Bank warns of cheap Turkey trona-based soda ash production

06 April 2011 18:25  [Source: ICIS news]

PRAGUE (ICIS)--European soda ash producers should be wary of a huge increase in cheap trona-based soda ash production that is planned for Turkey by Turkey-based Eti Soda, Austria-headquartered Raiffeisen Centrobank said on Wednesday.

Eti Soda, a member of Turkey's conglomerate Ciner Group, has built up its capacity at Beypazari in Central Anatolia for trona-based soda ash to 1m tonnes/year in recent years and is set to add another 700,000 tonnes/year at the site by 2013 or 2014 as well as possibly an additional 1m tonnes/year at nearby Kazan by 2015, noted Raiffeisen analyst Dominik Niszcz.

“We believe that these projects pose a serious long-term risk for [Poland's] Ciech and the whole European market of soda ash,” said Niszcz.

“The 700,000 tonnes/year capacity jump [alone] may have a negative impact on margins in southern Europe and put a cap on prices in the central & eastern Europe (CEE) region, where Ciech is the market leader,” said Niszcz.

It is hard to say at this stage how big the initial threat posed by the new production is, but it would be felt most by Ciech's Romanian subsidiary US Govora, which has 400,000 tonnes/year of Solvay process-based soda ash capacity, he added.

So far, US Govora had not suffered significantly from the market rivalry of Eti Soda because the latter company had been able to divert much of its output to the Middle East and Asia, Niszcz said.

After US Govora, Ciech itself, which had 1.2m tonnes/year of Solvay-process based soda ash capacity in Poland and 600,000 tonnes/year at subsidiary Sodawerk Stassfurt Ciech in Germany, would be the next to feel the new market competition, he added.

Due to high soda ash transport costs, the impact on Scandinavian and German markets from at least the initial capacity increase should be rather limited, Niszcz also predicted.

Turkey has an estimated 250m tonnes of trona reserves at Beypazari and 500m tonnes at Kazan, according to Raiffeisen. That is enough to produce 300m tonnes of soda ash, the bank estimates.

The Ciner group, through Eti Soda, remains the only trona-based soda ash producer in Turkey. “I have not heard about any other market entrants, they would have to get into good relationships with the government and acquire trona reserves,” said Niszcz.

Raiffeisen figures show that at present capacities for soda ash in Europe amount to 15m tonnes/year, roughly one quarter of global capacity.

By: Nigel Davis
+44 20 8652 3214

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