OUTLOOK ’18: US domestic soda ash steady, producers eye export growth

HOUSTON (ICIS)–The US soda ash market expects to see steady domestic demand in 2018, with slight growth possible in line with an expanding economy. Globally, producers of US material will eye growing export opportunities at more attractive pricing as the supply situation remains tight worldwide.

Domestic demand for soda ash is largely expected to remain flat, with little organic growth anticipated in the largest downstream market, glassmaking. Some slight growth is possible, however, amid a strong macroeconomic outlook in the housing and automotive industries, especially as Texas and Florida ramp up post-hurricane rebuilding efforts. Additionally, growth could come if domestic glass plants remain operational throughout the year.

US soda ash producers Ciner, Genesis Alkali and Tata separately sought price increases of $6/ton. While annual contracts won’t fully settle until 2018, some higher settlements have been heard.

While the domestic market should remain in a steady state, US production will be driven by export-demand growth. Two major factors will inform US producers’ export opportunities in 2018: potential competition from Turkish Ciner subsidiary Kazan Soda Elektrik and China’s supply/demand fundamentals amid that government’s increasingly stringent environmental regulations on plants.

China’s demand growth outpaced production in 2017, so the country pulled back 500,000 tonnes of export material in order to feed its domestic needs. US producers do not expect to see that material return to the export market in 2018, and they anticipate demand growth in China, Latin America and Europe.

A central question to the global supply situation is if and when Kazan’s 2.5m tonne/year plant fully comes online. Inaugurated in September, the plant was supposed to have all five lines up and running by December, but that has been delayed into early 2018. The company has been mum on when exactly the new plant will be fully up. The full capacity from the Kazan plant would ease global supply, but questions remain on whether it will ramp up to full capacity.

The Chinese government appears poised to continue its environmental crackdown on the country’s plants, lowering utilisation rates at various times for both soda ash plants and for facilities that produce the raw materials needed to make soda ash. The stricter regulatory environment has caused prices to spike in Asia and increased inquiries for US material.

Even if the Kazan plant comes on full stream, Asian market tightness is not expected to dissipate. “We expect this to continue to create opportunities for the US,” a market source said.

US players expect global market tightness to persist throughout 2018. “Generally, our three-year view is it will remain tight,” another market player said.

Mexico accounts for the largest share of US soda ash exports at 16% from January to August 2017, the latest month for which data are available. Brazil follows at 13%, and stabilisation of that country bodes well for opportunities there.

Wyoming trona mines account for about 90% of the US production of soda ash (sodium carbonate). Downstream, about 50% of soda ash goes into glassmaking.

Producers of US soda ash include Genesis Alkali, Solvay, Tata, Ciner and Searles Valley Minerals.