Iofina Share Discussion Threads

[superg1] 05/3/2014 09:09

US producers

I forgot to mention (it's covered as a rumour in a note too)

The original US producers have been going for 25 and 35 years in the same area. The talk was of their resource depleting. No surprise really after such lengthy extraction periods.

It was mentioned that Woodward are now trucking in brine, on top of that I heard Woodward are struggling. Trucking in brine will have put up their opex.

So it's not just about Chile mines struggling, the existing Oklahoma producers are struggling on margins as their costs are higher.

Chile water rule change potential



150 litres per second is the cut off suggested. E.G. Algorta are on 170 per second. So that limit will either force mines to stay under a certain level of production or sort a seawater pipeline to expand.

There is no point doing a seawater pipeline to add 300mt if it takes you over the 150 rate, as costs v production would destroy the margin.

If the rule comes in, SQM have no choice but to build pipelines, which will push their opex up, with about $250 mill capex needed to build them.

[johncsimpson] 05/3/2014 09:00

Love the ansana and alphacharlie posts - no weather reports and 'The 60p Day' - brilliant.

[che7win] 05/3/2014 08:59

Ansana,
Exciting stuff, we are growing whilst others throttle back, we are sitting in a 6000 MT market.

I'm looking forward to 2014 H2 when we have 5 full size plants producing as opposed to 2 now.

[ansana] 05/3/2014 08:54

Just a tiny reminder while SQM are struggling we are in the process of commissioning our shiny new Units 4 and 5 and if that's not enough we are building another shiny unit one and that one is IO6.

[alphacharlie] 05/3/2014 08:50

Missed your chance Shonny - it's gone blue. Never mind. Always tomorrow and of course, Friday - The 60p Day

[che7win] 05/3/2014 08:40

A lot of buyers eager to get in this morning....

[ansana] 05/3/2014 08:35

Well I was disappointed with this report no matter how hard I have looked I can't see a weather report. IOF always tell us about the weather when they release news. It seems though that the Polar Vortex SQM have had to deal with is the fall in production and net income.Che very nice para "Their fourth quarter net income halved so they are feeling the heat. No iodine expansion plans.Their P/E is 15 with no forecast growth over the next two years, meanwhile we are forecast to grow at over 70% over the same time period."Shoddy I look forward to your detailed analysis or are you still eating your boiled egg and soldiers?

[alphacharlie] 05/3/2014 08:34

EDITD: Was meant for the other thread so deleted

[alphacharlie] 05/3/2014 08:23

Just checking the Shonny update. Down 3% in early trading so expect an 'oportunistic post' any time now along the lines of:

I predict another red day for the rampers. Down to 60p by Friday

[rogerbridge] 05/3/2014 08:15

Very encouraging news for IOF.

[woodpeckers] 05/3/2014 08:13

This is starting to feel like a boxing match with new blood, Iofina, in the blue corner, "Technology Leaders in Iodine®" and SQM, reigning world champion, in the red, "prepared to fight for long-term market share".

Know who my money is on.

[che7win] 05/3/2014 08:04

Superg,
Good post. I was chuckling at the other thread, they compare chemical demand to iodine market.

Your last line is a good point, last year IOF have decreased demand in the raw iodine market by a good 300-400MT as you say.

We turn the screws on bit by bit this year :-)

[superg1] 05/3/2014 07:56

Che

The mines SQM closed were high cost through depleting resources. Go back 12 months or so and the talk was of big expansions and increased production, most of the Chile producers were talking that way, including Sirocco planning over 2000mt this year.

While the others have chased the iodine price I think SQM have been shrewd by concentrating on cost efficiency rather than higher production. Going for the mid term view.

Our prediction was that they had taken off 200O to 3000 mt of production, much of that reduction action came in H2 and we can see 1700mt mentioned, so the 2 to 3k seems a fair figure for a full year.

So with them and Sirocco, that's got to be around 3000mt gone offline for this year v last year, with a 1000mt expected demand increase.

4000mt............ with Bullmine no doubt under severe pressure, I estimate they do around 1000mt and they may fold.

For H1 prices the ioditech report said........Some smaller mines 'managed to stay open', the price has dropped since then and I suspect Bullmine are probably loss making now.

Seawater rules on the table to come in, if they do SQM need pipelines and that will add to their opex. Cosayach don't have any, and neither do Sirocco or Bullmine, so both of those will be restricted on production due to water flow rates limits. if those water use limits rules come in.


