InterviewGlobal soda ash market to tighten - Tata

06 April 2011 17:04  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS)--The global soda ash market is poised to tighten, putting upward pressure on prices, a senior executive at Tata Chemicals North America said on Wednesday.

“The industry is essentially sold out and operating at full rates,” said Chris Douville, vice president and general manager at Tata Chemicals North America.

“With most world production being synthetic soda ash, and the input costs of [petroleum] coke, salt and energy rising, that will raise opportunities to move pricing,” he added.

Of the 45m-50m tonnes in annual soda ash production, only 14m-15m tonnes are produced from natural sources, with the rest from synthetic processes, said Douville.

US-based Tata Chemicals North America, the new name for General Chemical Industrial Products as of 1 April, produces natural soda ash at its 2.5m tonne/year facility in Green River, Wyoming.

Tata Chemicals North America is a unit of India-based Tata Chemicals, which bought General Chemical Industrial Products in 2008.

In light of the tight market conditions and prospects for global growth, the company is studying a potential expansion of its Green River facility.

“With natural soda ash in a very strong competitive position globally versus synthetic producers, and strong demand from emerging markets, it makes sense to look to Green River for supply growth,” said Douville.

“We tend to debottleneck capacity by 2-3%/year, but given global demand growth we are evaluating something larger down the road. We hope to complete the study by the end of the year,” he added.

Douville indicated that the US industry has developed new business over the past few years in Africa, Latin America, Russia, Vietnam, Asia and India. In September, 2010, the company made its first shipment to its parent company in India.

“India’s per capita use of soda ash is just 4-5 lbs/year versus about 35 lbs/year in the US. We see significant opportunity there looking out to the next 15-20 years, especially with growth in automotive and housing,” Douville said.

Soda ash is used to produce glass, which is used in these and other end markets such as containers.

Growing demand in Asia will cause upward pricing pressure in North America, he said.

“The US and Canada is fully supplied by US production. As world demand rises and exports increase, pricing in North America should come up as well,” said Douville.

The US exports around 50% of its soda production outside of North America, with Tata Chemicals North America having a similar profile, he noted.

“Being part of the overall Tata Chemicals company provides a long term sustainability that we didn’t have with previous owners,” said Douville.

“Prior to being acquired by Tata in 2008, there was never a global vision for soda ash. We were owned by private equity where the focus was on operating the soda ash business for cash,” he added.

Author: Joe Chang

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