Soda ash is mainly used in the chemical industry, glass-manufacturing, metallurgy, paper-manufacturing, textile, dyeing, synthetic detergent, soap, washing powder, water treatment, as well as in the petrochemical industry.
Flat glass comprises 28% of global demand with container glass a close second at 23%. Detergents take up 12% whereas chemicals and metallurgy take up 6% each. Silicates account for 4% and fibre glass, 1%. The remaining 20% is made up of other applications such as water treatment.
Asia’s soda ash demand totals 21.5m tonnes/year versus a production capacity of 29.3m tonnes/year. On the demand side, the diversified markets for soda ash are mainly driven by GDP growth rates. The flat glass industry is 80% linked to consumption by construction in emerging countries with the rest linked to the automotive industry. Increasing population and the growing consumption of detergent and container glass in emerging countries are the other market drivers. China’s demand growth is projected to be about 7-8% per annum.
China’s soda ash prices were on an upward trend during the latter half of 2013, buoyed by reduced supply on a combination of curtailed output, planned and unplanned plant outages during the second and third quarter coupled with buoyant demand from the flat glass sector in the fourth quarter of 2013.
Soda ash producers had reduced their plant operating rates to an average of around 80% capacity during the second and third quarter on the back of poor margins owing to supply length in the first quarter of 2013.
The sustained erosion of prices of the ammonium chloride (AC) by-product in China further prompted Hou process soda ash producers to reduce operating rates at their plants, which resulted in a rebound in prices of the light grade soda ash from late March to early May 2014. Prices began to erode in the first quarter of 2014 on weakened demand from the flat glass sector following measures by the Chinese government.
China’s Industry and Information Technology Ministry (MIIT) in February 2014 enforced tougher measures which included the banning of new projects in steel, cement, electrolytic aluminum, flat glass and shipbuilding industries before 2017, while gradually eliminating existing projects that were found to be below standard.
More than half of Asian production capacity comprises of the Hou process versus the normal synthetic process. The natural process makes up a marginal proportion of Asia’s soda ash production method. In the Solvay process (or ammonia soda process) of soda ash production, the only major inputs are salt, limestone and thermal energy and its only major byproduct is calcium chloride, which is sold as road salt. Calcium chloride can be produced directly from limestone, but large amounts are also produced as a by-product of the Solvay process.
Calcium Chloride is used as a desiccant and for de-icing and freezing point depression. Calcium chloride is also used to increase the hardness in swimming pools. Other uses can be found in food, medicine, concrete, additives in plastics and fabric softeners.
In the Hou process of soda ash production, the first few steps are the same as the Solvay process. However, the calcium chloride is supplanted by ammonium chloride. The byproduct ammonium chloride can be refined, used as a fertilizer and may have greater commercial value than calcium chloride, thus reducing the amount of waste.
A heavy turnaround season at several China-based soda ash plants in the second quarter of 2014 contributed to a firmer outlook. Some sources said supply may remain snug into July whereas weak demand from the flat glass sector owing to government policies had already been factored into the downward trend of soda ash prices in the first half of the year, they added.
The downward trend in dense grade soda ash prices in the Chinese domestic market subsequently halted in May. A producer indicated that it may raise prices by the end of the month for June shipments because its supply of contractual soda ash volumes was limited.
On the contrary, the upward trend on prices of the light grade abated by early May, following the recent rebound from late March to early May on limited supply owing to curtailed output.