FocusUS soda ash sold out on strong export demand

26 August 2010 23:08  [Source: ICIS news]

By Doris de Guzman

NEW YORK (ICIS)--Strong export demand has driven natural soda ash producers in the US to crank up their operations to full capacity, producers said on Thursday.

“US soda ash producers are very competitive right now due to their lower cost of production and efficient supply chain. Export demand is strong and US producers are currently sold out,” one major producer said.

FMC noted industry operating rates went back up to mid-to-high 90% in the fourth quarter of 2009 from below 80% seen in Q1 2009.

FMC estimated global demand for soda ash this year at around 47m tonnes.

The US Geological Survey (USGS) said US soda ash production totalled 9.3m tonnes in 2009, while exports totalled 4.4m tonnes.

US demand dropped significantly starting in late 2008, mostly because of the global economic recession and China’s aggressive move to expand its export market share driven by the Chinese government’s tax rebate incentives.

Total US demand, which included export and domestic consumption, dropped 1.8m tonnes, or 15%, in 2009, said Bill Breunig, director of marketing and sales at FMC’s alkali chemical division.

The US is the largest supplier of natural soda ash while China is the largest producer of synthetic soda ash, which is said to be more costly in terms of operating costs. Around 70% of the global market is supplied with synthetic soda ash.

Breunig said the US industry started changing its export strategy last year and producers decided to be more aggressive in expanding export market shares because of their lower-cost positions.

“This year we are operating at full effective capacity. Our delivered costs into Asia are low enough that we still make a margin compared to Chinese products,” said Breunig.

This year, the US was expected to win back some market share from China which is seeing higher raw material and energy costs, said Robert Baylis, manager of industrial minerals research at UK-based consulting firm Roskill Information Services.

“Increased volumes of trade to South America are also likely, especially from the US. Companies like [India’s] Tata and Nirma might start importing more natural soda ash into South Asia from assets in the US and Africa in defence of growing imports from China,” said Baylis.

One industry source noted buoyant demand from Asia - even Japan, which was expected to have 3% growth in demand this year compared with the country’s average annual 0.2-0.5% demand growth for soda ash.

“Demand from Latin America, especially Brazil, is just off the charts,” the industry source said.

“Chile’s demand for glass has also come back very strong while Mexico’s activity in automotive component production has been doing very well this year, which bodes very well for soda ash,” the industry source added.

In 2009, glass held 48% of US consumption by end market use, followed by chemicals at 29%, soap and detergents at 10%, distributors at 4%, flue gas desulphurisation, pulp and paper, and water treatment each at 2%, and other uses at 4%, according to the 2010 soda ash report by the USGS.

Major US soda ash producers include FMC, General Chemical, Solvay, OCI Chemical and Searles Valley Minerals.

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By: Doris de Guzman
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