Iofina Share Discussion Threads

[mister big] 01/4/2014 18:58

These are all long term advantages!
I doubt that many retail iofina shareholders will be there to see it. I think IOF is a small company finding its way - I guess we have to step back and look at whether we find IOF has done what it said it would do - and broadly speaking it has delivered the plants and made the process work.
The price got over ramped by the city but is now at an attractive level, to move forward.

[mister big] 01/4/2014 18:42

cyberbub
I believe that was me, as i bought 3x 500 on thursday!

[mister big] 01/4/2014 18:41

hi superg1

I think that is an excellent summary, transport costs reduced to the US market too. I think the speciality chemical business will come on stream too. The simple fact is iofina can produce iodine more cheaply and if it can establish itself , the growth aspect can come back with that cost advantage.

The water and oil is an added bonus if it comes off and I am not relying on that in my calculations.

A

[cyberbub] 01/4/2014 18:09

Threr large late trades printed, 3x 500k, dated Thursday mid-morning. Our assumeed large seller selling out?

[nellyb] 01/4/2014 18:07

3 x big trades - reported late.

[superg1] 01/4/2014 18:03

Forgive me if I have it wrong, but I think Mr Big's understanding is.

Chile virtually have a cartel on the market as Japan are in decline, but Chile costs are high and rising.

The US has vast reserves contained in brines and the recent shale boom is unlocking a lot more of it.

IOF have the technology to produce the iodine a lot more cheaply than the biggest players in the industry, have the contracts for the brine, and the patents not only protecting some tech, but also the 3rd party extraction model.

If they deliver on that, and become material producers with good cash flow, then they can simply price some Chile players out of the market. It's quite simple, in business if you can have the solid supply, and it's cheaper then you will get customers.

The above in the knowledge that there are not 100's of idol iodine mines or resources around the world that can affect the market.

The US happens to import most of it's iodine from Chile. Thus it's a no brainer re market advantage on delivery.

It looked good with no plants, but now it looks much better with 5 due to be producing and can get it for the same price.

Water, Oil and other potential is a great bonus.

[testuser123] 01/4/2014 17:28

Re the size of the Iodine market, you're not wrong there mate. Total world production of about 34,000 metric tonnes per year (mostly contract. We talk of spot prices but the Iodine spot market barely exists really). Exec summary below.

Japan - co-produced from brines in the South Kanto Gas Fields. Makes up about a third of global supply. Lowest cost producers generally because their iodine is a byproduct of natural gas production (gas v expensive in Japan). Production is in terminal decline at a few % a year due to depletion of the underlying gas field.

Chile - over half of world production from Calchite ores in the atacama desert and generally set prices. Beset by problems due to power and staff costs. Water availability now desparate after 5 years of drought (concentration is by evaporation so big water users). Constant infighting between the companies involved (who increased production while Japanese production was decimated by the tsunami and are now caught short).

US - maybe 2000 mt a year (stats withheld). 2 companies in addition to Iofina (IoChem and Woodward Iodine). Both are subsidiaries of Japanese companies. Both located near IOF in Oklahoma. They use their own wells which are said to be depleting but have the option of trucking brine in from oil wells. The chemical requirements of their process mean that they are unlikely to receive EPA permission to expand.

[bocker01] 01/4/2014 17:24

Mr Big, those that produce the iodine presumably understand the market. Since you've been talking to some of those that make it at IOF, presumably you have a fair insight now. Hence your investment. Looking forward to your comments....

[monkeymagic3] 01/4/2014 17:13

Just to be clear, were you a no on the stick on opposable thumbs investment?

[mister big] 01/4/2014 16:32

im beginning to think there must be very few people that really understand the iodine market!!
Its very thin....

[bobsworth] 01/4/2014 16:27

Key Question: Does anyone know if iodine derivative prices have fallen by the same % as raw iodine? TIA

[superg1] 01/4/2014 16:20

Engelo/Test/Che

Seems we are all thinking similar

Let's not forget the gaggle here were predicting Chile doom while the analysts were saying buy the boom. The reason for the prediction was rocketing costs with power and energy issues.

