The global soda ash industry
is undergoing significant structural change, characterised by
shifting capacity, the impact of rising costs for synthetic
soda ash producers and developments in its core markets.
According to global industrial research group IHS, which
publishes an annual study covering historical trends as well as
ten-year supply and demand forecasts for soda ash, global
annual consumption is expected to rise to 76.5m tonnes by 2024,
compared with 55.5m tonnes in 2014.
|Changes in soda ash markets, including the way some
counties export wine
without bottles, are setting new trends in the worldwide
soda ash industry
(source: Baynham Goredama).
Figures from the US Geological
Survey (USGS) peg world soda ash production (natural and
synthetic) in 2013 at 53.2m tonnes, up from 52.9m tonnes in
2012. Of this, approximately 75% is derived from synthetic
processes, while 25% is produced naturally, principally from
deposits of the mineral, trona.
Worldwide average demand for soda
ash is expected to increase by 3.3% per year between 2014 and
2024, IHS analysis shows, driven by increased consumption
in the recovering construction and automotive industries, with
China, the worlds largest soda ash producer, contributing
almost 4% year-on-year growth to 2024.
Glass markets, which account for more than half of global
demand, are expected to remain the dominant end use for soda
ash, while chemicals and detergents will also remain important
Patterns of trade for soda ash are
beginning to experience more seismic adjustments, meanwhile, as
higher cost production centres become displaced by cheaper,
alternative sources, particularly in Europe and Australia,
where domestic output makes way for supply from Turkey and the
The closure of 360,000 tpa capacity at Tata Chemicals
Magadi soda ash plant in Kenya in June, which mainly supplied
the Indian market, with a large part going to the glass
industry, has caused soda ash prices to rise in India, Vincent
Pedailles-Ledoux, senior analyst at IHS, explained to
The Magadi plant was idled because of high energy
costs. Local producers can try to increase production, but the
closure left a big gap to fill in India he said.
However, as Pedailles-Ledoux points out, the Kenyan facility
has only been mothballed in response to current industry
pressures, and Tata may bring the plant online again in the
The India-headquartered companys cost pressures were
not only felt in Kenya. In February 2014, Mumbai-based Tata
also closed its 560,000 tpa Winnington soda ash plant in the
This contributed to the UKs soda ash imports rising by
155,000 tonnes in the first five months of 2014, more than
three times higher than the corresponding total in 2013, when
imports stood at 50,000 tonnes.
Of this, 40% was imported from Turkey, and 27% from the US,
with the remainder coming from Poland and handful of other
Elsewhere in Europe, in Portugal, the closure of
Belgium-based Solvays 230,000 tpa Povoa plant in 2013 has
resulted in a near-400% increase in imports between January and
May this year, compared to the same period last year, as the
country effectively no longer has any local production.
On announcing its decision to shut Povoa, Solvay said that
the closure was part of a plan to rationalise its European soda
ash operations and improve profitability, while expanding its
lower-cost output capacity in Wyoming, US, by around 12%.
Australia, meanwhile, saw the loss of Penrice Soda
Holdings 340,000 tpa Osborne chemical plant earlier this
year, which Pedailles-Ledoux explained was one symptom, amongst
others, of the downturn in Australias domestic glass
In the countrys container glass market, for example,
demand has been impacted by changes in the way
the country exports wine.
Australian wine is now exported in bulk, rather than
in individual bottles, meaning that the local container glass
market is pretty weak, Pedailles-Ledoux said, but
stressed that the wine trade is just one contributing factor to
the Australian glass markets overall weakness, which is
also affecting flat glass.
Powder detergents, another important market for soda ash,
are also losing favour in developed economies worldwide as
consumer preferences shift towards using liquid detergents.
As part of a trend observed globally, in Australia this has
meant that most of its formerly domestic detergent producers
have moved to Asias emerging markets where production
costs are lower and cheaper, powder products still account for
the majority of detergent sales.
Australia now imports around 300,000 tpa soda ash, mainly
from the US, as a cost-effective alternative to producing it
Cost challenges in
While global demand for soda ash is on a broadly positive
trend, Chinas domestic soda ash industry is struggling
against a number of operational factors that are making
production an unprofitable business.
Prices for soda ash follow cost, Pedailles
explained. The US has a huge advantage because of its low
gas prices these are expected to stay low for at least
the next 10 years.
China produced approximately 24.5m tonnes soda ash in 2013,
of which IHS estimates 98% is synthetic.
High raw material costs, particularly for salt, have had a
negative impact on margins in China. Lower coal prices have
meant that Solvay-based producers are no longer operating at a
loss, but these have not helped Hou-based producers back to
The main issue for companies that use the Hou process is the
cost of ammonia and the credit they receive from by-produced
In the past, the
credit received from ammonium chloride in China covered the
cost of ammonia for soda ash producers, but this ceased to be
the case in 2008 and shows no near-term signs of
credit Hou-based producers receive for ammonium chloride is two
and a half times lower than the cost of ammonia.
explained, is partly due to oversupply in the ammonium chloride
and urea fertiliser business.
