NOTEICL.TA
ICL Group: end demand is destocking and the price is not reflecting it
The spot price is the last thing to move in a destock.
The economics turn on the destocking cycle. Downstream inventory adjustments suppress order intake well before they suppress price, so order books lead prices by a quarter or two.
Order intake has declined for two consecutive quarters while spot prices were flat, which is the classic destocking signature.
The position: short on ICL Group, entry locked at publication and the exit dated rather than open-ended. The target is stated in the call block above and the horizon with it. Sized to the catalyst rather than to conviction, with the invalidation written into the kill-switch card instead of left implicit.
A restock arriving earlier than expected would invalidate the demand argument quickly.
Discussion · 4
Marco BianchiJUL 17
Respectfully, I think this overstates it. The channel data is what makes this hard to dismiss. Does the thesis survive a soft guide next quarter?
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Marco BianchiJUL 17
This lines up with what I saw in the filings. The utilisation assumption is where I disagree. How much of this do you think is already in the buy side's numbers?
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Sam WhitfieldJUL 16
This lines up with what I saw in the filings. I had not appreciated how much of this is already in consensus. What is the level where you would walk away?
1
Adam RosenAuthorJUL 17
Fair challenge. Invalidation is a close below the lock price on volume, and I should have written that into the card rather than leaving it implicit. (587)
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