The future of soda ash? The impact of the commissioning of Inner Mongolia’s natural soda ash plant on the future

With the commissioning of natural soda in Inner Mongolia, it will have a certain impact on the domestic soda ash market. However, the production of soda ash remains necessary, and as demand stays stable, soda ash plants can continue to develop. Furthermore, the main uses of soda ash are in industries such as glass and alkaline batteries, and the development of these industries is also crucial for maintaining stable demand for soda ash in the market. Therefore, although the commissioning of natural soda ash production in Inner Mongolia will have a certain impact on the soda ash market, it does not mean that soda ash production will come to an end entirely. .

For bulk basic chemical products, there is no risk of their demise. Although competition may intensify and profits may decline, the large overall demand in the market means that a single company will not be able to have a catastrophic impact on the entire market, unless that company occupies one of the top ten positions in terms of market share either in the country or globally. Please learn about the production capacity of soda ash manufacturers around the world, as well as that of the large-scale soda ash producers in China.

In 2022, domestic production capacity was around 33 million tons, with effective capacity of about 31 million tons and actual output of roughly 29 million tons. This year, once Yuanxing Natural Soda and other companies begin operations, the total capacity will reach about 40 million tons. There are no major changes expected; the demand for soda ash will not increase that quickly. With overcapacity, as is traditional, companies will compete on prices to control costs, leading to a reshuffle in the industry.

The price of soda ash will continue to be pressured by high supply levels in 2024; three aspects need to be closely monitored going forward: First, attention should be paid to the changes in supply as soda ash enters the maintenance period from June to August. As the maintenance season is approaching, the tug-of-war between bulls and bears is intensifying. Should there be major maintenance work at soda ash plants or equipment malfunctions during this period, resulting in supply disruptions, it could drive up soda ash prices. Second, attention should be paid to the daily melting volume of glass, the startup status of photovoltaic glass production lines, and whether float glass production lines will undergo large-scale cold repairs. Third, attention should be paid to changes in soda ash inventory; if it continues to build up at high levels, it will further put pressure on soda ash prices. As the price of soda ash declined in 2024, the profits of soda ash manufacturers generally dropped. Among them, Yuanxing Energy has lower costs due to its use of the natural soda method; if this company aims to capture a larger share of the soda ash market, price wars may occur.

Given the trend of the growth rate of soda ash production exceeding that of demand, it is likely that the profit margins of soda ash manufacturers will be further compressed in the future. This will force these manufacturers to make adjustments, optimize their products, undergo transformation and upgrading, and enter a new phase of high-quality development. Moreover, recent advances have been made in domestic soda ash production technology, with the proton-exchange membrane production method having successfully passed evaluation. This technology features low production costs, low energy consumption, and high product purity; if it can successfully enter the industrial application phase, it may bring about new changes to the soda ash industry. 2023 was a year of significant increase in soda ash production capacity. With the commissioning of new production lines at Yuanxing Energy and Jinshan Chemical, China’s soda ash production capacity rose from 33.39 million tons per year to 36.7 million tons per year, an increase of 10%. As new production lines gradually reached full capacity, the supply of soda ash increased significantly in the fourth quarter of 2023. However, the increase in demand from downstream industries was largely absorbed during the first three quarters, resulting in a situation of oversupply in the overall market. Since the first quarter of 2024, demand for soda ash in the spot market has remained weak. Under the pressure of sales demands, many manufacturers continued with the price-cutting tactics that began at the end of 2023. Throughout the first quarter, the national average price of heavy soda ash dropped from around 2,900 yuan per ton at the start of the year to around 2,000 yuan per ton, representing a total decline of over 30% ； The national average price of light soda ash also dropped from around 2,700 yuan per ton to around 1,950 yuan per ton, a decrease of 27%. Although the production costs of light and heavy soda ash have also decreased, the overall decline is far less significant than that of spot prices. As a result, the profit margins of soda ash manufacturers have been significantly compressed. ”

It’s said to be sad every year; it’s always like this from year to year