Iluka Resources says lower prices for its mineral sands will cause a fall in earnings in 2013.

But prices have stabilised and demand is increasing, the company’s managing director, David Robb, told its annual general meeting.

Iluka is a major producer of zircon, used mainly in ceramics, and rutile and synthetic rutile, which are used in paints and plastics.

Its key markets are China and the United States.

“Based on lower weighted average prices, at least as they stand at the moment, and lower sales than could be expected to flow from more usual market conditions, earnings are expected to be materially lower than in 2012,” Mr Robb told the meeting on Wednesday.

Iluka’s earnings were $541.8 million in calendar 2012.

Orders for zircon continue to increase during April and May, in all markets except for Europe, Mr Robb said.

“Indications are that prices have stabilised, which if sustained, provides essential confidence to underpin volume recovery and represents a pre-condition for potential price increases,” he said.

Iluka shares were up 55 cents, or 4.9 per cent, at $11.70 at 1514 AEST.