OUTLOOK ’19: US domestic soda ash demand declining; export market strong

HOUSTON (ICIS)–The US domestic soda ash market continues to expected a slight decrease in demand following demand erosion of downstream products such as powder detergents.

However, the US market will face strong global demand as low global inventories persist, encouraging producers to eye export opportunities.

The US soda ash producers Solvay, Genesis Alkali, and Tata Chemicals separately sought a price increase of $10/short ton for US and Canada; however, the contracts are not expected to settle until 2019.

US production of soda ash will continue to be driven by export opportunities. The Turkish Ciner subsidiary Kazan Soda Elektrik had a slower-than-expected ramp-up through 2018, which was supposed to relieve exacerbated supply, and some market participants contest the current status of the plant.

The global supply situation is waiting to hear firm answers on the status of  Kazan’s 2.5m tonne/year plant. Inaugurated in September, the plant was supposed to have all five lines up and running by December 2018, but that had been increasingly delayed.

Due to a slow ramp-up and tight supply fundamentals, the impact of the plant on tight global supply is expected to be minimal as the material will be quickly absorbed into the market.

Another central issue surrounding global soda ash is the Chinese environmental protections. Chinese prices remain elevated due to strong demand and tight supply and prices are expected to remain elevated into 2019.

It was reported that the Shandong Haihua Group on around 1
December cut output at its 3m tonne/year soda ash plant to
70% of capacity from 100% previously, as mandated by Chinese
authorities for environmental protection. The output cut is
expected to last into Q1 2019 amid an already exacerbated supply situation.

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.

Some US market participants expect the tight soda ash supply to continue well in 2019, citing current market fundamentals don’t indicate that relief is in sight.

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.

Focus article by Alex Snodgrass

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