Soda ash, also referred to as sodium carbonate or wash soda, is an inorganic compound with a white appearance. Natural soda ash is obtained through the extraction of trona, followed by processes such as filtering, crystallization, concentration, and drying to produce soda ash. On the other hand, synthetic soda ash is produced using the Solvay or Hou process, where sodium chloride reacts with limestone in the presence of ammonia to yield synthetic soda ash. The primary application of soda ash lies in glass production. In 2021, Asia-Pacific accounted for around 60% of the global demand on the back of strong demand for glass from China and other Asian countries owing to increasing demand in the automotive industry and other end-use industries.
Asia-Pacific is the largest region in terms of soda ash capacity, accounting for more than 50% of the global capacity. The region has remained a net importer of soda ash with average annual net imports being around 5,000 thousand tons during 2016-2021. Solvay process and Hou process are widely used for the production of soda ash in the region. China holds more than 80% share of the total capacities in the Asia-Pacific region. Shandong Haihua Group is one of the largest Soda ash manufacturers in China with an installed capacity of 3,000 thousand tons/year at Weifang, Shandong. There are over 25 producers of soda ash in Asia-Pacific with a total combined capacity of about 40,000 thousand tons. China and India are major producers of soda ash in the region together accounting for more than 95% of the regional capacity. In the forecast period, an average of 150 thousand tons of capacity addition is expected to come online each year mainly in China to cater to the domestic as well as export demand.
These companies are among the top producers of soda ash in the Asia Pacific region, serving various industries including glass manufacturing, chemicals, and detergents.
The Soda Ash demand in the Asia Pacific was estimated to be around 38,000 thousand tons in 2022, which has grown at an annual average growth rate of around 2% during 2016-2021. Dense-grade Soda ash dominates the Asia Pacific Soda Ash market with a share of more than 51% of the total demand. Dense soda ash is used to manufacture glass because it has granular properties which makes the glass dust-free and lowers the risk of breakage during transportation and handling. Light Soda Ash is the second biggest grade consumed in Asia Pacific accounting for almost 20% of the total Soda Ash demand.
In terms of the soda ash market by application, glass manufacturing application (including Flat Glass, Container Glass, and Other Glass) dominates the regional demand accounting for more than 50% of the total demand. Soda ash is used to manufacture Flat Glass, Container Glass, and Other Glass. It is used as the main component, as soda ash decreases the temperature, and the alkali helps maintain the shape of the glass. Flat glass is widely used in the automotive industry as laminated and tempered glass. It is also used in the building & construction industry for windows and door replacements. Soda ash reduces the melting point of silica and lowers the amount of energy produced during glass manufacture. Soaps & detergents application is the second biggest outlet for Soda Ash in the Asia Pacific accounting for around 18% which translates to 6,860 thousand tons.
Nirma Ltd. is the largest soda ash manufacturer in India. The company operates a Soda ash production unit in Bhavnagar, Gujarat with a nameplate capacity of more than 1,400 thousand tons. The company is planning on expanding its soda ash capacity by 32% to cater to the increasing demand from the end-use industries like automotive and building & construction in the country. GHCL operates two manufacturing units in Junagadh and Kutch in Gujarat. The Junagadh facility has a total capacity of 1,100 thousand tons and the Kutch facility is set to start operations of soda ash with an installed capacity of more than 500 thousand tons by 2025. In January 2023, GHCL announced to set up of a Greenfield soda ash plant in the Mandvi taluka district of Gujarat. This will be the company’s third Soda ash manufacturing facility in India.
China has experienced a decline in soda ash capacity in 2021, the decline in soda ash capacity is due to strong environmental checks on the alumina smelting industry, which is the largest consumer industry of soda ash, but despite this trend, there are ambitious expansion plans in place. Among these plans, a significant focus is placed on a massive natural soda ash plant located in Inner Mongolia. The initial phase of the Inner Mongolia project was originally expected to commence operations by mid-2022 with an annual capacity of approximately 5,000 thousand tons. However, due to delays, the project's launch has been postponed until July 2023.
Asia Pacific’s share of the soda ash market is set to increase in the coming years amid new capacity additions in the region. In 2022, China witnessed a substantial surge in soda ash exports, with a growth of 272% compared to the previous year, reaching a record high since 2015, surpassing 19000 kilotons. Chinese export volumes of soda ash have experienced fluctuations in the historical years. South Korea, Vietnam, Indonesia, and the Philippines are major importers of soda ash from China with an average import size of more than 100 thousand tons.
In 2020, Chinese soda ash export prices experienced a significant decline, creating pressure on other exporting countries to lower their prices, particularly during the renewal of annual contracts. The decline in soda ash prices is attributed largely to COVID-19 and a decrease in oil prices in early 2020. However, the current market dynamics are vastly different, record-high prices are being observed worldwide owing to high crude oil prices, the Russia-Ukrainian War, and high transportation costs.
Monitoring China's export prices serves as a reliable indicator of the global pricing trend, as China is one of the largest exporters of Soda Ash, with exports ranging between 1,000-1300 thousand tons. Amidst the COVID-19 pandemic, China experienced a slump in average export prices, reaching $185 per metric ton. This marked a year-on-year price decline of more than 22% compared to 2019 when the average export prices from China were $238 per metric ton. In 2021 & 2022, the prices skyrocketed to a high of $259 and $392 per metric ton respectively, indicating a growth of over 112% owing to the Russia-Ukraine war and COVID-19 market-related disruption
In 2020, the Asia Pacific soda ash market witnessed degrowth in terms of volume owing to the COVID-19 pandemic. The pandemic led to the temporary closure of various industries around the world, aimed at curbing the spread of the virus. This situation had an adverse impact on the soda ash market. Although specific end-use sectors experienced varying impacts, the overall demand for soda ash in the Asia Pacific region had slumped by 6% compared to the previous year. However, there was a remarkable recovery in 2021, with a growth of about 5.4%, surpassing the pre-COVID levels.
Prismane Consulting's estimates for 2022 indicate that the current growth trend is set to continue. However, the market is expected to encounter tight conditions due to limited capacity, which could pose challenges in meeting the growing demand.
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