Estimates from major fertiliser
producers and market tracking services suggest that urea prices
are set to remain weak into at least 2016, thanks to structural
oversupply in China, which in turn is likely to hold back the
price of ammonium chloride and the corresponding credit for
Hou-based soda ash producers.
China exported the same
volume of urea in the first two months of 2014 as it did in the
first half of 2013, US fertiliser company Agrium Inc.
noted earlier this year, adding that Chinese shipments
will be a key driver of the world urea market this
Pedailles-Ledoux said that while some Chinese soda ash
plants may be subsidised by local governments, the country is
likely to see part of its capacity shut down in the next few
years as operating costs make many plants unviable.
US soda ash a natural advantage
Soda ash is the US' largest
inorganic chemical export, with shipments totalling around 6.5m
tonnes in 2013, or around 58% of the countrys total
production of 11.4m tonnes, according to the USGS.
All of the countrys natural
material is produced from large trona deposits, mined and
processed by four companies in Wyoming (FMC Corp., OCI
Chemical, Tata Chemicals and Solvay) and one in California
(Searles Valley Minerals), all of which benefit from low energy
costs coupled with stable domestic and strong export
South America and South East Asian markets are among the
biggest consumers of US-produced soda ash, receiving 1.8m
tonnes and 1.3m tonnes of exports, respectively, in 2013, data
compiled by IHS shows.
The proximity of US soda ash exports to South America has
negated the need for local capacity in this region, with a
small amount of production from Argentinean producer, Alpat,
being the continents sole internal supplier.
Europe is also importing more and more US soda ash,
following the closures of its own local capacity.
Turkeys projects face delays
While naturally produced US soda ash remains among the
lowest cost in the world, Turkey is likely to become an
increasingly important supplier to the European market as it
develops large domestic deposits of trona.
USGS figures show that Turkey produced around 1.8m tonnes
soda ash in 2013. IHS estimates that the local market consumes
around 1m tpa, with 60% consumed by flat glass production,
while 75% of the remainder is exported to Western Europe and
the rest to Russia, the Baltic countries, India and the Middle
clear that the new low-cost Turkish supply with a competitive
cost base and low transport costs relative to the US
producers will continue to influence the market. We just
do not know yet to what extent, Marguerite Morrin,
director of global soda ash services at IHS said.
Demand in Turkey is expected to grow by around 10%
this year, led by the glass sector, Pedailles-Ledoux
We expect exports from Turkey to decrease in 2015
because they will need more material to feed their domestic
market, he added
A number of projects to increase soda ash capacity in Turkey
are in the pipeline, but most have missed their scheduled start
Last year, Turkish producer Star-Kazan Soda Elektrik, part
of the Ciner Group industrial conglomerate, announced plans to
build the worlds largest soda ash production complex in
the Kazan district near the Turkish capital, Ankara.
The trona deposits in this region are estimated to total
around 1.6bn tonnes (at a grade of 30%, for 296m tonnes
contained), with a mine life of around 40 years.
Phase one (1.5m tpa) of the 2.5m tpa Kazan facility was
originally forecast to come online in 2014, but this start-up
date has since been pushed back to the second half of 2018,
ramping up to full production the following year.
Kazan for the two phased soda ash project has not yet started
although the land is reportedly ready for construction,
It is the
same situation for Eti Sodas 500,000 tpa project at
Beypazari, where the estimated completion date has also been
postponed, he added.
Beypazari soda ash plant, which was initially scheduled to come
online in 2012, could be finished in the second half of 2016,
according to Pedailles-Ledoux, although soda ash production in
this area is already well established.
already have 1m tpa capacity from trona extraction at Beypazari
and Soda Sanayii (Sisecam) has capacity of 1.1m at Mersin, via
the Solvay process, Pedailles explained.
As Turkish soda
ash output rises, to a level where the country can afford to
increase exports at the same time as satisfying growing
internal demand, it is likely to become the supplier of choice
for many European importers.
Turkish trona is very cheap to extract, Pedailles-Ledoux
explained. Shipping material from Turkey to Northern
Europe is still cheaper, for some, than producing soda ash
domestically although this varies depending on the
Morrin, synthetic soda ash producers are likely
apprehensive about the further Turkish natural soda ash
production developments as its increasing cost competitiveness
poses a threat to the industry, particularly in valuable
In the meantime,
however, Pedailles-Ledoux warns that the lack of new Turkish
capacity coupled with greater internal demand could result in
some tightening of the European market.
Synthetic soda ash here to stay
Although naturally produced soda
ash has a number of cost benefits over synthetic material in
regions where it can be easily extracted and delivered, there
is not sufficient supply of natural soda ash to supply the
entire global market.
Synthetic soda ash accounts
for around three quarters of global consumption and is,
therefore, here to stay, Pedailles-Ledoux told
The future of soda ash consumption
is likely to remain dependent on its present key markets,
including container and flat glass, detergents, and chemicals,
such as sodium dichromate and sodium silicates, he said.
Less positively for struggling producers, he believes that
there are no new meaningful applications for soda ash on the
horizon for soda ash any new uses that do emerge
are unlikely to require significant quantities, he
IHS has recently published its
2015 World Soda Ash Analysis report, which is now available