China soda ash to stay firm on better demand amid easing supply

Focus article by Helen Lee

SINGAPORE (ICIS)–Spot soda ash prices in China may stay firm in the coming months as an expected easing of supply tightness will coincide with a seasonal pick-up in demand for the material.

Chinese producers would attempt to increase production by November as the nationwide environmental inspections of chemical factories wind down, while buyers typically shore up their inventories ahead of winter, market players said.

During the week ended 13 September, the country’s export prices for dense- and light-grade soda ash were assessed at $270-280/tonne FOB (free on board) China, up $10/tonne from the previous week, ICIS data showed.

Prices of Chinese material have been rising since the start of August, with cumulative gains of 10-13%.

China’s export supply has dried up due to plant turnarounds, followed by reduced run rates at soda ash plants when the Chinese government’s strict environmental campaign was launched this year.

In response, Asian buyers, including those in China, sought supply from alternative sources such as the US, Turkey and Europe.

But a wide buy-sell gap of $20/tonne hindered progress of discussions for fourth-quarter shipments.

Some end-users in southeast Asia were comparatively more anxious in securing their required quantities to maintain production and deemed the cost to be of secondary concern.

“I have no option but to grab [any available lots] because it’s now a sellers’ market,” a southeast Asia-based end-user said.

Meanwhile, a September-shipment soda ash cargo from Turkey to northeast Asia negotiated recently was heard to have been delayed for unclear reasons.

“There [is] no floating [price] quotation because most suppliers [are] not willing to provide updated pricing,” a northeast Asia-based trader said.

“We are still seeking other suppliers to initiate deal[s],” he said.

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.

Meanwhile, market players in China expect some longer-term impact on the country’s soda ash supply stemming from the government’s environmental campaign, mainly because it will mean increased cost for producers.

A Shandong-based soda ash producer highlighted cost concerns amid requirements to use cleaner but more expensive natural gas-based power instead of coal-based power for production.