Iodine industry news, 2013

It was another interesting year for the iodine industry regarding price, supply, and demand.  Initial 2013 prices were quoted at the same price as fourth quarter of 2012.  Initially it seemed like this was going to be acceptable to buyers, but then large contract buyers begin to put up resistance to paying 2012’s historically high prices, which were based on iodine shortages, when it was clear that shortages themselves were history.   By the beginning of February, several suppliers were quoting prices lower than their December 2012 pricing.  This price erosion continued through June of this year, and eventually all suppliers lowered prices.  The amount of the decrease has depended upon the supplier’s point of view about their inventory levels and desired income, as well as the quality of the iodine.  In a new twist to the Chilean iodine market, some material currently being offered by a few Chilean mines is below traditional quality standards, and the sale price reflects this lower quality.  This type of material is deemed unacceptable for use in complex products made by some manufacturers.  Prices for this lower grade iodine are considerably less expensive and are a real benefit to those companies that can use it.

As the year has progressed, supply and demand have become very stable; perhaps even out of balance in which there is an over supply of iodine. It is difficult to state with certainty that excessive  inventory exists, but if additional price decreases occur in the fourth quarter, it would tend to support that concept.   The newest mining company in Chile is still not at 100% capacity but is headed in that direction.  Other mining companies seem to be producing at full capacity while one older mine that was expected to close has not.  Plus all the small mining companies have managed to stay open even as prices have fallen.  Most buyers of iodine are being offered all the material they want, and requests for additional needs are not being declined by Chilean suppliers.  Some mining companies have fought to keep prices higher, for obvious reasons, but sometimes less obvious ones.  In an attempt to rebuild inventories, at least one mining company has purposefully stated they want to limit sales and build up safety stock to levels they carried prior to the Japanese earthquake and tsunami.

Japan continued on in 2013 with the same very steady course with iodine that it has been on for over a decade:  Prices substantially lower than Chile, and a declining supply.  It will be many years, if ever, before Japan stops being considered an influence in the iodine market.  At the same time, not one company with growth plans for their iodine-related products can count on Japan to help them gain that growth.  Because of the steady drop in supply, many companies that were using Japanese iodine exclusively ten years ago now have to buy a fair share of their needs from Chile.  One thing that buyers can appreciate about Japanese iodine:  Extra profits.   Most buyers of Japanese iodine mark up or base their iodine products as though they were made with iodine purchased from Chile.  This has, in a nutshell, made some large buyers of Japanese iodine literally tens of millions of dollars in extra profits during the iodine crisis. As Chilean prices decline closer to current Japanese prices, this extra profit is substantially less, but with the differential still large, it is still a significant amount of extra profit.

As 2013 ends, the question inevitably comes up:  What about next year?  Will prices continue to fall and supply continue to grow due to Chile’s output increase?  At this point in time, it would be very difficult to answer that question.  The newest mining company in Chile is known simply as “Algorta” and throughout 2013 they have moved along in production capacity.  At the same time, other Chilean suppliers have added to their output as well,  but global iodine demand continues to be strong.  Third generation flat screens appear likely to continue to contain some iodides.  Medical uses of iodine, including x-ray contrast media, remain strong.  And some companies that had minimized their use of iodine and iodine compounds in 2011 and 2012 due to uncertainty of supply, have come back into the market.  It is not in the best interest of any Chilean producer for prices to decline further, and most buyers seem to have successfully worked higher prices for iodine into their market places.

Only a crystal ball could tell us what will happen in 2014.


Posted in Iodine Industry News


Iodine prices have been flat now since January 2012, when the last major increases in iodine prices were ushered in as 2011 contracts ended and January prices renewed at much higher levels.  These increases brought contract buyers back to the levels already being paid by non-contract buyers.   Despite the flat Chilean iodine prices in 2012, Asian iodine suppliers have increased prices some in that latter half of 2012 year, but they still lag Chilean prices significantly.   Looking back, 2002 was the last time yearly prices were this stable.

In spite of that stability, it isn’t easy to ignore that iodine prices are currently more than twice what they were in January, 2011, and the long term impact of such significant increases remains to be seen.   Although iodine does not have a direct substitute in areas such as nutrition, contrast media testing, pharmaceuticals and similar applications, other areas could migrate to substitutes and alternates because of high prices.

