14 June 2013 09:28 [Source: ICB]
Solvay's plans to close its Portugal plant and cut back production in Italy could help bring the market back into balance
Belgium-based soda ash producer Solvay's decision to close its Portugal plant will help balance the market and reduce supply length in the Mediterranean, sources said.
Solvay will close its 230,000 tonne/year soda ash unit at Povoa, Portugal, by January 2014 as part of restructuring measures aimed at cutting costs and improving profitability in Europe.
The plant's closure is part of Solvay's plans to address structural overcapacity in the Mediterranean basin.
The company said that while demand worldwide has been growing, Europe has been suffering from the economic downturn, which has caused structural overcapacity.
Solvay will also cut run rates at Rosignano in Italy. The cuts in Europe will affect about 450 jobs by 2016.
Producers in Europe said that this is likely to balance the market as the closure and capacity cuts will take out about 500,000 tonnes of soda ash from the market next year.
And, if the market tightens, Solvay can ramp up production at its Italy plant.
A Turkish producer said that it can step in to supply the market if necessary and it welcomed the closure, saying that it will help balance a long market.
This more balanced situation is likely to be short-lived though, because there are massive expansion plans in Turkey, where soda ash is produced from mined feedstocks, which are cheaper.
Turkish soda ash producer Ciner is to invest $1.35bn in a new soda ash plant with a nameplate capacity of 2.7m tonnes/year in Kazan, Turkey, to meet increasing global demand.
The plant will be operational by 2017. In addition, Ciner's Beypazari plant in Turkey will be expanded to add 1.7m tonnes/year of capacity by 2016.
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