Soda ash production capacity is slightly surplus, prices have fallen

Since the listing of soda ash, inventories have continued to accumulate and prices have fallen. From the analysis of the supply side, there is a slight excess of production capacity. After the Spring Festival, as the soda ash enterprises resume work, the supply exceeds demand. From the demand side analysis, it is difficult to increase the output of the heavy soda ash downstream glass due to high inventory suppression; the overall consumption of the light soda ash end is stable, and the export is difficult to improve. It is expected that the pattern of oversupply of soda ash in the future market will continue.

Stock continues to accumulate

The current supply of Soda Ash exceeds supply. Soda ash production capacity will increase by 2.6 million tons in 2019, an increase of 8.44%. The production capacity is in an excess pattern. From the supply side, the regulation of Soda Ash supply is relatively flexible. During the Spring Festival, many soda ash companies carried out maintenance, the overall supply pressure dropped, and the increase in soda ash inventory slowed down. With the control of domestic social and public events, the downstream has gradually resumed production, the soda ash enterprises' operating rate has increased, and excess capacity has begun to suppress the destocking of inventory.

Currently, the stock of soda ash is at a historically high level, and it is more difficult to destock. During the Spring Festival, the stock of soda ash rapidly increased, mainly due to the stagnation of downstream demand, limited logistics and transportation, which is a seasonal accumulation. Affected by public events after the holiday, the downstream resumption of production and production was postponed, and transportation was blocked, which led to the continued accumulation of enterprise inventory. After the soda ash enterprises gradually resumed production in mid-February, the soda ash inventory has remained at a historical high of 1.1 million tons.

Stable downstream consumption

The downstream of heavy soda ash is mainly glass industry. Because the furnace design cannot be opened and closed freely, glass production did not stagnate during public events, plus the closure of Wuhan, which is an important transportation hub and demand market. At the same time, the rate of deep processing in other areas is not high, and the glass stocks have accumulated to a high level after the Spring Festival. . In order to cope with the inventory pressure, there are about 5 glass production lines that are cold repaired ahead of schedule, and the subsequent resumption of production plan has been postponed accordingly. The overall demand for heavy alkali is controlled by the sluggish glass market. The downstream inorganic salt products of light base are mainly traditional products, and there is basically no new field. The demand tends to be stable. The capacity of individual industries has expanded, but the overall consumption is stable, and the downstream demand of light base will not fluctuate too much. Overall, the downstream demand for light and heavy alkali is relatively stable.

The proportion of soda ash exports is 5% -8%, and the proportion of exports in recent years is not high. The spread of overseas public events has shrunk overseas demand. Starting from March 20th, the export tax rebate rate for soda ash products has increased to 13%, which is good for the export of soda ash, but the prospects for international market demand are bleak, and it is difficult for overseas markets to support prices.

In short, the Soda Ash market is under high inventory pressure with excess capacity and slowing demand, the short-term alkali plant maintains production, and downstream demand is weak. The soda ash price center of gravity is slowly moving down as the inventory continues to accumulate. At present, the profits of some soda ash production enterprises in Shandong and Henan are at a break-even point, and the decline in spot prices has slowed down. Signs that companies are cutting output or soda ash prices are turning heads.