VSA Capital Market Movers – PYX Resources

0
19

VSA Morning Miner, 16/06/21


PYX Resources (ASX:PYX)


PYX Resources (ASX:PYX) has secured a further price increase for its high quality zircon products; the third this year and the largest taking the base price level to US$1,750/t. Today’s announced increase of US$210/t is a step change from the initial increments of US$70/t and US$75/t earlier in the year. It highlights that conditions are tightening fast in the zircon market driven by ongoing operational issues at Rio Tinto’s Richards Bay operation compounding the destocking impact of 2020.

Zircon prices are now at their highest point since 2013 and our investment case for PYX is in large part based on the strong outlook for the zircon price. We expect prices to exceed the last decade highs above US$2,100/t. In that last rally Indonesian producers of low grade concentrate provided swing supply, however, changes to Indonesian export rules mean that now only producers of 65%+ zircon concentrate may sell to international markets. Typically Indonesian producers have only been capable of producing a c40-50% product so this change dramatically reduces this swing producer potential. With inventories in China, the main consumer, at minimum levels after 2020 and strong demand for end use products such as semiconductors combined with the constrained supply the outlook for pricing is stronger than the last zircon squeeze, in our view.

Currently our projections are based on a US$1,450/t average for 2021, up from US$1,330/t in 2020 with a forecast US$1,800/t in 2022 and with volumes weighted to H2 2021, the realised price is likely to exceed our current forecast.

We reiterate our A$2.60/sh. target price and Buy recommendation.




Oliver O’Donnell, CFA, Head of Research & Natural Resources Analyst | T: +44 (0)20 3617 5180 | E: [email protected]

Paul Renken, Senior Geologist | T: +44 (0)20 3005 5011 | E: [email protected]


VSA Capital Research | T: +44 (0)20 3005 5000 | E: [email protected]


VSA Capital Limited, New Liverpool House, 15-17 Eldon Street, London EC2M 7LD | www.vsacapital.com


This email is intended solely for the named recipient. It may contain privileged and/or confidential information. If you are not one of the intended recipients, please notify the sender immediately, and destroy this email: any disclosure, copying to any person or any action taken or omitted to be taken in reliance on this e-mail, is prohibited and may be unlawful. Any views expressed in this message are those of the individual sender, except where specifically stated to be the view of VSA Capital Limited, its subsidiaries or associates. Whilst all efforts are made to safeguard inbound and outbound emails, VSA Capital Limited and its subsidiaries or associates cannot guarantee that attachments are virus-free or compatible with your systems and do not accept any liability in respect of viruses or computer problems experienced.

VSA Capital Limited will use your personal information to administer your account in order to provide any products and services you have requested from us. Your personal information will be kept secure and will not be shared with any other party unless you provide consent to that effect.

VSA Capital Limited is Authorised and Regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

The Company is registered in England with company number 2405923 at New Liverpool House, 15-17 Eldon Street, London EC2M 7LD.


Please consider the environment before printing this e-mail


unsubscribe from this list update subscription preferences

LEAVE A REPLY

Please enter your comment!
Please enter your name here