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| India Infoline Sector Reports | Wed, 18-Feb-2004 17:12:05 IST (GMT+5:30) | |
| Soda ash | ||
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Global Scenario Globally, glass industry accounts for around 49% the total consumption of soda ash (see table) followed by chemicals. Global Consumption Pattern
However, growth in consumption of soda ash in global market has been negligible in the recent years compared to that of in 70's and 80's. This can be understood if one examines the major user sectors of soda ash and the growth pattern of these sectors. Main reason for poor growth in consumption of soda ash in the world is the shrinkage of demand from the container glass industry. The reasons for this decline are as follows, Replacement of glass bottles by PET bottles to a very large extent in soft drinks industry. PET bottles are finding competitive new uses in other industries too, where glass bottles were used earlier. Increase in the use of recycled glass cullets in the manufacturing of glass. Cullets represent a cheap raw material for the manufacture of glass. In US natural soda ash producers, have emerged as the low cost producers, and are expanding their capacities. Capacity is expected to increase from 12.1mn ton in FY95 to 13.7mn ton by 2000AD. (see table ) World Capacity Trends (`000 tpa)
Formation of the American Natural Soda Ash Company (ANSAC), in FY82 was a significant event. Soda ash exports from the U.S. are routed through ANSAC, this facilitates exports. ANSAC is however not recognized in European Union and many other parts of the world. It has also been banned in India. USA is the largest producer of soda ash in the world and all its capacities are based on trona (a naturally occurring soda ash ore), due to its abundant availability in the country. The reserves of trona in Wyoming alone were estimated to be 60,000mn ton in 1977. China is a major exporter of soda ash in Asian region. Significant capacity additions over the years have seen China emerge from being a net importer of soda ash in the early nineties, to being a net exporter now. For this reason it becomes necessary to discuss the present demand-supply situation in China Most of the Chinese producers route their exports through Sinochem International Chemicals Company Ltd, the Chinese trading agency. Indian authorities have recently banned imports through Sinochem because it was found to be dumping soda ash in India. This is because, the CFR cost worked out to be $209-214 per ton. But Sinochem was found to be exporting soda ash to India at $160 per ton much lower than the CFR cost. In Asia the demand for soda ash has reduced sharply after South East Asian crisis and consequent depreciation of currencies of these countries. It is for the same reason that there has been a downward pressure on the prices. Surplus capacities in China will put further pressure on prices. It is estimated that in 1998 the demand for soda ash would be 6.2mn ton. The present capacity has already reached 7.3mn ton pa. Some enterprises are still planning expansion and renovation in pursuit of economic returns. The present capacity is expected to have increased by around 0.3-0.5mn tpa in the previous year. The existing units are operating at the rate of 90%, which means an output of more than 6.6mn ton. This will be much higher than the expected demand.
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