Soda ash was extremely tight in 2022.
Demand recovered post-pandemic but supply was constrained as capacity additions were delayed because of COVID-19.
Production in Europe was repressed by energy and raw material limitations while logistical issues impacted on US supply.
Meanwhile, costs were extremely high, especially in Europe, following Russia’s invasion of Ukraine.
Today soda ash is over-supplied with spot prices falling quickly in line as well with a drop in cash costs.
Meanwhile, slower economic growth is contributing to weaker soda ash demand.
There is a lot of new supply scheduled, mainly in China and the US.
From seeing a net loss in capacity in recent years, China’s capacity is set to increase sharply, with the technology profile also about to change.
Inner Mongolia Berun Yingen is adding 5.0 million mt of natural soda ash capacity this year and another 2.8 million mt by 2026.
Inner Mongolia Berun started up its 1st production line (1.5 million mt) on June 25th - three other lines are to follow.
Inner Mongolia Berun is part of Yuanxing Energy, a subsidiary of Berun Group.
Yuanxing Energy is the sole domestic natural soda ash producer with controlling positions in the two other natural soda ash plants - Henan Zhongyuan (1.4 million mt) and Tongbai Haijing Alkali (300,000 mt).
There are also some large synthetic expansions underway in China.
The US, among the lowest cost producers in the world, hasn’t added any significant capacity in decades.
This is set to change with over 10 million mt scheduled by 2030, including 1.1 million mt which Genesis is adding this year.
In addition, a synthetic plant is about to start up in Saudi Arabia.
Ciner is expanding its capacity in Turkey by 1.0 million mt by 2025. There are also various expansion planned in India Pic 1 below.
World Soda Ash capacity year-on-year growth
GLOBAL SUPPLY/DEMAND OUTLOOK
The US, Turkey and China are key soda ash exporters, while South America and Southeast Asia are key importers.
Global soda ash trade is robust post some COVID-19-led supply chain complications.
None-the-less, China saw the only significant increase in exports last year.
China’s ability to increase exports in the future will be influenced by the success of Inner Mongolia Berun and also the impact this low-cost production has on high-cost plants in China.
Mainland China soda ash exports (YTD May)
Soda Ash Demand Distribution
Soda ash demand is dominated by glass with flat glass the single biggest end use.
In terms of demand growth, environmental sectors are contributing very positively with solar glass set to be the single biggest demand driver by 2027.
Lithium carbonate, used in the production of some electric batteries, will also contribute strongly.
Flat glass will remain an important driver even though production growth in China has slowed.
Soda ash demand was strong in 2022 but growth has slowed this year, with most markets oversupplied.
Availability will continue to improve as new capacities come on stream.
Demand from environmentally driven sectors.
PRICES, COSTS AND MARGINS
The soda ash cost curve was extremely steep last year with US producers at the bottom of the curve and many European producers at the top.
Based on our forecast for energy prices, cash costs seem to have peaked.
Freight rates have also fallen sharply.
Soda Ash export price comparison.
The US is the biggest soda ash exporter in the world, with Turkey in 2nd place.
China’s export position is the most volatile and can change significantly from year-to-year. China exports a lot of spot product.
Therefore, monitoring prices from China is helpful.
In August 2020, in the midst of the pandemic, China’s spot export prices averaged $161 per mt FOB while by August 2022 prices increased to $420 per mt FOB with prices recently at $250-285 per mt FOB.
SUMMARY & CONCLUSIONS
World operating rates may have peaked. However, the timing of the new projects will be critical.
In addition, our forecast doesn’t include unscheduled capacity closures which the huge new plant in Inner Mongolia may trigger.
For a detailed overview of the global soda ash and allied industries join us at the World Soda Ash Conference in Athens, October 10-12th.
Executive Director Global Soda Ash Services email@example.com
Associated Director Global Soda Ash Services firstname.lastname@example.org
Associated Director China Soda Ash