Kazan Soda Elektrik full capacity delayed to May, soda ash being exported – company official

(Clarification: recasts plant ramp-up schedule in third paragraph)

LONDON (ICIS)–The activation of the fifth line at Europe’s new soda ash plant, Kazan Soda Elektrik, has been delayed again by one month, a source from the company told ICIS on Wednesday.

“Four lines are working now. We’re ramping up and the fifth line will be active next month,” the source said. “We will reach full capacity by May.”

The plant, which promises to add 2.5m tonne/year to global soda ash production, was inaugurated in September 2017 and was originally planned to be fully active by December 2017. This was later delayed till March, and now again until May. The specifics are unclear regarding what issues are preventing the plant from reaching full capacity sooner.

The company source also confirmed that the soda ash already in production at Kazan is mostly headed for export markets, confirming long-standing speculation from other market players who have not seen a marked increase in Europe’s supply of the glass feedstock despite the region’s capacity increasing by around 25% with the new plant coming online.

“It’s all for export, although I cannot mention any specific market,” the source said.

Recent data released by Eurostat shows Europe’s exports of soda ash surging in the final months of 2017 compared to the same period of the previous year, which was at the time linked to the shutdown of various soda ash plants in China after the government implemented strict environmental regulation in the final quarter of 2017.

The final destination of soda ash originating from Kazan has been a main talking point for the past year, with a range of questions pervading the market and common opinion pointing towards Asia and specifically China as the main recipient of the newly produced material.

“The new capacity at Kazan seems to be focused on the Asian direction because it is not so long term-driven,” said one source, “It’s hard to capture customers on an annual basis, so they are looking at China more.”

Another source took a similar view, pointing out that despite the new plant starting production, there has been no evidence yet of an influx of supply on the European market.

“It can’t possibly have just gone under the radar,” the source said, referring to the newly produced soda ash, “my opinion is that they’re not making as much as they say. But if 1.5m tonnes is in fact going to Asia, that’s another position all together.”

The prospect of additional supply in Europe lead to a softening in 2018 Q1 contract prices, with buyers leveraging a bullish supply outlook to achieve price decreases. However, given that full capacity is once again delayed and the new material appears to be flowing to for export markets, sentiment may have overestimated the real impact the Kazan plant will have on European supply.

On the other hand, a European purchaser of soda ash confirmed it was receiving material from the new plant, although it maintained that most of the product was coming from a different supplier.

“From time to time I receive material from Kazan too. As long as I receive enough product, in fact I don’t care if the product is coming from either supplier. The quality of product from Kazan is perfect,” they said.

Since the soda ash market in Europe predominantly works on an annual contractual basis, any price impact arising from Kazan’s delay and apparently export-driven trade flow will likely only become apparent next year, when buyers and sellers once again renegotiate contracts.