they could produce at $60 per kg.
Clearly Tamaya in the US needed iodine and in the end had to pay $80 per kg for Bulline Iodine on the first iodine Bullmine produced of 20mt, then it seems kept buying near all Bullmine iodine for the time Bullmine produced. The last few exports by Bullmine pe closure were to Tamaya.|
|Well I thought I'd look at 2011 and 2012 exports to try and get some idea of what happened post the Japan quake. I had previously looked what happened when Algorta and Bullmine were up to speed and as stated before they were all selling well above SQM prices and that made no sense if SQM had been sat on inventory.
Well I've been a bit stunned about what I found and it tells a different story about SQM and may be a contributor as to why they lost custom and closed mines.
It seems to me there has been a bit of F'k you from SQM when customers were desperate for iodine SQM and then the same back to SQM rom customers when others came onto the scene who could supply iodine.
In short post the Japan quake SQM screwed their customers who couldn't get iodine elsewhere.
Obviosly others don't have the inventory SQM have so were stuck, in just 4 months SQM banged up the price by 110%-120%. They were averaging around 64/65 per kg. Cosayach at that time were doing 29-40 during the big price rise. The others too like ACF were selling at 40 while SQM sold at 64/65.
By Nov 2011 Bullmine arived and it was an early xmas for them as a US customer took their first 28 tonnes of production at $80 per kg, then the next 20mt at $80 per kg, then $68 per kg for another 28 tonnes. After that the same US customer month after month on $60 per kg taking just about all they had. It was the same customer that took the final 90 tonnes off them late 2015 just after closure.
SQM kept that price going for about 7-8 months until Algorta arrived on the scene as a new mine supplier in April 2012. Algorta were chirpy at the time and no wonder their first 86 tonnes went for $71 per kg. In May 12 they got $68 per kg for 20 tonnes.
BUT on paper SQM had dropped their price but to Belgium which is them suppling to themselves I believe. Perhaps a tax dodge or trick but suddenly they were selling at $45 per kg. BUT there are individual exports to non SQM subsidiaries of $65 per kg and over and the one SQM kept screwing was the country in need, Japan.
By now those that were way below SQM prices in the months prior now saw prices of $60 per kg.
So In short SQM screwed their customers who had to watch competitors with the other Chile miners get their iodine much cheaper.
In Q3 2012 the picture changed, by now Algorta and Bullmine the new arrivals were up to speed and hittng the market on their full production. So whay happened then ??
SQM hit the market in Q3 with iodine exports well above previous levels. Q1 about 2000, Q2 about 2150 but Q3 over 3,100.
It looks like an attempt to screw up Bullmine and Algorta but it failed as Bullmine and Algorta kept going on the high prices with no dent in what they were exporting. Most of SQM iodine at that point was $45, so either a tax dodge or an attempt to destroy the newcomers custom which failed.
It did short term start to affect the price a little but then it seems SQM ran out of steam, iodine and ideas. Eg Q4 were back to normal rates and those on the buyer end will tell you SQM ran dry.
Why would SQM allow Algorta and Bullmine to keep going on high prices if what they say now is true as they would have been sat on 5-6000 mt of inventory back then. That was the time to hit prices and bulldoze the newcomers off the market but they had tapped out on supplies.
Bullmine and others were loving it so put in plans for expansion as did some newcomers looking at it Sergio and Eloisa.
SQM were stuck with no where to go, they screwed their customers post quake and anyone else that wanted iodine. So as it went through 2013 and the price was dropping SQM started a plan to close down expensive mines. El toco/Maria Elena was closed late 2013.
SQM then changed tactic as in the price game they created they clearly lost customers while everyone else gained some. They filled the market with BS and hence here we are now on their stargey to kill off the high costs players and those thinking of joining the market. That is the only option they have, high prices probabaly mean all survive and expand which in turn screws SQM and starts to erode their market dominance to irrecoverable levels.|
|Agreed. If any share has taught me the art of patience it's this one.|
|I don't expect any action in the winter months unless there's a sudden rise in iodine price.
I conclude this from the following from the interims:
"Iofina continues to focus on areas of potential for future iodine production sites. The team continues to investigate unique opportunities for future iodine production to bring to fruition at the opportune time when market conditions justify."
This to me says that they're not actually looking to implement future production in the near future as they're still just investigating their future options.
As for "when market conditions justify", they don't expect it to be this year as they write regarding the iodine price:
"The rate of decreasing iodine prices has slowed, but it is not clear if a bottom in pricing has been reached or not. Barring any significant changes in the segment, the Board anticipates iodine pricing to be in the mid to low $20's per kg through the end of 2016. "
We're stuck with a holding pattern for now, IMO.|
|Good to see mad and captain still around. All holding at massive losses. One day we will all make some money here!! Live in hope.|
I think it has risen too fast for me, 33% profit for me in a couple of weeks, so I've exited here for now.
I'm very fickle in this market, if a chart changes, I often change quickly.
