04 January 2008 02:51 [Source: ICIS news]
By Hong Chou Hui
SINGAPORE (ICIS news)--Asian soda ash contracts - at a new high of $300/tonne (€204/tonne) CFR (cost and freight) Asia barely a month after settling between $230-260/tonne – may head higher due to limited supply, buyers and sellers said on Friday.
Market sources revealed that most contract deals for soda ash last year were done between $190-200/tonne.
The latest contract price equates to a 50% year-on-year increase on the higher end of the price range as end-users scrambled to secure supplies for the next 12 months.
“It sounds crazy but yes, we settled for this incredibly high contract price because it’s a sellers’ market right now,” a southeast Asian buyer of Chinese and US soda ash said.
“To top it off, we’re getting the same volume of soda ash that we did in 2007 and we haven’t been able to secure any additional cargoes because the producers want to charge a premium for extra soda ash,” he added.
He said that he was lucky to be able to pass the feedstock costs to his downstream end-users in the detergents industry as they understood the factors behind the soda ash crunch.
Producers and traders confirmed that contract negotiations were going their way.
“Anyone with an open contract right now had better be prepared to buy spot cargoes for the rest of 2008 or fold up their business. We’re only selling to our regular customers and our receptionist has been instructed not to entertain any ad-hoc buying queries,” a seller of ?xml:namespace>
“I’ve been in this business for seven years and this is the first time that I’ve had to turn away business. It’s weird but it feels good,” he added.
Even with new capacities starting up in
Preparations for the Beijing Olympics in 2008 and a construction boom in the
Likewise, a healthy global economy has contributed to the growth of the middle class in
India, which started 2007 as an exporter of soda ash and ended the year as an overall importer, is expected to continue bringing in overseas cargoes to alleviate the shortage triggered by monsoon-induced floods in late July.
Soda ash prices were assessed at $240-245/tonne free-on-board (FOB) China for the week ended 21 December, on the back of firmer offers from producers, based on global chemical markets intelligence service ICIS pricing.
($1 = €0.68)
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