Despite an Oversupply, Global Demand for Soda Ash Growing Following Sharp Decline in 2009, Says IHS Study

Tuesday, December 13, 2011 1:44 pm EST


"The U.S. producers have low production costs and are likely to continue to maximize this market advantage. In 2010, for the first time ever, we saw exports represent a bigger share of total U.S. production than domestic sales"

Following a sharp global decline following the 2009 recession, developing economies, particularly those in Asia, are driving demand for soda ash, a basic chemical product essential for glass production and other industrial uses according to a new, global market study issued by IHS (NYSE: IHS), the leading global source of information and analysis.


According to the report, The 2012 IHS Chemical World Soda Ash Analysis, despite an oversupply, much of which is in China, world demand for soda ash will total slightly more than an estimated 52 million metric tons in 2011 after peaking at 49 million metric tons in 2008. The study covers historical developments and future projections for supply, demand, capacity and trade in the global soda ash markets for 2006 to 2016.


”Following a drop in demand for soda ash during the recession, we are seeing demand growth, despite the fact that the market is currently oversupplied,” said Marguerite Morrin, director of soda ash research at IHS Chemical and one of the authors of the annual study. “However, since much of the overcapacity is in China and high costs are prohibiting any real surge in exports from China, much of the excess capacity in China is, in effect, stranded. Due to the global cost disparities, relative production costs will be a key issue for the soda ash industry in the future.”


This year, soda ash demand in China will account for almost 40 percent of global demand. Between 2006 and 2011, world soda ash demand grew at an average annual rate of slightly more than three percent, while during the same period demand grew in China by more than seven percent – equivalent to an average increase of more than one million metric tons per year. By comparison, demand in the rest of the world registered growth of just one percent per year, an average increase of about 330,000 metric tons. By 2016, IHS analysts expect annual global demand to total nearly 65 million metric tons.


Glass is the dominant end use for soda ash, accounting for more than half of global demand at 29 million metric tons in 2011. Detergent formulations and soaps account for 14 percent of global soda ash demand followed by chemical production at 10 percent, production of alumina and metals and mining at five percent, and pulp and paper at one percent. The remaining 13 percent of demand is attributed to other uses, including environmental applications, such as effluent treatment and in acid-waste reduction.


“The proportion of soda ash used in glass is also rising over time, especially with new, flat-glass capacity being installed globally,” said Morrin. “We expect flat-glass usage of soda ash to have the highest growth rate of just over six percent during the 2011 to 2016 timeframe, which is largely attributable to demand in Asia. Flat glass is essential for building construction, automobiles and furniture/specialty products.”


One key feature of the soda ash industry is the fact that soda ash can be produced by two different methods – synthetically, which accounts for about three-fourths of global supply, or from natural mineral resources, which provides about one-quarter of global supply. Trona is the primary mineral mined to produce soda ash, and the most exploited reserves are located in Wyoming in the U.S, although the most recent natural soda ash development is in Beypazari, Turkey.


Natural soda ash production costs are significantly cheaper than synthetic production costs. In fact, sharp increases in crude oil prices since 2005 mean that the delta between natural and synthetic soda ash production costs has widened significantly.


Said Morrin, “This change increases the relative competitiveness of the natural production of soda ash over synthetic production, and it bodes well for the U.S. industry, which is doing well — producers are operating at maximum rates and margins are strong.”


Prior to 2003, the U.S. was the largest producer of soda ash in the world, but China’s efforts to become self-sufficient in soda ash supply resulted in that country becoming the world’s largest producer. However, the study noted that while both countries are important in the global soda ash industry, the two markets differ significantly. For the U.S., which relies entirely on natural sources, exports are as important as the domestic market. China meanwhile is primarily focused on meeting its own domestic needs, but relies primarily on synthetic production, which is must more costly..


U.S.-based FMC brought back part of its idled capacity at Granger (Wyoming) in July 2011, and is waiting for board approval to restart the remainder at Granger. According to the IHS report, other U.S. producers are also considering additional capacity.


“The U.S. producers have low production costs and are likely to continue to maximize this market advantage. In 2010, for the first time ever, we saw exports represent a bigger share of total U.S. production than domestic sales,” said Morrin. “The U.S. is by far the biggest exporter of soda ash in the world and accounts for more than 40 percent of soda ash traded globally.”


While historically the U.S. was the prime location for capacity investments in soda ash, since the end of the 1990s the focus has moved to China. Since 1999, China has added 20 million metric tons of capacity, primarily to support domestic demand, and plans to add significant capacity through 2016. During the same period, the U.S. capacity total has declined by about 326,000 metric tons, the report noted.


However, the soda ash industry is in an evolutionary phase and the U.S. and China have more competition for soda ash than ever before. While China is the largest producer with approximately 28 million metric tons per year, the U.S. follows with slightly more than 12 million metric tons per year. Russia and India follow with capacities of more than three million metric tons each per year, with eight additional countries each delivering capacities of one to two million metric tons per year.


One of those up-and-comers is Turkey. In 2006, Turkey supplied only 10 percent of the total soda ash imported to the European Union’s 15 countries. Turkey’s share of the total had increased to 48 percent in 2010, and Turkish supply has maintained its dominant position in the European market as well in 2011.  


Top producers of soda ash globally are Solvay (Belgium), which produces nearly 12 percent of global capacity, followed by Tata Group (India), which produces a little more than eight percent, followed by Shangong Hiahua (China) and FMC Corp., which each contribute more than four percent of annual global capacity.


Going forward, Morrin said the biggest threat to the global soda ash industry is the global economic outlook, which remains quite delicate. “The state of the global economy, combined with the role that China will continue to play in the market, is key to the future health of the soda ash industry. If the economy continues to stagnate, the demand for soda ash could fall, and we could see prices weaken and capacity idled.”


In addition to the IHS Chemical 2012 World Soda Ash Analysis, IHS offers world analyses for other key chemicals, plastics and fiber intermediates on a continual basis. The reports provide comprehensive studies of long-term market trends, and most are produced on an annual basis with a five-year historical market review and a five-year supply/demand and price forecast. Other world analyses include: benzene; butadiene; butylenes; chlor-alkali, cumene, phenol and acetone; ethylene oxide and ethylene glycol; light olefins; acetyls; methanol; nylon engineering resins, nylon feedstocks and fibers; petrochemical feedstocks; polycarbonate and ABS (derived from acrylonitrile, butadiene and styrene); polyolefins; polystyrene/expandable polystyrene (EPS);  styrene; terephthalates and polyester; toluene and mixed xylenes; and vinyls.


For more information on the IHS Chemical 2012 World Soda Ash Analysis or other world chemical analyses from IHS, please visit  To speak with Marguerite Morrin, please contact, or


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IHS (NYSE: IHS) is the leading source of information and insight in critical areas that shape today’s business landscape, including energy and power; design and supply chain; defense, risk and security; environmental, health and safety (EHS) and sustainability; country and industry forecasting; and commodities, pricing and cost. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS employs more than 5,500 people in more than 30 countries around the world.


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