One of Iofina' s (IOF) key competitors in the iodine market, Chile-based SQM (NYSE: SQM) - which produces roughly one-third of global iodine supply - has warned of weakening iodine prices as a result of rising global production. Iodine pricing is generally opaque but SQM says it expects prices to be 2 to 3 per cent lower in the fourth quarter than the third quarter, and 5 to 15 per cent lower in the first quarter of 2014 - implying prices of $40 (£25.45) to $45 a kilogram.
Meanwhile, another competitor with operations in Chile, Canada's Sirocco Mining (TSX-V: SIM), has decided to temporarily suspend a third of its production for the whole of 2014, in addition to delaying a planned capacity expansion from 2014 until 2015. It also announced it will merge with a Canadian lithium producer in order to better diversify its business.
These announcements suggest iodine prices are now close to average cash costs of production in Chile, which are around $40 a kilogram. Iofina has yet to disclose its own cash costs of production while its proprietary iodine extraction plants in the US ramp up to commercial production rates, but management has previously guided towards $10 to $20 a kilogram.
These discouraging developments come on the back of Iofina's news last month that commissioning of plants IO#4 and IO#5 is likely to slip into the first quarter from the year-end.
