Enterprise inventory levels are high, and losses in China’s soda ash industry are increasing

Thread Content

Reporters learned from the 2013 members’ meeting of the China Soda Ash Industry Association, held in Wuhan from March 27 to 28, that China’s soda ash production capacity reached 28.7 million tons in 2012; an additional 3.2 million tons of capacity will be brought online this year. The import of low-cost, high-quality natural soda ash from the United States also poses a threat to the domestic soda ash market. As production capacity has increased rather than decreased, the domestic soda ash industry has not only continued to experience heavy losses across the sector as in the previous year, but those losses have even worsened, with high inventory levels among companies. 　　 　　According to statistics from the China Soda Ash Industry Association, the soda ash industry incurred losses of 2 billion yuan in 2012. Among the 44 manufacturing enterprises, 12 of those using the ammonia-soda process suffered losses, representing a loss rate of 83.3%; such severe losses were seen for the first time in history ； Among the 31 companies using the caustic soda process, 54.8% suffered losses. Since the beginning of this year, as the price of by-product ammonium chloride has fallen, more companies using the combined alkali process have incurred losses. 　　 　　It is also understood that the supply of soda ash will continue to increase in 2013; on one hand, 3.2 million tons of new production capacity will come online domestically ； On the other hand, there is an increase in the import of natural soda in the United States. Last year, the export volume of natural soda from the U.S. to our country was just over 30,000 tons; it is estimated to reach 150,000 tons in the first half of this year, with the annual figure expected to be between 200,000 and 300,000 tons. In addition, the large amount of inventory carried over from last year in the domestic market also needs to be cleared this year. 　　 　　Wang Xiling, president of the China Soda Ash Industry Association, said that the association has submitted policy recommendations to the China Petroleum and Chemical Industry Federation regarding production restrictions to maintain prices. On the one hand, the association recommends achieving the goal of a 20% production cut across the entire industry this year through rotational maintenance ； On the other hand, the association will submit policy recommendations to the Petrochemical Federation to strictly control new projects and review existing ones, in an attempt to regulate new and expanded production capacities. 　　 　　Furthermore, the Soda Ash Association is currently closely monitoring the impact of imports of natural soda ash from the United States on the domestic industry; should it be found that the quantity and prices of such products cause more substantial damage to domestic industries, it will request the Ministry of Commerce to initiate an investigation into the dumping practices related to American natural soda ash.