OUTLOOK ‘20: Global market share of China soda ash to continue declining

Author: Helen Lee

2020/01/09

SINGAPORE (ICIS)--China’s share of the global soda ash market is set to continue declining amid new capacities in Turkey and inflow of US supplies to Asia.

In 2019, China exported less than 1.3m tonnes of soda ash, down 6.1% from the previous year.

Source: ICIS Supply & Demand

The market outlook for 2020 is downbeat in view of ample supply on both the domestic and global fronts.

During the week ended 8 January 2020, dense grade soda ash prices fell $5/tonne to $200-210/tonne FOB (free on board) China; while prices of light grade soda ash fell $3/tonne to $200-207/tonne FOB China, ICIS data showed.

China’s import prices of dense grade material in northeast and southeast Asia likewise decreased, slipping $5-10/tonne, to $215-220/tonne CFR (cost and freight) NE (northeast) Asia and to $215-230/tonne CFR SE (southeast) Asia, respectively.

Spot prices were at their lowest levels since around October 2016, according to ICIS data.

ICIS Editorial Chart goes here

Bulk lots from the US supplied under term contracts for delivery in the first two quarters of 2020 were available at lower prices.

This includes a 20,000- to 30,000-tonne lot of dense grade natural soda ash which is close to being settled at around $200/tonne CFR SE Asia, according to market sources.

Term 2020 supplies from Turkey were being negotiated at around $200-210/tonne CFR SE Asia to as much as $220/tonne CFR NE Asia.

The US and Turkey enjoy low-cost manufacturing processes due to vast reserves of the trona mineral which is mined and refined into soda ash.

In China, two major producers – one from Jiangsu and the other from Shandong - foresee a 5% to 14% reduction in their export volumes for 2020.

“Last year, we exported 350,000 tonnes of dense and light grade soda ash and this year we [forecast] 300,000 to 350,000 tonnes,” a source from the Jiangsu-based producer said.

In South Korea, the 2020 term import volumes are expected to be cut by 20% for dense grade soda ash due to depressed demand from a major downstream glass manufacturer as the country’s economy struggles with weak exports and construction investments.

China may see a consolidation of production bases in the long run given the lack of cost advantage of manufacturing soda ash through chemical processes.

New soda ash projects are mostly located outside China.

Company Capacity (tonnes/year) Location Status/Start-up schedule
Tata Chemicals 900,000
(+ 250,000)
Mithapur, Gujarat, India Received environmental clearance for capacity addition; targeted to come on stream in late 2021.
Yildirim Holding 400,000 Togyzkent village, Sarysu district, Zhambyl, Kazakhstan Construction scheduled to start in late 2019; no further update available.
Inner Mongolia Berun Group 5m Inner Mongolia, China 2023
Sisecam Group & Ciner Group JV 2.5m Green River, Wyoming, USA 2024

“Turkey and US suppliers already got their market share in Asia,” a southeast Asia-based distributor said, citing that they pose stiff competition for Chinese suppliers.

Soda ash has uses in glassmaking, chemical processing, the manufacture of soaps and detergents, pulp and paper processing, water treatment and flue gas de-sulphurisation.

Focus article by Helen Lee

Photo: Soap bars (Source: imageBROKER/Shutterstock)