Demand for soda ash appears to be on the increase, with prices expected to begin moving upwards in the autumn.
The soda ash sector has been struggling since the end of 1996 because of a weak glass in…
Demand for soda ash appears to be on the increase, with prices expected to begin moving upwards in the autumn. The soda ash sector has been struggling since the end of 1996 because of a weak glass industry, EU duties and a delay in the introduction of a new domestic consumer. There are now forecasts of continued strong growth in the export markets of Asia and Latin America, and the potential of the European markets opening up as it appears that anti-dumping duties may soon be lifted. According to industry sources, demand in the third quarter should increase 10-12% over first quarter figures of 2.8 million tons. As a result, the industry, which operated at 92-93% of effective capacity in the first quarter and is now operating at 94-95%, may approach full effective capacity by the third quarter. These higher rates are the result of growing export levels. There are strong indications that the European Union“s anti-dumping duties will be lifted by end of the year. European Commission officials will formally call for the duties to be discontinued in September, principally because Solvay of Belgium, the largest European soda ash producer, has offered to withdraw its support of anti-dumping duties against US soda ash producers. Smaller producers are less happy at the prospect of competition from a strengthened Solvay and increasing exports of US soda ash. UK soda-ash producer Brunner-Mond and Germany“s Stassfurt have already complained to the Commission about its impending decision, but officials point out that they have no choice. The Commission“s own anti-dumping procedures state that duties should be discontinued if companies accounting for a minimum of 25% of European production are not in favour of them. With Solvay“s change of position, that minimum is no longer met. Solvay“s decision stems from its successful takeover of the Bulgarian soda ash company, Sodi. The privatisation deal gave Solvay an additional 1.2 million metric tonnes of synthetic soda-ash production a year and the chance to further boost its position as the world“s biggest producer, with output increased to 7.4 million metric tonnes a year. The Sodi deal was, however, questioned by Italy“s competition authority, which demanded that Solvay change its stance and drop its support for duties on US imports of soda ash into Europe. This, it argued, would allow US imports to dilute Solvay“s dominant position on the European market. The original duties on American companies in 1995 had worsened the situation in Italy by forcing FMC, one of Solvay“s biggest rivals, to leave the local market. Solvay argues that the renewal of the duties on US imports has been meeting increased opposition over recent years. It is not yet clear what sort of impact the opening up of the European market will have on US producers. However, before the duties were imposed in 1992, US producers exported 600,000 tons of soda ash to Europe; since then exports have fallen to between 100,000 and 200,000 tons per year. Although currency rates will probably prevent any return of soda ash exports back to 1992 levels, producers are expecting a positive impact from Europe. However, fundamental growth will continue to come from Latin America and Asia. Apart from general economic development, some of the growth in Asia is the result of the closing down of higher-cost synthetic soda ash plants.