The soda ash industry faces severe difficulties in both domestic and international markets

Thread Content

The domestic and foreign markets for soda ash are facing severe difficulties. Source: China Chemical Industry Information Network. “At present, the soda ash industry is encountering unprecedented challenges.” Affected by factors such as weak market demand for soda ash and its downstream products both domestically and internationally, as well as the continuous increase in soda ash production, domestic soda ash prices have been steadily declining, resulting in overall losses for ammonia-soda plants. It is understood that real estate regulation will continue in the future. Coupled with the ongoing growth in production capacity, the outlook for soda ash remains bleak; this unfavorable situation is expected to persist for some time. ”Wang Xiling, president of the China Soda Ash Industry Association, made the above remarks in a recent interview with reporters. 　　According to Wang Xiling, the soda ash industry faced numerous difficulties in the first eight months of this year. First, the selling price of soda ash is at an all-time low. According to statistics from the China Soda Ash Industry Association, currently, the domestic price of soda ash has decreased by 1,000 yuan per ton compared to its peak level last year. Second, the losses incurred by ammonia-soda plants have reached an unprecedented level. Domestic ammonia-soda plants are experiencing comprehensive and substantial losses. Even large soda ash enterprises in Qinghai were not spared. Although the soda ash plant has not incurred losses, thanks to the high price of ammonium chloride, its profits remain minimal. Third, finished goods inventories are at an all-time high. Currently, the inventory of finished soda ash products is at a historic high. According to statistics from the Soda Ash Association, by the end of the second quarter, the combined inventory of three plants—Qinghai Alkali Industry, Kunlun Alkali Industry, and Sichuan Hebang—reached approximately 300,000 tons. The total inventory held by other manufacturers amounted to 440,000 tons. Consequently, the overall inventory of finished soda ash products across the country exceeded 700,000 tons. And users still have quite a bit of inventory on hand. 　　Wang Xiling said that the losses incurred by the ammonia-soda plant may persist for a considerable period of time, mainly because the domestic demand for both heavy and light soda ash has decreased simultaneously to an unprecedented extent. Affected by domestic real estate regulations, the demand for heavy soda ash is unlikely to see a breakthrough. In the second half of this year, departments such as the Ministry of Land and Resources and the Ministry of Housing and Urban-Rural Development repeatedly introduced measures to prevent a rebound in the real estate market. Meanwhile, the State Council conducted special inspections regarding real estate regulation. Therefore, in the coming months of this year, there is little chance of a significant breakthrough in flat glass production, nor is it likely that the demand for heavy soda ash will increase. 　　Domestically, products that consume large amounts of alkali—such as sodium tripolyphosphate, sodium nitrate, sodium nitrite, sodium dichromate, sodium silicate, and sodium metabisulfite—which use soda ash as a raw material, were previously mainly exported to developed ** countries; exports accounted for 30%–50% of the total output. However, currently, there is insufficient international demand for these products, and exports have been hindered. As a result, companies have seen their operating rates drop by half, leading to a corresponding decrease in the demand for light soda ash. This has had a significant impact on the soda ash industry. 　　Affected by the increase in production and decrease in exports, the market conditions for ammonium chloride produced via the ammonia-soda process are also expected to deteriorate. This year, fertilizer distributors in the international market, depending on the specific circumstances of China’s special export tariffs, adopted new measures against China. For instance, during the eight months when the special tariffs were in effect, they drove up international fertilizer prices; conversely, during the four months after those tariffs were lifted, they drove down the prices. Such actions have disrupted China’s fertilizer exports and caused great difficulties for its domestic fertilizer industry. After October, the country enters the off-season for fertilization, and the demand for ammonium chloride will further decline. 　　Additionally, a total annual production capacity of 1.9 million tons from three enterprises—Kunlun Alkali Industry, Fengcheng Salt Chemical, and Shaanxi Xinghua—became operational at the end of last year; however, actual output remained low. This year, production is expected to increase ； Last year, the annual production capacity of 1.4 million tons at Dahua and Tianjian was utilized at only half capacity; this year, output has also seen an increase ； Additionally, the increased production capacity resulting from the expansion and renovation of some older plants will also be put into use. This year’s output is still expected to be higher than last year’s, with supply continuing to exceed demand in the market. 　　Wang Xiling pointed out that to cope with the unfavorable situation, the soda ash industry needs to appropriately curtail production and accelerate the pace of structural adjustment and corporate restructuring. At the same time, every effort should be made to increase exports of soda ash and ammonium chloride.