Soda ash prices seen poised for increase

17 May 2007 23:15  [Source: ICIS news]

By Heather McGuire

HOUSTON (ICIS news)--Global soda ash prices were poised for an increase amid full operating capacity and strong demand, sources said on Thursday.

“History shows that operating rate is leading indicator for price,” the producer said.

The five soda ash plants in the US were running at 96% capacity, according to the US Geological Survey.

China was operating at 99%; Eastern Europe was at 90% and Western Europe was at 95%, the producer added.

“The world is becoming sold out and with worldwide financial pressure on energy prices, freight and governmental influence, a rising price environment is inevitable,” an analyst said.

All US producers have increased their list prices by $90/short ton in the last three years, according to global chemical market intelligence service ICIS pricing.

US soda ash contract prices were firm at $130-170/short ton ($143-187/tonne) free on board (FOB) Wyoming, up $5/short ton from 2006.  Prices are negotiated annually. On Thursday, US soda ash producer FMC announced a $15/short ton increase attempt.

US producers have also added energy freight surcharges, a buyer said.

“With the increase in costs of production, prices are expected to remain firm over the next few years,” a US producer said.

US soda ash is produced from trona mines in Wyoming and California. Major producers are FMC, Solvay, General Chemical, OCI and Searles Valley Minerals. Soda ash is also produced from mines or by synthetic production in Europe and Asia.

No new capacity was foreseen in the US due to the uncertainty of future export demand, according to a US producer. US production is driven by export demand but overseas markets were building their own facilities, the producer added.

During the next five years, new capacity will come on-stream in India and China, according to global producer Tata Chemicals, however it will take time for these facilities to be built and there are a number of challenges to overcome such as tariff reduction and regulatory and environmental policies.

Glass represents 53% of global demand for soda ash. Soda ash is also used in detergents and the pulp and paper industry.

By: Heather McGuire Doyle
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