300-400mt of SQMs lost business may well be down to the IOF not being a buyer last year.

[cyberbub] 05/3/2014 07:45

Sounds bullish for firm or rising sale prices :-)

[che7win] 05/3/2014 07:35

Says it all chaps, as the biggest producer they are throttling back production to keep supply and demand in sync, they clearly don't want lower prices.

A 15% cut in production of iodine by them.

[yorkshiret] 05/3/2014 07:32

Sales down 1700mt in a market they say is growing at over 2%.

[supreme mo] 05/3/2014 07:31

Production 2012 11,000 mtProduction 2013 9.3 mtMarket still growing but they state their sales to reduce further. Note the below and reference to "fight for long term market share".... this why iof want to stay under the radar as long as possible.We are the world leader in the iodine market, with the largest capacity, the best natural resources, and a significant cost advantage. We believe that total demand will grow between 3-4% during 2014. Despite these positive signals, we believe our sales volumes could decrease during 2014...In the future, we will maintain our efforts to assure that world iodine needs are met, and remain attentive to all strategic options in managing our position in the iodine market; we are prepared to fight for long-term market share.

[orslega] 05/3/2014 07:26

SQM Q4 - from earnings pdf - penultimate para very telling indeed...."we are prepared to fight for long-term market share"....



Iodine market growth was approximately 2% during 2013, slightly lower than the growth rates we have seen in previous years. We believe this is related to inventory optimization from our customers. Based on our analysis, consumption continued to grow in the range of 2-4% during 2013, slightly higher than demand growth. As we have seen in recent years, demand was led primarily by x-ray contrast media and LCD and LED applications.

Our sales volumes decreased approximately 15% in 2013 when compared to 2012. Average prices for 2013 were just under US$50/kg, almost 6% less than prices reported during 2012. These price decreases were in line with market conditions and out expectations.

We are the world leader in the iodine market, with the largest capacity, the best natural resources, and a significant cost advantage. We believe that total demand will grow between 3-4% during 2014. Despite these positive signals, we believe our sales volumes could decrease during 2014 as uncertainty surrounding the production and sales volumes of our competitors continues. We have also seen pressure on pricing in recent months, as announced at the end of 2013. We expect this pressure to continue through 2014.

In the future, we will maintain our efforts to assure that world iodine needs are met, and remain attentive to all strategic options in managing our position in the iodine market; we are prepared to fight for long-term market share.

Gross profit for the Iodine and Derivatives segment accounted for approximately 36% of SQM's consolidated gross margin for the twelve months ended December 31, 2013.

hxxp://ir.sqm.com/files/doc_news/2014/SQM%204Q%20Earnings%20press%20release_v_ing_FINAL_v001_e6330q.pdf

[che7win] 05/3/2014 07:18

SQM states that the iodine market demand is increasing but they're feeling the pressure from competitors, I guess they must be looking very carefully our direction.
They state they have significant cost advantages, if that's the case, then looking at the decline in their margins, many of their competitors will be running at break even or even a loss.
Their fourth quarter net income halved so they are feeling the heat. No iodine expansion plans.
Their P/E is 15 with no forecast growth over the next two years, meanwhile we are forecast to grow at over 70% over the same time period.

"Mr. Contesse continued, "As anticipated, and following the positive trends in recent years, we saw market demand growth in both lithium and iodine during 2013. However, new supply in excess of market growth, was added by existing competitors; this ultimately had a negative impact on our sales volumes in both business lines during 2013 when compared to 2012. As we stated in an announcement in December, during the end of 2013 iodine prices decreased in accordance with market conditions. Throughout 2014, we will continue to face challenges considering the uncertainty related to the production and sales volumes of our competitors in the iodine market, but we remain confident in our long-term position in the market as the largest producer with significant cost advantages"

CEO States:
"Rest assured, we will act on what we believe to be in the best interest for the long-term of the Company, and remain focused on maximizing margins and shareholder value. Any strategic decisions will reflect these goals."

Very secretive.

Read more:

[superg1] 05/3/2014 07:17

S Mo

The factor of SQM closing mines is starting to show. That didn't really appear until H2 but then in the main Q4. the estimate was that they would have taken lost 2000 to 3000 mt of production.

