Solvay to add 500,000 tpy to soda ash output

By Michael Greenfield
Published: Wednesday, 03 April 2019

The Belgian producer will gain 500,000 tpy in soda ash production by debottlenecking existing processes but will not develop greenfield sites until soda ash prices improve.

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 February 22.

"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," Clemente said. 

"A fair price allows for long-term supply of soda ash by covering investment costs for capacity expansions," Clemente added.

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 tightness.

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 Fastmarkets’ estimates.

"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 customers.

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 hydrocarbons.

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.