Shares in Iluka Resources plunged after the mineral sands miner revealed sales of one of its key products almost stopped in the second half of the year.
Iluka posted a surprise update to the Australian Securities Exchange on Thursday in which it said sales volumes for the year for its three main products - zircon, rutile and synthetic rutile - were expected to be at the bottom end of guidance.
Prices have also fallen by 25-35 per cent as demand has dried up - due to weak property markets, especially in China and the US - for the three products, used variously in ceramic tiles and to make titanium dioxide for pigments for paints, plastics and paper.
Iluka shares closed 48 cents, or 5.56 per cent, down at $8.16 and are 57 per cent down since hitting a year-high $18.88 in late January.
The most alarming aspect of Thursday's announcement was that it expects just 15,000 tonnes of second half rutile sales compared to 85,000 tonnes in the first half.
Previous guidance was for 140,000 tonnes.
RBC Capital Markets analyst Geoff Breen said that in a weak market, the makers of titanium dioxide want to produce it cheaply and prefer to buy low priced "chloride slag" than higher priced rutile to make higher titanium.
"They (customers) are under pressure, they're building inventories and running 70 per cent capacity etc ... ," he told AAP.
"They're trying to reduce their production all the way down the chain really, the demand is not there."
Mr Breen said he had downgraded earnings expectations for the stock five times this year.
Iluka, the world's largest producer of zircon, was also forced to sell it at below market prices following an auction by competitor Rio Tinto to help with price discovery that led to a sharp fall.
The average realised price for zircon was $US2,490 a tonne for the first half but was just $US1,885 in October and November with some analysts forecasting further falls to $US1,500 next year.
Iluka's managing director David Robb said the company would continue its policy of flexing production levels and pricing in response to the economy.
It is estimating zircon/rutile/synthetic rutile sales volumes of 475,000 tonnes to the end of December and 425,000 tonnes of ilmenite sales.
A combined 900,000 tonnes will be well down on sales volumes last year of 1.61 million tonnes, when mineral sands were booming.
A soaring share price propelled it into the top 50 stocks on the ASX in 2011 when it posted a record profit.