FocusExport markets boon for US soda ash

14 January 2008 22:01  [Source: ICIS news]

By Ben Lefebvre

HOUSTON (ICIS news)--High foreign demand will help US soda ash producers thrive this year despite a slowing domestic economy, industry insiders and analysts predict.

Despite a soft domestic market, producers are commanding prices of $145-185/short ton (€98.60-125.80/short ton), or an average of 10% higher than last year, according to global chemical market intelligence service ICIS pricing. 

The price increase is driven by a tight global supply, said Bob Goldberg, an analyst with Scopus Asset Management. “Without the foreign market, the domestic market would be in a little bit of trouble.”

Since 2001, the four major US producers - FMC Wyoming, Solvay Soda Ash, OCI Wyoming and General Chemical - have seen the domestic housing market go from boom to bust and the automotive industry stagnate, so that their two biggest domestic markets for glass could not be counted on for new demand.

Domestic consumption of soda ash dropped 5% between 2001 and 2006, the last year for which the US Geological Survey (USGS) has information available.  

But during the same period, US soda ash exports rose 17%, according to USGS data.

Construction booms and growing automotive demand in China and India were cited by industry sources as reasons for robust foreign demand.

The falling value of the US dollar has also fuelled soda ash exports, according to industry observers.

“The international market has been extremely robust - that’s the good news,” an industry source said. “There are international opportunities that we haven’t been able to take full advantage of because of our tight supply.”

FMC’s year-on-year soda ash revenue rose 10% to $269.9m in the third quarter of 2007, with the boost driven by higher volumes and selling prices for soda ash. 

US soda ash producers said last year they expected about half of their combined 11m short tons of yearly production would go overseas.

“Producers have been disciplined, more than they have been historically, and haven’t added capacity,” Goldberg said. “Now they’re being rewarded with higher prices.”

“The one thing that would kill this would be a greenfield expansion,” he added. 

However, new production facilities in the US seem unlikely in the near future.

Suppliers have only added incremental capacity since 2001, USGS data shows, and none of the four companies have announced plans for new construction projects.

FMC Wyoming has nearly 1m short ton capacity idled, but has not said if and when it will bring it online - no matter how much some Asian buyers want it to.

Soda ash has no synthetic counterpart, and US producers sit on what is by far the world’s largest pile of trona, the mined material that eventually becomes soda ash. The USGS estimates that 47bn short tons of identified soda ash resources could be recovered from the Green River basin in Wyoming.  

Botswana is the nation with the next highest soda ash reserve at 4m short tons, according to the USGS. In 2006, the country produced 280,000 short tons of soda ash.

By: Ben Lefebvre
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