Price and market trends: Europe soda ash demand outlook steady

07 June 2013 09:57  [Source: ICB]

Demand for soda ash in Europe in June is likely to remain steady with May levels, but consumption is down by as much as 8% for some market participants, owing to weak macroeconomic conditions, sources said.

"We've seen a modest increase [in demand] in the last couple of months, but it is from a very low point. In June, we expect it will probably remain at a similar level," a producer said on 30 May.


 Copyright: Rex Features

"Demand is quite weak," another producer said. "It's the state of the economy."

Offtake has improved slightly since April as manufacturers have focused on preparing for the summer season. A pick-up in glass bottle demand is expected from the end-use drinks sector during the summer, in line with the traditional peak season, but as Europe is experiencing a colder-than-usual spring, the increase in demand is only likely to be slight.

"There is usually a stocking-up of containers ahead of the summer, so in May or June, players start to anticipate higher sales of cold drinks," the first producer said.

A third producer said it had seen improved buying interest from the detergents, glass and sodium bicarbonate sectors in the last couple of months.

The first producer said, however, that if demand does not show a particular uptick during summer, demand at the end of the year is likely to remain flat. Offtake from the drinks sector normally picks up for the Christmas and New Year holidays, but if stocks have built up during the summer, end-of-year demand proves fairly stable.

"If the weather doesn't come and the demand doesn't come, you tend to get it flat into Christmas time. If you have a good summer, and the supply chain runs empty, you'd typically see good demand in the run-up to Christmas. Demand very much depends on the weather," the producer said. "Stock can build up, and that can have a knock-on effect into the Christmas period."

Most sources are seeing anything from a 2-8% fall in consumption levels, compared with May 2012, because of reduced buying power, as concerns surrounding the eurozone debt crisis continue.

"Because of low level activity in construction and car building, demand is not good. It is a bit sporadic, but generally speaking, it's still in the doldrums," the producer added.

By: Helena Strathearn
+44 208 652 3214

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