Thread by @ValueSituations

There has been much discussion about how the recent rollover in commodity prices is due to recessionary fears and demand destruction from already high prices - but there is a class of commodity that appears to be bucking the trend - titanium feedstocks, namely ilmenite

https://twitter.com/FT/status/1544704651269906435

Ilmenite is a mineral sand that is the main input for titanium dixoxide and titanium metal; Kenmare Resources Plc $KMR #KMR, the world's largest ilmenite producer (~8%-10% global mkt share) this wk reported H1 results, which noted record pricing for its products AND -

reported recent price increases are continuing into Q3 (as other commodity prices have fallen), attributable to tight global supply & low inventories -

Sustained, higher pricing was achieved despite COVID lockdowns in China (a major mkt for ilmenite) and recessionary headwinds globally, but also due to sustained demand for ilmenite & titanium feedstocks; this again highlights how prices don't necessarily decline when -

the SUPPLY profile for essential (often niche) commodities is structurally constrained. I believe prices for ilmenite will remain elevated due to supply set-up and conflict in Ukraine - note Ukrainian production of ilmenite (~2.3% global mkt share) is effectively offline now;

Against this backdrop, IMO $KMR #KMR as the owner of a unqiue and globally significant mining asset that produces essential commodity products appears too cheap at 2.5x LTM EBITDA / ~23% FCF yield.