Soda ash: the year in review

By Michael Greenfield
Published: Wednesday, 20 December 2017

A round-up of pricing, company moves and key issues that affected the soda ash market in 2017.

Pricing and volume
Trade volumes were varied until October this year, according to the most recently published data. The May total was a nine-month high, reflecting exports from China at 178,286 tonnes. Chinese exports hit a nine-month low in October of 96,315 tonnes.

Despite the variation in volumes, spot prices held flat from May 18, although October had the highest single monthly increase in prices since at least January 2014.

Compared with 2016, monthly volumes in 2017 were down for every month except for February.

Supply

In February, Tata Chemicals announced plans to expand its capacity in India by 2020 to meet growing domestic demand. The company will lift total capacity to 1.4 million tonnes per year from 900,000 tpy at present

Eti Soda confirmed at the end of this year that it would bring its Kazan plant to full capacity by the end of January 2018, which the company claims will make it the biggest producer in the world with total capacity of 4.4 million tpy at its two sites in Turkey.

Anti-dumping
In September, after a midterm review in the high court of Gujarat, the Indian government decided to extend protectionist duties on foreign-originated soda ash.

This prompted a challenge from the by the All Indian Glass Manufacturers Federation (AIGMF), which believes market conditions no longer warrant the anti-dumping tariffs, which have existed since 2012. Buyers and manufacturers had hoped that the tax, which will run until July 2, 2018, unless the AIGMF-lead challenge can overturn the ruling, could be scrapped.

Environment
Environmental controls are due to come into full effect for Chinese producers after January 1, 2018. But many markets have already been affected by partial closures or temporary shutdowns. The ramp-up in the regulatory regime during 2017 reflected the federal government taking control from regional governments.

Under the environmental protection tax law, manufacturers must comply with restrictions on emissions and waste disposal and must pay a tax weighted against the volume of pollutants produced. The market has widely expected that this cost would be passed onto buyers and end-users.

M&A activity
After no consolidation in the first eight months of the year, there were two major deals. After a second failed bid from Nirma in August, Genesis swooped in to buy Tronox’ Alkali Chemicals business, the fourth-largest producer globally, for $1.325 billion in cash. In turn, Tronox used that capital to buy Cristal TiO2 for $1.7 billion in cash plus stock.

Italian chemical group Itlamatch made three acquisitions, culminating in the purchase of Dextrex Corp for $27 per share, representing an 8% premium on the closing bid price of Dextrex’ stock as of November 9.

Looking forward
The additional 1.4 million tpy of capacity at Eti Soda is widely expected to influence prices although the company has attempted to reassure buyers and manufacturers, pointing out that more stringent environmental regulations in China have forced output there down by 10%.

Producers look set to benefit from a predicted near doubling in the size of the glass market to $1.4 billion from $800 million at present. If this materializes, it could be a boon for producers, particularly from China and the US, who are subject to the high duties when exporting to India.



More like this