16 July 2010 15:53 [Source: ICIS news]
LONDON (ICIS news)--European soda ash producers are confident that prices of the chemical will increase this year, but a buyer maintains that there is still overcapacity in the market, sources said on Friday.
“It is clear we are in a special situation here,” said Pascal Bandelier, managing director with medium-sized producer Novacarb.
“The market is long at the moment but there are many factors which can turn this around,” he said.
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The European market has been oversupplied for some time due to reduced demand as a result of the global recession, and new manufacturers that set up production in Turkey last year further crammed an already crowded marketplace, Novacarb's Bandelier said.
According to Raiffeisen Centrobank, the new production in
Nevertheless, Raiffeisen added, Ciech could expect average soda ash prices across 2010 that would constitute a 10% fall compared with prices last year, taking into account average European prices in the first quarter, which were the worst for four years.
While Europe's soda ash market has been sluggish, there are signs of change in other regional markets.
Demand in Asia, Latin America and the Middle East was seen to be improving due to a strong economic recovery, and prices in those regions were rising.
As a result, Novacarb's Bandelier said European producers were increasingly tempted to export. The weak euro against the US dollar made this even more attractive, while leaving imports scarce.
Combined with a number of plant shutdowns and outages earlier in the year, Bandelier said the market was getting shorter and shorter.
But a European buyer was unconvinced, stating that much of the current demand in Europe was seasonal and due for a slowdown when the holiday period hits southern Europe in August.
"There is greater stability now but ultimately there is still more production capacity than demand in Europe," said a buyer.
Novacarb's Bandelier was insistent, however, saying: “[Producers] need this price increase as raw material costs have been rising, and we will get it as soon as the market is balanced.”
ICIS last assessed soda ash prices at $305/tonne (€238/tonne) FOB (free on board) NWE (northwest Europe).
($1 = €0.78)
Will Conroy in Prague contributed to this story
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