The Japan earthquake caused iodine prices to go 4 fold and the Chile players jumped in to chase the boom, throwing cash at expansion with little regard for opex.

In the drop it seems they have sought to out do each other on the price, but they have done so at the near peak of Peso weakness.

Meanwhile the costs continue to rise. If the Peso strengthens it just erodes what little margin they have.

Pay wages in pesos and iodine bought in dollars. SQM went defensive early.

16% was the peso move in full since last year. It seems they would struggle anyway on these prices so a good idea to keep an eye on the peso as if it does strengthen iodine prices will go up. That excludes the potential imbalance for production removed yet to affect the market.

[microcline] 01/4/2014 16:16

Does it mention the purity of these iodine imports?

[engelo] 01/4/2014 15:53

Thanks che, testuser.

From Zauba average price for Indian imports was $41.37 for March (Jan $46.28, Feb $42.46).

[testuser123] 01/4/2014 15:51

Hi Engelo. I don't have any numbers to hand although from memory China is one of the larger consumers (in addition to internal health and nutrition needs they make a lot of LCD panels). I was referring more to the second order consequences though. If copper demand picks up then it will push up the Chilean peso, reducing SQM et al's margins. It will also push up wages and power costs (once again hitting the Chilean producers in the pocket). These effects would push up the global iodine price irrespective of where we happen to be selling the stuff.

EDIT: CHe7win beat me to it.

[che7win] 01/4/2014 15:46

engelo,
test and I were discussing the copper consumption in China.

Chile is the top copper producing region in the world, accounts for 50% of their exports and a weaker copper price (due to China slowdown) affects their currency.

Iodine priced in $ mean higher income for Chile allowing them to reduce their prices partly offset by higher import costs of fuel, equipement and higher wages etc.

Unrelated to that discussion, China is a big consumer of iodine, but so is the US on our doorstep.

[engelo] 01/4/2014 15:25

test: 'I'd expect IOF to be reasonably well insulated though simply because the share price has already fallen to unrealistically low levels.' Yes, but also I don't see China having the same influence on Iodine as it does on Cu or FE. Crucial factor for us imo is US demand for Iodine (and derivatives) and I don't see that reducing, whatever happens in China.

Don't remember seeing any info about China's iodine consumption or imports, though. Does anyone have any figures??

[sr72] 01/4/2014 13:47

Boys check out Talv they got a reprieve with a nice funding up 40% and it does rise 3-4 days in a row.

[superg1] 01/4/2014 12:50

Just an example after a quick dig.

I have so far find exports of $122 mill for one Chile producer for 2013.

Taking an average $50 for the period, that would mean roughly 2440 MT.

Waiting to see if I can find any more for the particular company but on that rate it puts them lower than where I suspected they were at.

[testuser123] 01/4/2014 12:02

I guess I should point out in the interest of balance, that just because things are bad in China doesn't mean they can't get worse. In that scenario pretty much everything would take a tumble. I'd expect IOF to be reasonably well insulated though simply because the share price has already fallen to unrealistically low levels.

[che7win] 01/4/2014 11:55

Thanks Test user,
when I looked recently, I saw the fall in copper but yet copper inventories are near all time lows.

Copper bounced slightly recently, I guess inventory needs to build up.

[testuser123] 01/4/2014 11:52

Hi Che7win. My understanding is that a lot of the copper in there wasn't actually used for building anything. It was used as part of a complex set of carry trades used to arbitrage the difference in price between onshore and offshore yuan, whilst also sneaking hot money into the country (I'll be honest, I don't remember the specifics off the top but google will :) ).

Anyway when US QE taper started and the chinese credit market tightened a lot of those trades unwound causing all the copper used as collateral to get dumped on the market. Physical buyers will have snapped the copper up at those prices and physical sellers will not have bothered replacing it at prices which barely cover costs. Add in the lack of speculation due to people being nervy about the PBOC's next move and you have the perfect storm.

As you point out though we've most likely been through the worst on that as there simply is no copper left to buy at these prices.

[che7win] 01/4/2014 11:33

Test,
I couldn't believe how copper inventory was so low when I checked, any ideas why?

[1madmarky] 01/4/2014 11:25

Test - you and me both. Sneaking what I can but it is frustrating