We can see from the H2 strategic changes 1700mt was lost. They claim to have significant cost advantages, so why let the new competitors grab the market share if the have such a strong advantage. That of course relates to the depleting high cost mines they closed.

Low prices, that's a rock and a hard place, high prices are good and low prices are good.

We know from figures posted by other producers that they have high production costs, some maybe at break even or loss making at these prices.

$60 to $70 per kg would allow those smaller Chile mines to keep functioning and expand, so a low price may well crush then as mentioned in ioditech reports in the past.

Growth 2% with 3-4% expected this year. So 600mt growth last year, SQM reduced 1700mt, with probably 2K to 3k for a full year. Sirocco suspended the ALP and forecast 1000mt this year instead of the 2000mt planned. A forecast extra 1000mt demand this year.

So near a 4000mt gap in the supply demand this year. Cosayach cancelled some applications, Bullmine will be struggling badly, so that leaves Algorta/acf minera.

As mentioned before Algorta made claims of 3000mt to be achieved this year, but the H1 revenue didn't support that. $10.2 profit for H1 when prices were higher, and as I recall costs of 70% of the selling price from back then.

Bullmine will surely fold if prices stay low. Cosayach had been having a very tough time in recent year, and have gone very quiet.

[supreme mo] 05/3/2014 06:57

SQM results - taken from advfn news feed:SANTIAGO, Chile, March 5, 2014 /PRNewswire/ -- Sociedad Quimica y Minera de Chile S.A. ("SQM") (NYSE: SQM; Santiago Stock Exchange: SQM-B, SQM-A) reported today earnings for the twelve months ended December 31, 2013 of US$467.1 million (US$1.77 per ADR), a decrease from US$649.2 million (US$2.47 per ADR) for the twelve months ended December 31, 2012. Gross Margin reached US$721.5 million (32.7% of revenues) for the twelve months ended December 31, 2013; a decrease compared to US$1,028.6 million (42.3% of revenues) for the twelve months ended December 31, 2012. Revenues totaled US$2,203.1 million for the twelve months ended December 31, 2013, representing a decrease compared to US$2,429.2 million reported for the twelve months ended December 31, 2012.The Company also announced earnings for the fourth quarter of 2013, reporting net income of US$69.0 million (US$0.26 per ADR) compared to US$141.8 million (US$0.54 per ADR) for the fourth quarter of 2012. Gross Margin for the fourth quarter of 2013 reached US$146.3 million, a decrease compared to US$234.3 million for the fourth quarter of 2012. Revenues totaled US$492.2 million, a decrease compared to US$601.0 million for the fourth quarter of 2012.Patricio Contesse, SQM's Chief Executive Officer, stated, "SQM faced important commercial challenges during 2013; pricing was more difficult in the potassium chloride market when compared to 2012. Increased volumes in the potassium chloride business line helped us to partially offset these lower prices, but our margins were impacted. As we have stated before, we believe that world market demand is the most important indicator when assessing pricing and the overall future of the potash market. We remain confident that total potash demand levels in 2014 will surpass levels recorded during 2013, this could lead to a positive change in the pricing situation we have seen in recent months."Mr. Contesse continued, "As anticipated, and following the positive trends in recent years, we saw market demand growth in both lithium and iodine during 2013. However, new supply in excess of market growth, was added by existing competitors; this ultimately had a negative impact on our sales volumes in both business lines during 2013 when compared to 2012. As we stated in an announcement in December, during the end of 2013 iodine prices decreased in accordance with market conditions. Throughout 2014, we will continue to face challenges considering the uncertainty related to the production and sales volumes of our competitors in the iodine market, but we remain confident in our long-term position in the market as the largest producer with significant cost advantages.""During 2013, we worked diligently on a major expansion plan in the Salar de Atacama to increase our effective capacity of potassium chloride by the end of 2014. In the coming months, we look forward to reaping the benefits of these expansion efforts. We will continue to work on our cost-saving efforts that began during 2013."The CEO closed by saying "We are well-positioned to move quickly to meet any changes in market demand and market dynamics in all of the main businesses in which we sell. Rest assured, we will act on what we believe to be in the best interest for the long-term of the Company, and remain focused on maximizing margins and shareholder value. Any strategic decisions will reflect these goals."For the complete version of this press release, please visit our IR Web site:

[superg1] 04/3/2014 22:40

jbe

Yes and the dark side tipping them too (share prophets)