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Driven by the rapid development of chemical, glass, and daily chemical industries, the soda ash industry has strong demand. It is expected that the gap between the production growth of soda ash and downstream products will increase in 2008, and soda ash will continue to maintain a tight supply and demand situation. At present, the operating rate of domestic soda ash producers is at the best level, the rate of product inventories is relatively low, the rate of production and sales remains high, and the export situation is good. The high boom of the soda industry will continue until 2009.
Global market supply is tight
The world's soda ash production capacity is mainly distributed in China, North America and Europe, accounting for more than 85% of the total global production capacity. By the end of 2006, China's soda ash production capacity reached 17.2 million tons, accounting for 34% of the world's total production capacity, ranking first in the world, while Europe and North America accounted for 29% and 23% respectively. In recent years, the world's total capacity for soda ash has not changed significantly, but regional growth has occurred and production capacity has increased rapidly in the Asia Pacific region, while the United States, Europe, and Japan have been declining. South Korea, China Taiwan, and others have withdrawn from the soda ash production sector. Among them, in the Asia-Pacific region, the annual growth rate of soda ash production capacity in China and India is around 10% and 6%, respectively, which contributed to the vast majority of the Asia Pacific region.
Soda ash consumption in North America, Western Europe, Japan, South Korea, and China Taiwan has entered a stable period with little change; while China, India, and Eastern Europe have enjoyed rapid economic development, and are in a historical period of rapid growth in the construction and automobile industries, demand for soda ash Strong, driving the rapid growth of production capacity. Therefore, the world's new capacity for soda ash production will be concentrated in China, India and Eastern Europe in the next few years, of which China will be the region with the fastest capacity growth.
Overall, it is expected that global soda ash production capacity will be 1.4 million to 2 million tons in 2008, and the demand growth will be 1.8 million to 2 million tons. In the first half of the year, global supply will be tight, and the market situation in the second half of the year will depend on several major The project will be put into production. In 2009, due to the release of domestic production capacity and the increase of production capacity in India and Eastern Europe, the supply situation will improve and the market tension will be eased.
Trade area adjustment brings opportunities
On the one hand, due to stable demand in most of the major soda ash importing regions and countries, the growth rate has been relatively slow and has begun to shrink. On the other hand, in addition to South America, there are a lot of newly built and proposed capacity in other rapidly growing regions. Therefore, the total space for international soda ash trade growth will be limited, and regional adjustment will be the main theme of international soda ash trade.
At present, the United States and China occupy more than half of the world's export markets. The total proportion is above 80%. Among them, US exports account for 60% of global trade volume, and it is a well-known international soda exporter. However, the rise in international energy prices has led to a significant increase in the cost of natural alkaloid production and transportation costs in the United States. In the past two years, the United States has gradually reduced its exports to Asian markets, resulting in tight supply and rising prices in Asia. This will provide new market opportunities for local soda ash producers in Asia, especially China and India.
According to statistics, since 2005, Europe has increased imports from the United States and Poland, and reduced imports from Romania and Russia. In addition, in 2005, China's soda ash exports increased by 30% compared with 2004, totaling 410,000 tons. This also reflects the decrease in US exports to Asia, while China has filled most of the market vacancies. As the United States continues to withdraw its natural alkaloids from the Asian market, it is expected that China's soda ash will have 300,000 to 500,000 tons of export growth space in Asia in the future. The annual increment will depend on the rate at which the United States natural alkaline will withdraw.
It is worth noting that the recent domestic soda ash export prices have increased significantly. On the one hand, because domestic supply is tight, basically all soda ash plants are under full-load production, while downstream demand is stable, and the downstream growth rate is generally higher than the growth rate of the soda industry itself. Soda ash used for export is limited. On the other hand, the United States increased the contract price of soda ash exports per tonne in 2008 by US$15 to US$30, which is also an important reason for the recent rapid increase in domestic export prices. It is expected that the export price of soda ash in the short term will have room for improvement due to the restrictions on export volume.
