One year after the Japanese earthquake and tsunami sent the iodine supply industry into chaos, a certain semblance of “normal” is returning.
Although January 1 prices were still higher than December 2011 prices, virtually all major iodine suppliers provided set prices for the quarter. This presents the first time since April of 2011 that prices have remained the same for more than 30 days.
What has happened to stabilize prices and supply? The single biggest factor is the new Algorta mining operation in Chile. This new mine was originally scheduled to come on line in June, 2011. Because the other mining companies in Chile had been following the new operation, they had reduced their mining activities so that the market would not be swamped with an oversupply of iodine. What they could not know, of course, was that the new mine in fact was being delayed by many external factors that would ultimately prevent any new iodine shipments until late December 2011. When the Japanese earthquake occurred on March 11, and their supply of iodine (totaling around 35% of the market) temporarily disappeared, the situation for iodine users became very dire. As June came and went, and no material from the Algorta operation entered the market, the supply situation continued to deteriorate, and prices continued to increase.
Finally, in the last week of December 2011,the Algorta mine begin shipping iodine, but even these have been of less volume than anticipated. Nonetheless the material is having a significant impact on the market.
The second occurrence that has stabilized the iodine market is that many uses of iodine have been reduced, eliminated or revised, so that demand has decreased. Particularly, liquid iodine uses where substitutes exist have been a big factor, but an equally big factor has been the revamping of how iodine is used so that less is wasted, or more is recovered, where possible.
The third change, but perhaps the one with the least impact, is Japan’s return to a production rate fairly equal to the pre-earthquake level. Unfortunately, in Japan iodine production is on a slow and steady decline, due to the location of the iodine reserves in the ocean off the coastline. At some point, the removal of brine water containing iodine must halt, because it creates an easily measurable drop in the land mass of the Japanese islands.
For the remainder of 2012, it would appear that supply will continue to rise up to closer to the demand level, although it will probably be well into 2013 before a possible oversupply might occur.