Most only look at the GDP numbers to track the economy. In yesterday’s ASX update we took a different tack. We looked at the demand for raw materials to get a feel for how the economy is going.
The theory goes something like…
If a particular commodity is experiencing high (or low) demand that tells you a little about the economy.
Yesterday it was copper. It’s a good one to follow, as it’s used in many areas of the economy.
Another one we could look at is mineral sands. That’s because it’s used in many parts of our daily lives.
The ILU Share Price in relation to the Economy
Mineral sands is used in your ceramics. Think tiling and bathroom fittings such as baths, basins and lavatories.
It’s a key component of the many chemicals we use in our daily life. It’s used by heavy industry in glass, steel and cement. It’s a key component in aircrafts and is used in steel fabrication and ship building.
It’s also found in printing inks, paints and plastics. That just about covers every base.
Ultimately, demand for all these products will revolve around consumer confidence and how the economy sits.
Anyway, let’s see which way the wind might be blowing by bringing up a chart.
One mineral sands producer we could look at is Iluka Resources Ltd [ASX:ILU]. Let’s bring up the chart, here’s the daily:
Well, here we find a strong run up in the Iluka share price from the August low. It suggests revenues might be improving. We’ll find out soon enough, as the company is set to report half yearly results next month.
What now for ILU?
Well, for the last few months the Iluka Resources share price has been trading a range. It’s finding resistance around $9.70 and support around $9.00 or so. That gives you some reference points to work with to guide any further study.
As always, let the chart be your guide. A strong break either way will tell you which way revenues are heading.
Iluka’s revenues aside, it might also suggest a few things about the wider economy as well.
Perhaps one for the watchlist.
Anyway, if you want to keep up to date on what’s happening in markets and a whole lot more, you can subscribe to the Profit Watch newsletter here.