Mineral sands producer Iluka Resources Limited (ASX:ILU) says total mineral sands production rose 9.6 per in the 2011 third quarter compared to the year before.

In the three months to September 30, zircon production lifted 24 per cent and rutile production was 7.5 per cent up from the same time a year earlier.

Iluka says production and unit cash cost trends, on a year-to-date basis, are in line with or slightly better than prior guidance.

The company did also warn that Chinese customers are cautious over demand for zircon and that policy changes had led to some customer caution regarding future demand commitments.

Yesterday Iluka says it expects the price of zircon to increase 10 per cent in the fourth quarter to around $US2,420 per tonne.

In the first half of the 2011 financial year Iluka Resources moved from a loss to a profit of $146 million.