Not necessarily the right thing to do, but I have to rebalance a bit and keep some firepower for other opportunities.
Will reenter on any big dips.|
|A bit of prefabrication and a snow blower should do the job.|
|Captain- I'm sure that they have worked through the winter previously to get plant finished. Depends how deep the snow is. Rather them than me,|
It's all lithium driven combined with Chinese buyer interest in the Ponve lerou shares.
A bit mad really giuven the risk for their lithium and the efect that has on other sectors of their business.
But then SQM just lie as we know so gawd knows what they tell analysts.
Potash prices which is why SQM flew in the first place all those years ago have plummeted and Lithium imo will see an over-supply as those chasing the boom get producing.|
|With sub zero temperatures arriving in Oklahoma during November/December/January I assume any new builds will occur past February if the iodine pricing circumstances are right??|
|SQM Q3 results Nov 3rd.|
|If Japanese demand might increase, and the Ch peso is going down, then I would expect the SQM share price to rise. It does not mean that the company value has increased by very much - just that expectations have changed.|
All this bad news from chile yet SQM share price keeps going up?|
|If AAZ has a good run will be keeping an eye on IOF as a potential place to put profits, but right now cant see anything better than AAZ, 24m market cap is ridiculous.|
If the dollar unwinds Chile costs go up.
Major producers recently suggest if copper hit $2 per lb they are going to have to start cutting back production. It's $2.10 per lb now so there is only 5% of margin there
If the dollar starts to fail the cut off point per dollar geos up due to rising costs.
I looked up Antofagasta yesterday after that news and they out most of cost savings down to the weak peso v dollar.
Of the dollar goes down nay distance and copper doesn't go copper iodine and other producer in Chile are in the poop. Obviously SQM control the idoine price so they can just tweak it to keep margins where they are on the peso and still keep the thumb screws on Chile competitors as margins would in theory be no different.
That's the whole problem in Chile if the Peso gains strength copper has to follow, which it would as the mines would have to cut production and when that happens a supply deficit kicks in which solves the low price issue. For end users the higher price is no issue as they just potentially gained on the dollar.
Higher copper price + stronger peso and it becomes a domino effect dollar down fueling higher costs, higher costs means cut backs cut backs lead to a higher price.
So how long before the dollar collapses and I don't mean drops but capitulation. It may be steady to start but it will happen it always does and history repeats itself. It's been a ticking time bomb for some time imo and well overdue.|
|dollar should start to unwind after the US election, only a couple of weeks to go|
|AAZ will rise significantly if gold maintains current levels. If the dollar capitulates and gold goes to 2000, 3000, 5000 then AAZ will see 000% return. But at current levels the progress it has mad makes it a very low risk play on the dollar capitulating/gold rising significantly.
they are presenting at proactive on the 3rd, although I think you will earn more from research and reading the board.
am expecting a 50 percent rise in the short term|
I have yet to catch up re AAZ and feel there is plenty of time as I expect the US daollr to capitulate at some point so in theory I wonlt miss out on gold players as their Sps will rocket and on a strong trend when that day comes. So I can then go in a lot heavierr and thus don't miss out on lower level riskier trades.
The same goes for IOF if the iodine producer gets hit.|
|superg, still a chance to get in AAZ before next leg up, chart looks great. More than the current market cap, in stockpiled ore waiting to be processed, cost of mining which has already been accounted for.|
|Did I see tht there has been a big earthquake in Japan again? Is it likely to cause any change in the iodine price?|
I don't like that FDI news on the point of manipulation opportunities by the MMs. Cearly FDI are at first are dealing with lower grade tailings and state the dollar per carat rate is lijkley to be lower than forecast.
How many times have I been moaning on here about MMs hitting shares hard on news they already released previoulsy.
If FDI don't hit a big stone in the start up in the tailings and low grade stuff then the update in theory will demonstrate lower CPHT returns and lower $ per carat achieved.
That would present an excuse to MMs to drop the price to sweep up on sells if they are short of stock. Due to the way the Sp has risen strongly share are clearly. The Sp is currently above broker forecasts and some say a 17% drop is on the way.
When they say such things I believe they have clients sold out and they want in lower, the same goes when they are in and forecast higher target prices.
So I'm gambling on sitting tight and waiting to see if the market drops it if they CPHT and $ per carat comes in at below forecast which they have said is highly likely. If they find a quality big stone or two then that enhances the $ per carat above forecast as the CPHT rate is lower and this the $ per added from big stones will have a higher impact per carat.
A gamble of big stone or no big stone but they have set the warning if no big stone is found. It would all depend if a big buyer prevented MMs hitting it on low $ per carat low CPHT news, but generally those buyers know the tricks of the trade and work them to their advantage.|
|QP turning out alright after that news
The trading did look very suspect and my guess was a p'd off insti. I see there is an rns now saying VAST are investigating the unusual volume. I won't fall off my cajhior if it was an insti saying screw you and abandoning ship re issue of shares.
It was clear someone had been buying in high volumes at the .28 to .32 range offering some share price protection|