29 May 2008 05:00 [Source: ICIS news]
By Hong Chou Hui and Ng Hun Wei
SINGAPORE (ICIS news)--Asian soda ash spot prices could cross the $350/tonne (€224/tonne) mark early next week on the snug supply situation and a $40/tonne upward revision in contract values from 1 June, said producers and traders on Thursday.
While a trader from the Middle East selling soda ash from east Europe said that spot prices would soon be going "up, up and away", some downstream end-users believed that the push for higher prices was unjustified.
Supplies have been tight due to the American Natural Soda Ash Association’s (ANSAC) continued force majeure in Wyoming state, said market sources.
The upward revision of Asian contract prices from existing levels of $230-300/tonne CFR (cost and freight) Asia by $40/tonne from 1 June could see spot prices rising in tandem, said market watchers.
Soda ash imports to SE Asia were assessed at $320-340/tonne CFR southeast (SE) Asia for the week to 23 May, based on historical data from global chemical markets intelligence service ICIS pricing.
As spot values have always led contract prices by $30/tonne, import values for spot cargoes to SE Asia could soon cross the $350/tonne mark, said industry sources.
There has already been talk in recent weeks of deals being closed at $350/tonne, although these could not be confirmed.
ANSAC, one of the Asia’s key suppliers, reduced its supply allocation by around 10% to the region as severe winter weather crippled production in February.
The earthquake in China, the largest in over 30 years, disrupted soda ash production in the region and reportedly forced the closure of a 400,000 tonne/year facility which reduced availability to Asian buyers.
Concerns over logistics restrictions in China during the Beijing Olympics have also fuelled the price increases. Transportation of soda ash is likely to be regulated during the sporting event in August and some buyers both within and outside China have been buying early to stock up their inventories, a SE Asian trader said.
"At this rate, next year’s contract talks could very well start at the $400/tonne level," said a SE Asian term buyer. Surging fuel prices have added to transportation costs, exerting further upward pressure to prices, traders said.
Some downstream end-users, however, felt that the push for higher prices led by ANSAC was unjustified.
"The US housing market has slowed down which means that soda ash demand should be softer. ANSAC should be able to transfer this amount of wares over to Asia so it cannot justify its price hike," said a source from a northeast Asian downstream end-user.
Soda ash is used to make flat glass for construction and consumer goods such as glass bottles and detergent.
($1 = €0.64)
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