Belgian producer Solvay is seeking to improve its output of
soda ash by 500,000 tonnes per year, primarily across its four
major exporting plants by debottlenecking its processes, the
company told Fastmarkets on Friday February 22.
But it continues to shy away from greenfield investment in
new production assets until there is a "fair" price for soda
ash in the market.
Four of Solvay’s seven soda ash plants, which
are "dedicated to both the local and export markets" in their
regions, will undergo debottlenecking activities to increase
capacity utilization by 500,000 tpy of soda ash and 100,000 tpy
of sodium bicarbonate by 2021, thus making that material
available for sale.
The plants which will undergo the majority of the
debottlenecking processes are in the United States, Italy,
Bulgaria and Spain.
Solvay also has two plants in Germany and one in France.
To warrant a greenfield development, Solvay said that any
prospective site must have access to competitively priced raw
materials, limestone, salt and energy. That limits the number
of possible sites for new capacity.
"Clearly, when we look at the price of soda ash and the
investment costs, then [we can identify] no feasible greenfield
plants. We are looking for a fair price for soda ash [before we
consider such an investment]," Christophe Clemente, the
president of Solvay’s soda ash and derivatives
global business unit, said exclusively to Fastmarkets on
"We do not want to see the same price volatility in soda ash
as you see in some other commodities. This is not positive for
value creation or a sustainable business for customers,"
"A fair price allows for long-term supply of soda ash by
covering investment costs for capacity expansions," Clemente
Fastmarkets’ monthly price for soda ash,
natural and synthetic, dense and light, large contracts,
delivered in Europe, was €210-220 ($238-249) per tonne in
the assessment on January 31.
This price has risen twice in the past 12 months. It went up
in February 2018 to €190-210 per tonne from €180-200
per tonne earlier. It then rose to the current price in
October. Both increases were the result of supply
Clemente acknowledged that the additional tonnages that
Solvay intends to bring to the market will not even cover one
year’s growth in the global market.
"This capacity expansion won’t balance the
market, which will remain under-supplied. We are taking the
first step in the short term by providing some additional
tonnages for our loyal customers," he said.
Annual demand for soda ash is roughly 60 million tonnes and
is growing by 1.5% per year, according to
"According to our analysis, 2019 is a better pricing
environment than 2018, but 2018 was a [backward step] because
we suffered a strong increase in the cost of raw materials and
energy," Clemente said.
While Solvay is focused on delivering more soda ash to its
export markets, it has in recent years pulled out of sites in
markets which were earmarked for growth.
In 2016, Brussels-based Solvay mothballed soda ash
production at a chemical plant in Egypt with capacity for
100,000 tpy, despite the plant’s location in the
Middle East, where Clemente says "most of the [potential for]
growth" is to be found.
As well as the Middle East and Africa, Latin America and
Southeast Asia were identified as markets that will drive
demand for soda ash in the near future. "The market is tight
and will most likely get tighter in the next two to three
years," Clemente said.
But he added that there was a "strong positive echo" from
customers which share Solvay’s idea of developing
a market with low volatility and stable prices.
While repeating statements from a previous interview with
Fastmarkets, Clemente again stopped short of giving a price for
soda ash that would be seen as fair.
It is also possible that estimates of what fair pricing is
could change in the eyes of Solvay’s
Separately, the soda ash producer is making more use of more
sustainable energy sources, which will both drive down its
costs of production and reduce carbon dioxide emissions from
the soda ash plant in Rheinberg, Germany, by 30%.
This follows a similar process at its soda ash plants in
Rosignano, Italy, and Bernburg, Germany, which increased their
energy efficiencies and reduced the need for expensive
The latest investment in energy efficiency will lower CO2
emissions by 190,000 tpy, Solvay said. This will be achieved by
investing in a biomass boiler which will burn recycled wood
chips. The boiler will come online in May 2021.