ILU rallied +3.9% on Monday, an infrequent day in the winner’s enclosure for this rare earth/mineral sands business. We have discussed ILU several times over the last six months, but while it is operating well, this remains a demand story, particularly from China. ILU should recover strongly if/when things turn for China’s ceramic industry, i.e., the property market.
From a macro standpoint, if the stimulus measures announced this week underwhelm, it will likely push Iluka’s recovery further out, and this would force us to re-think our tilt towards commodities more generally. ILU is a high beta play on China, and as such, we would likely cut this position if we do not get a positive outcome from tomorrows policy update.
- We will watch ILU carefully this week before and after Beijing’s announcements. MM holds ILU in our Active Growth Portfolio.
MM is cautiously bullish toward ILU
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