Australian mineral sands producer Iluka Resources Ltd. reported a 3.8% quarter-on-quarter drop in production of zircon, rutile and synthetic rutile for the three months through March. Here are some remarks from the company's quarterly review.


On zircon sales:

"The company anticipated cautious buying activity in Q1 2023 and this was observed on the part of some zircon customers. However, total sales of 42,000 [metric tons] in Q1 2023 were higher than expected; and customers continue to indicate their full year volume requirements for 2023 will be in line with their purchases in 2022."


On zircon market:

"While China's ceramic market restarted slowly after Chinese New Year on the back of softness in the real-estate market, positive signs emerged later in the quarter, with home prices and land sales figures suggesting a recovery in housing demand. Other major market segments--fused zirconia, zirconium chemicals, refractories, and foundries--remain relatively stable. Conditions in Q2 2023 are expected to improve as China's re-opening gains momentum.

"In Europe, ceramic manufacturers had a slow start to the year. Production activity did increase over the quarter on lower energy prices and improving sentiment. India continues to outperform in production of tiles and foundry products; and demand from other South East Asian markets remained strong throughout the quarter."


On zircon prices:

"Iluka announced a zircon sand price increase of US$50 per ton for Q2 2023. This price increase has been accepted by the market, with Q2 volumes now contracted."


On titanium-dioxide feedstock sales:

"Sales of synthetic rutile in Q1 2023 were 48,000 tons and sales of rutile (including HyTi) were 12,000 tons. Synthetic rutile sales were impacted by a 20,000-ton sale that, owing to shipping constraints, was pushed into Q2 2023."


On titanium-dioxide feedstock market:

"In Europe demand for pigment remains weak, however production facilities that were taken off line in Q4 2022 re-started during Q1 2023. While curtailed capacity was predominantly higher cost and energy intensive sulphate pigment plants, some chloride capacity was also curtailed and has been restarted. The downstream destocking of pigment appears to have run its course.

"China's reopening has spurred increased construction activity and improved the market's outlook for pigment. This is translating to improving demand in China for titanium feedstocks.

"The North American pigment market remains steady, however increased interest rates have dampened housing demand which is impacting downstream demand for paints and coatings. Operating rates at pigment plants in the U.S. are down compared to the previous year. Despite subdued demand for paint and pigment, inventory throughout the supply chain remains lean as a result of the industry-wide actions to idle unneeded capacity and interruptions to feedstock supply.

"Chlorine prices remain at historically high levels, which is pushing up chloride pigment plant head grades and supporting demand for Iluka's high-grade products of rutile and synthetic rutile."


Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com


(END) Dow Jones Newswires

04-19-23 2004ET