SINGAPORE (ICIS)--China’s soda ash market extended gains as producers stood firm on higher offers in a bid to recover margins on the back of production cost pressures.
But the availability of competitive deep-sea cargoes amongst other factors, may continue to weigh on sentiment.
Other than squeezed margins, supply constraints amid a spate of soda ash plant turnarounds in China bolstered the sentiment of suppliers as they targeted offers at $175-185/tonne free on board (FOB) China for the dense grade soda ash.
In contrast to China’s domestic demand which is enjoying a boost from the downstream glass sector amid a recovery in the housing market - southeast Asia’s buying sentiment weakened due to a resurgence in the coronavirus outbreak in countries such as Vietnam.
Downstream buyers in Asia indicated that price was less of an issue compared to the loss in demand and uncertainties due to the coronavirus outbreak resurgence.
Across Asia, the combination of a slowdown in the downstream construction industries and the availability of deep-sea cargoes at lower prices kept buyers on the sidelines.
Underpinning the poor market conditions, selling indications for Turkey origin bulk cargoes surfaced at a steady-to-soft $160-180/tonne cost and freight (CFR) NE/SE Asia level, depending on the volume.
Selling indications in early July were at $170-180/tonne CFR NE/SE Asia.
This contrasted with China origin offers at up to $200/tonne on a CFR NE/SE Asia basis, which elicited muted buyers' response.
Some buyers opted for a wait-and-see stance for an anticipated inventory build-up in China due to poor export sales.
During the week ended 29 July, the spot prices of dense grade soda ash rose $5/tonne at $170-175/tonne FOB China, ICIS data showed.
Import prices of the same across Asia were steady-to-firm during the same week at $170-185/tonne CFR NE/SE Asia, reflecting a $5/tonne gain in southeast Asia.
Soda ash is an essential ingredient in the manufacture of detergents, soaps, cleaning compounds, sodium based chemicals, float glass, container and specialty glasses, silicates and other industrial chemicals.
It is also widely used in textiles, paper, metallurgical industries and desalination plants.
Focus article by Helen Lee
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