Why Iluka’s Share Price Fell Today

What Happened to Iluka’s Share Price?

Shares in mineral sands producer Iluka [ASX:ILU] fell around 8% today on the back of a weaker than expected first quarter production report. Output was down 24% on the same period last year. Revenue fell 12%, or a massive 51% compared to the December quarter.

Why Did This Happen to ILU Shares?

Iluka blamed the fall on weak Chinese demand over the Chinese New Year period. However, compared to the same period last year (which also included the traditional New Year slowdown), production of zircon and rutile dropped 16% and 39% respectively. That suggests more than just a seasonal slowdown.

What Now for ILU?

ILU’s mineral sands products are used in things like paints and ceramics. Like in most commodities, China is the main influencer of demand. ILU is tied to the commodity cycle, and its share price performance reflects that fact.

It peaked in 2011 at just below $20 per share. Then it entered a long bear market, falling to nearly $5.50 in December last year. Throughout 2015 ILU has rallied strongly, reaching close to $9 before falling back recently and further today on the worse than expected production news.

Despite the recent weakness, the share price is in a fledgling upward trend. If the commodity complex is close to bottoming, it might be worth a punt to pick up some shares on the recent weakness. It’s a high risk bet though as there doesn’t appear to be much in the way of positive catalysts for the commodity sector.


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Greg Canavan is a Contributing Editor at Markets & Money and Head of Research at Port Phillip Publishing. He advocates a counter-intuitive investment philosophy based on the old adage that ‘ignorance is bliss’. Greg says that investing in the ‘Information Age’ means you now have all the information you need. But is it really useful? Much of it is noise, and serves to confuse rather than inform investors. And, through the process of confirmation bias, you tend to sift the information that you agree with. As a result, you reinforce your biases. This gives you the impression that you know what is going on. But really, you don’t know. No one does. The world is far too complex to understand. When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases. Greg puts this philosophy into action as the Editor of Crisis & Opportunity. He sees opportunities in crises. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines charting analysis with more conventional valuation analysis. Charting is important because it contains no opinions or emotions. Combine that with traditional stock analysis, and you have a robust stock selection strategy. With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the same mistakes that most private investors do every time they buy a stock. To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Markets & Money here. And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here. Official websites and financial e-letters Greg writes for:


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