Product prices still have room to rise
The consumption structure of soda ash in China is relatively close to the international average level. Glass is the largest soda ash consumption industry and its consumption ratio reaches 42%. In the past two years, the domestic chemical industry, metallurgy, electronics, building materials, and decorative industries have developed rapidly. The demand for soda ash has been very strong. This has led to a continuous and steady increase in the production and sales volume of soda ash in China, and the industry operating rate has remained above 90%. In 2007, export tax rebates lowered pressure on soda ash producers. However, due to the rapid growth in domestic demand and the booming stage of real estate and automobile industries, especially the increase in demand for glass, the market quickly digested the negative impact of the reduction in export tax rebates for soda ash. Soda ash prices also continued to hit new highs during the year.
Driven by the rapid growth of downstream industries, it is expected that the demand for soda ash in China will continue to grow rapidly in the next few years. In light of the recent increase in the downstream products such as glass and chemicals in 2008 and the growth rate of GDP, the demand for soda ash will increase by at least 10% this year. It is expected that the increase in soda ash demand in 2008 will reach 1.5 million to 1.7 million tons. The annual domestic consumption reached 17.3 million to 18 million tons. In addition to meeting the export demand, it is estimated that the total demand for the soda ash market in China in 2008 will be between 19 million and 20 million tons.
In terms of supply, in 2007 China's soda ash production capacity will be 18 million tons, and by the end of 2008, it will increase to 21 million tons, of which the incremental portion will be basically put into operation in the second half of 2008 or the end of 2008. According to the current production capacity, it is necessary to maintain a high operating rate to fully meet the overall demand. Even considering the adjustment of the raw materials structure of some products, for example, the demand for alumina for soda ash is gradually being replaced by the caustic soda industry, and the possibility of tight production of soda ash this year is still quite large. With the release of several large project production capacity in the second half of this year, supply shortage will be eased in 2009. However, if the release of these major projects is not successful, or the acceleration of the closure of small alkali plants due to energy conservation and emission reduction, it is not ruled out that supply will remain tight in 2009.
In terms of prices, the US contract price per ton of soda ash prices reached US$185 per ton in 2008 due to the increase in energy costs and the increase in production costs. From the domestic point of view, at present, Shandong has started to implement new prices after the year, with a large increase. The overall average price has risen by 120 yuan per ton. In 2008, there is still room for soda ash prices to rise. The average annual price is expected to increase by 10% to 15% year-on-year.
Industry gross margin will remain high
Soda ash production costs Steam, water and electricity prices are relatively stable, so the price fluctuation of raw salt is the main factor in the fluctuation of soda ash costs. The demand for raw salt in the country has been increasing at a rate of 10% to 15% in recent years. In 2006, the total output of the original salt was 58 million tons, and the sales volume was 56 million tons, which was slightly higher than demand. Despite the rapid development of raw salt in China, due to the continuous expansion and development of coastal economic development zones, the area of ​​effective salt fields in China’s original salt production areas continues to decrease. In 2007, the area of ​​domestic salt production fell by 5% over the previous year, Hebei, Liaoning, In some areas such as Shandong, there has been a large area of ​​salt fields turned into the development of economic regions and the development of aquaculture.
Simultaneously. In July 2007, heavy rains and floods in the southwest region, central China, southern China, and parts of eastern China also had a significant impact on the production of crude salt. Affected by these factors, the price of crude salt rose slightly in the second half of 2007. The increase in the price of two alkalis in the international market and the favorable international market trade environment have played an effective role in promoting the domestic crude salt market, and the tight supply and demand situation will continue. For some time, the price of raw salt still has a further upward trend.
As the domestic industrial salt market is still immature, domestic salt companies are more, smaller, and scattered, and they are in a weak position in the game with salt companies. The possibility of a large price increase will not be large, and the cost of raw salt will be low. The proportion of China's soda ash industry is not high (20% to 30% for the ammonia-alkali method and 15% to 20% for the soda method), so the soda ash industry's gross profit margin will remain high.
The gradual withdrawal of the United States natural alkalium from the Asian market has enabled China to expand its space for the development of soda ash industry. Benefiting from strong demand and tight supply, the soda ash industry will experience a rare good year in 2008. With the release of up to 3 million metric tons of capacity, domestic supply shortages in 2009 will be eased.