The high prices in 2012 were still preferable to the spotty availability of iodine in 2011, and supply is noticeably greater now than at any point in 2011.  Two things are responsible for this:   A drop in the demand for iodine in markets where substitutes were available, along with limited new production from two sources:   A new mine in Chile and from increased output from an existing Chilean mining company.  However, these two increases were somewhat offset by decreases at other mines in Chile and continually dwindling Japanese volumes.  In addition, a number of new, small capacity mines in Chile have come online since the Japanese crisis in 2011, but with increases evened out by decreases, the high prices have held thus far.

With those high prices in place at the end of 2012, and inventory in a fragile supply and demand state, what do we know as we move into 2013?

One thing about 2013 is already known:  Prices will not be going up in first quarter  2013.  Suppliers provided prices for first quarter as early as October, and those prices are basically the same as in fourth quarter 2012.

Another thing is known about 2013:  Supply and demand, at current prices, is balanced.   A decrease in iodine prices would lower supply because most of those small capacity Chilean mines operate at breakeven within the current price structure.  Even  a small price decrease would remove some supply coming from small mines; a large decrease would probably shut them all down.  This would immediately throw the market out of balance, and it would take time to see if the other larger mines would be in a position to supply that lost capacity. Since none of the larger mines seem to have extra iodine to sell, it would appear that no decrease in iodine price is likely unless production increases.  And right now, production basically just covers purchases being made by iodine users.

The final thing we know about 2013 is that any drop in the global demand for iodine will have an immediate impact on inventories of iodine at the mining companies.  Mining companies would quickly know that one or more applications of iodine were going down in use, because warehouse inventory which have been virtually non-existent since mid-2011 would start to rise.  A drop in demand could come from a global economic slowdown, or from an application that has significant decrease in use such as contrast media tests or drop in the use of povidone-iodine liquid.   In general, however, iodine use is spread over literally hundreds, if not thousands of applications, so it is typically a global slowdown that impacts iodine inventories (or as in the case of the Japanese earthquake, a natural disaster).  If iodine inventories build, it will be up to the mining companies to either slow up on production, or start lowering prices to try and drive demand.  Lowering prices rarely helps drive demand however, given iodine’s very unique applications and use primarily as a component in other raw materials.

And finally, the general thought is that new applications for iodine are coming in the near future, so even if demand drops from traditional uses, these new uses will blunt the impact of a drop in use and keep supply and demand balanced for the long term.


Posted in Iodine Industry News


July, 2012

 With third quarter iodine prices having been announced by suppliers, this is a good time to review the state of the iodine industry.

 Iodine prices stabilized the first half of 2012, and entering the third quarter, prices are virtually unchanged.  When this quarter ends, iodine will have had its longest period of price stability since 2003 which is remarkable because even during this last recessionary period, iodine prices did increase somewhat. Considering predictions are for iodine prices to remain steady in quarter four of 2012, this will be the first year since the early eighties with no significant price changes in either direction.

 Given this new stability, many of you are very curious about what the future holds in 2013 and beyond.   After recent meetings with our iodine suppliers, we learned this:  Demand is actually increasing in 2012, and is expected to grow through 2014.  This comes as a surprise because it was expected that at 2012’s price level, some products containing iodine would become uncompetitive or alternates with similar properties would replace iodine products.  Instead, even with the expected drop in demand for older applications such as disinfection, consumption in newer applications has increased.  Three big areas of increase are LCD screens, semiconductor manufacturing and X-ray contrast media testing. In addition, some new uses in proprietary applications have further increased demand.

 After explaining about increasing demand, our suppliers addressed the supply side and what is being done to meet higher demand.  IodiTech utilizes primarily Chilean iodine suppliers along with one domestic source.  So, we learned less about the Japanese supply situation, but due to their finite annual capacity and slowly declining volume, Japanese suppliers do not play quite as much of a role in the marketplace as is often thought.  Our suppliers did confirm that Japanese volumes have returned to pre-earthquake and tsunami levels, and that Japan’s pricing continues to be significantly lower than any other country’s pricing. 

 Mostly we can report about Chile, and the four major mining companies.  It appears some additional supply is entering the market, but not much and very slowly.  Of the four major mining companies, only one has success in steadily increasing production.  One company (which IodiTech considers our partner supplier) continues to have production issues due to water restrictions, and this issue will take a few years to resolve. Another major operation is in a declining volume mode.  This major player is also primary owner of the fourth mining company, the new one which has been named “Algorta”.  Algorta continues to be very far behind its schedule date for full and extensive production. Overall, this situation leaves the worldwide supply of iodine in something of a precarious position, especially should any additional environmental disaster occur in either Japan or Chile.

