China Soda Ash Price Correction to Persist Into Early 2018

China’s soda ash market may remain in a correction phase into early 2018 as domestic supply outstripped demand for the first time since June.

Its export prices for the material have been falling since mid-November after surging by $80-85/tonne from July, according to ICIS data.

During the week ended 13 December, prices fell $10-15/tonne from the previous week to $280-290/tonne FOB (free on board) China for dense grade soda ash; and at $280-285/tonne FOB China for light grade soda ash, ICIS data showed.

Domestic demand has slowed down amid the government’s stricter anti-smog measures for winter which required heavy polluting plants, including those in the glass industry, to cut output.

Import arrivals in November also weakened demand for domestic material. The deep-sea cargoes were booked at $180/tonne CFR (cost and freight) China under term conditions in the third quarter.

Soda ash inventory levels in China were heard to have increased to around 400,000 tonnes this week or double the usual levels, according to local market players.

Meanwhile, major domestic producers were maintaining relatively high plant utilization rates of around 90%.

On the export front, offers for both dense and light grade soda ash loading in January were mainly cited below $290/tonne FOB China.

Transactions however, were scarce as buyers adopted a cautious stance amid the bearish market sentiment.

A southeast Asia-based end-user turned down an offer from China at $290/tonne CFR SE Asia, for January-loading cargoes, as it is saddled with import inventory, which were secured in November at a higher price of $310/tonne CFR SE Asia.

The buyer’s inventories were sufficient to meet its requirements for the first quarter of 2018, hence, it would not be tapping the spot market in the near future.

Separately, deep-sea origin cargoes for January delivery from Turkey were heard available at around $250/tonne CFR SE Asia.