The global glass market is expected to be the largest consumer and driver of soda ash business to 2018 and beyond.
Global soda ash demand is expected to increase from around 55m tpa today to more than 65m tpa by 2018, while the capacity oversupply that has been present in the market since 2008 is expected to continue.
These were the conclusions of the IHS World Soda Ash Business Outlook conference, held in Budapest, Hungary, at the beginning of October.
As with most things in the past two years, the global economic downturn has been held responsible for this soda ash capacity surplus, as a slowdown in the chemical’s end-use markets meant production simply outweighed demand.
This problem is particularly prevalent in Europe, which Marguerite Morrin, director of Global Soda Ash Services at IHS, called “a troublesome family” of soda ash suppliers and consumers and predicted that overcapacity in soda ash supply could run on until as late as 2018.
Soda ash supply
While the conference opened with the issue of oversupply, it wasn’t all doom and gloom.
Despite a downturn in the chemical’s main end market (flat glass, which takes up 25% of global soda ash production) the consequential demand for soda ash has continued across the world-in particular for the container glass, detergents and chemicals industries.
From a global perspective, northeast Asia dominates soda ash supply with China having a capacity to produce around 30m tpa (45% of the global supply and demand) in 2013, with more capacity planned to come online in the coming years – planned expansions that Morrin argues “are not likely to go ahead” due to oversupply.
Meanwhile, North America accounts for 12% of global demand and West Europe accounts for 11%.
Of this global soda ash supply, the majority is synthetic, produced using either the Solvay Ammonia process (used to make synthetic soda ash around the world) or the Hou Process, which is only used within China, IHS outlined.
The Hou Process overtook the Solvay process in China for the first time in 2011, reaching around 17m tpa soda ash in 2012. Globally, the Hou Process accounts for 36% of synthetic supply while the Solvay process makes up 60%.
Just 3% of global synthetic soda ash is produced using the Akzo Dry Lime process and 1% is produced using the Japanese Ammonium Chloride process.
While China leads in soda ash capacity, more than 90% of the country’s soda ash is used domestically including in the flat glass sector, explained Andrew Swanson, director of consulting at IHS, with just a small fraction exported to Asia, where soda ash demand is considerably in excess of supply.
China’s surplus soda ash has put pressure on soda ash producers in the rest of the world, which are now producing soda ash for export, especially in North America.
“A total of 25% of the soda ash produced globally is used elsewhere in the world,” Morrin explained
Market drivers
Glass
The global glass market, while the hardest hit by the global economic downturn, is still expected to be the largest consumer and driver of soda ash business to 2018 and beyond, according to IHS. At present, this market consumes 50% of global soda ash demand.
Soda ash demand is different in different regions, however,”Morrin explained, highlighting that for China the majority of soda ash production is being consumed in the flat glass industry, while in West Europe the prevalent use of soda ash is in the glass container industry.
Soda ash specialists gathered in the Kempinski Hotel Corvinus, Budapest, for the 2013 IHS World Soda Ash Business Outlook event.
For flat glass, the construction and automobile industries are driving demand; vehicle demand for flat glass stands at around 10% of the market. Both of these industries are in turn driven by economic growth, which is why they have experienced turbulent times in the past couple of years.
For container glass, which used to lead the global glass market, the alcoholic beverage sector including beer and wine is driving demand with the beverage market growing around 3-5% per year on average.
A growing trend of people drinking at home rather than in pubs is keeping the market afloat – however demand for glass for containers has been restricted to a certain extent due to the increased use of polyethylene terephthalate (PET).
Michael Delle Selve, senior communications manager at the European Container Glass Federation (FEVE), told delegates that despite these factors, “we see the industry as stable, we see stable growth.”
Speaking more specifically about the competition from the plastics industry, Delle Selve said:”the container glass industry] must continue to fight (...) The ultimate goal is that we continue to be in the market; in order to do so we must defend our environmental credentials”.
Recycling
One way the glass industry is able to do this is by encouraging the uptake of glass recycling, which can in turn have a positive impact on the demand for soda ash, which is used as a flux material in primary glass manufacturing process as well as in recycled glass manufacture.
By recycling glass producers are able to use the cullet (broken glass) to manufacture more glass at a lower cost, using fewer raw materials. This then reduces the energy costs – a large consideration for many glass producers.
However, while in some countries it is encouraged to recycle glass products in separate bins, other places (such as the UK) have mixed containers, meaning the cullet becomes contaminated, adding further problems when creating the recycled product.
Soda ash future
While the majority of the Soda Ash Business Outlook focused on the use of soda ash in the global glass markets, some attention was given over to other end markets, which remain demand drivers for this mineral.
The soaps and detergents market, which takes up 15% of the soda ash market share, was highlighted by Pinolo Fonanari, project manager for A.I.S.E., which estimates that the total market value of the overall detergents and maintenance products industry reached €35bn ($47bn*) in 2012.
The demand for soda ash in this sector is expected to continue to grow as its use in the laundry, surface care, dish washing, maintenance and bleach industry remains steady. However, in some countries, such as the US, a decline will be noticed as some move to use liquid detergents over their soda ash-containing powder counterparts.
Evgenia Apostolopoulou, a senior consultant with IHS Chemicals, also outlined the use of ammonium chloride in the fertiliser industry. The Hou Process co-produces soda ash and ammonium chloride a low grade fertilizer used on crops in China. Hou based producers in China have to contend not just with overcapacity in soda ash but in addition the added burden of overcapacity in urea and ammonium chloride.
Chemicals currently accounts for 9% of global soda ash supply. Together, these end markets are expected to continue to drive demand to 2023. In the short-term though over-capacity will remain an issue for the industry to contend with, especially as the new three million metric tons of low cost Turkish capacity comes to the market over the coming years.