After reviewing demand and supply, we come to the bottom line:  Price.  The current very high prices seem to have satiated the never-ending quest for higher profits that the iodine mining companies have always sought.  Iodine mining and recovery is a very capital intensive operation; it also requires high quantities of variable cost such as labor, energy and water.  While the profitability for iodine companies appears to have doubled in 2011, suppliers very quickly point out that much of this new profit is being plowed back into operations, so as to increase supply.  Still, these price levels have truly helped enhance greatly the overall wealth of Chilean iodine companies

Given these dynamics-high demand, slowly increasing iodine supply from Chile, slightly declining volumes from Japan, and the desire for high profits, IodiTech does not expect to see very much in the way of price decreases through 2014.  We would be somewhat surprised if pricing continues to be totally flat, but nothing short of another dramatic incident is likely to move iodine prices up or down in the next eighteen months.

For IodiTech’s customers, we have developed a very comprehensive and strategic plan for purchasing iodine.  We are the only derivatives company that is utilizing four different iodine sources, with plans to add a fifth in 2013.  We also spend a great deal of time on forecasting, logistics, and order patterns to ensure that we have material on hand, or can manufacture material, for timely delivery.  Although we always focus on low prices, we also can promise better order reliability through the focus on our supply chain.

Posted in Uncategorized

Iodine price and supply stabilize in first quarter 2012

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.

Posted in Iodine Industry News


We have recieved our latest price announcement:  Because November’s price was estimated at $60.00 for many of our customers, the new December price increase represents, for some, one of our largest increases ever.  Others of you received an amended price list once November’s price had been determined, and your increase in November is not as drastic.  Either way, in two months prices have soared.

Price:  The price of iodine in February of this year averaged $29.87 per kilogram.  The new December price averages $67.65 per kilogram, an increase of slightly more than 126% percent.  Although $67.65 represents a huge increase in price, IodiTech suspects that we are slightly behind our competitors, who are paying around $69.00 per kilogram.

Demand:  Higher prices have not had a great impact on product demand.  IodiTech continues to have more order requests than we have material available, a steady trend since right after the earthquake.  The intensity of demand for product has greatly lessened, but not the overall demand.  Even markets with direct substitutes, such as skin disinfectants, seem to be using at the same demand rate. This is not a positive sign for future prices.

Supply:  It appears that the area of Japan where the earthquake was centered produced about half of Japan’s iodine.  Primary among these was Kanto Natural Gas.  Those iodine production areas do not appear to be returning to the market.  Other areas of Japan seem to be supplying about the same amount of iodine to the market.  South American mines are operating at full capacity, and although one new and very large mine came on line in October, new material has not really made its way into user’s factories.  Part of this new mine’s production will be used to replace a mine that is closing.  Overall, the supply of iodine to the user base appears to be at about 85% of the demand.  This is not a positive sign for future prices either.

Outlook:  Economics would say that iodine is an elastic demand material.  Higher prices should reduce demand.  However since iodine is primarily used as a raw material, and not consumed strictly in and of itself, this is not necessarily how the market is being affected.  Oil prices directly drive gasoline prices, and gasoline is consumed throughout the world, and especially in the United States, as a direct budget item.  High oil prices = high gasoline prices = less driving, and less demand through conservation.  Potassium iodide, IodiTech’s largest product line, is typically used at a less than 1% inclusion rate in products.  In many of these products, the potassium iodide contained in the product may represent less than 0.01% of the product’s overall price.  In these cases, iodine prices could triple, quadruple, or more, without significantly impacting the product it is used in.

Iodine derivatives share a further unique property – they are occasionally inelastic to price in that they simply have no substitute.  X-ray contrast media testing is an excellent example of this.  The test has to contain iodine, otherwise it isn’t an x-ray contrast media test.  Dietary use for food production animals is the same.  Dairy and beef cows, poultry production and swine production all require enormous amounts of iodine products, with no substitute.  Again, prices can become as high as the suppliers want, and the animal still has to have its daily supply of iodine.

IodiTech is preparing for increased prices in the coming months.  Until supply and demand become more balanced, this is the only prudent way to approach the situation.  We do believe that eventually some uses with substitutes will finally drop out of favor and that at least some new mining capacity will enter the market.  But when those two will reduce the monthly shortfalls remains unknown.

Posted in Iodine Industry News