17:28 PM | August 4, 2020 | Francinia Protti-Alvarez
Global soda ash consumption is forecast to drop in 2020 as demand for flat and container glass applications—the most important end-user segments—remains weak. However, demand from other important end-user sectors such as soap & detergents remains stable, and sodium bicarbonate demand is forecast to grow 2% in 2020. Average operating rates in 2020 will be about 5% lower than last year, says Marguerite Morrin, Executive Director/soda ash at IHS Markit during a recent industry briefing.
“Flat glass is the biggest end-user segment for soda ash with the construction and automotive industries driving demand. Lockdowns and the ensuing shutdown of economic activities have severely hit these industries,” says Morrin. “Overall, soda ash demand in flat glass production is forecast to drop by 19% in 2020, the equivalent of 1.5 million metric tons (MMt).”
Similarly, container glass, the second largest end-user segment, is forecast to record a loss in demand of 13% (or 1.2 MMt). Container glass applications are primarily driven by demand from the beer and spirits industry and supported through tourism and hospitality-related activities, which have also been severely hit by COVID-19 lockdown measures, observes Morrin.
On the glass side of things, solar glass production is one sector that offers positive news. Plans to build solar glass plants—boosted by post-COVID-19 green recovery plans—would represent 1 MMt of new soda ash demand, Morrin adds.
Given the overall weak demand and poor economic outlook, there is little support for new projects. There will likely be delays to many of the capacity expansions announced in the United States in September 2019, even if producers have not been explicit about their plans, IHS Markit says.
In China, meanwhile, overcapacity remains an issue. “Although plants are closing, rationalization is being offset by new capacity coming on stream—despite a lack of access to bank funding,” says Matthew Hancock, principal analyst/soda ash at IHS Markit speaking at the same briefing.
In the short term, Chinese producers will likely be able to continue to operate, albeit it at a loss because of very high soda ash stocks and modest demand growth there is little support for meager prices. The ammonium chloride’s low price offers little respite to Hou based Solvay process producers, Hancock notes. Meanwhile, production costs for Hou-based producers remain high, he adds.
“Soda ash demand recovery in China is expected for 2021, but the rest of the world will lag, with demand not recovering until 2022 at the earliest. Although we forecast soda ash demand to grow over the 2021–2025 period at around 1.3 MMt/year, some of this growth will be to offset the demand lost in 2020,” Morrin concludes.
Learn more about the issues affecting the soda ask market and prices during IHS Markit's World Soda Ash Conference Online 2020, 19–22 October.