In 2022, the overall operation of the domestic soda ash market was stable, with a mild upward trend in the first half of the year and a slight consolidation trend in the second half. As of the end of 2022, the price of light soda ash has increased by 24% annually, while the price of heavy soda ash has increased by 17% annually. Looking ahead to 2023, market participants believe that with the gradual release of new domestic production capacity for soda ash, the original supply and demand balance will be disrupted, and the market may form a pattern of continued recovery at the beginning of the year, stable high points in the first half of the year, and rational decline in the second half of the year. At the same time, the development of the new energy industry will still support the demand for soda ash.
The recovery trend at the beginning of the year continues
According to frontline market feedback, the domestic soda ash market gradually rebounded in January, with the mainstream transaction price of light soda ash increasing from 2600 yuan (ton price, the same below) to 2700 yuan, and heavy soda ash increasing from 2800 yuan to around 3000 yuan, with increases of 3.7% and 7.1% respectively.
In January, the domestic soda ash inventory has dropped to a new low since last year, with a year-on-year decrease of 79%. In that month, Fengcheng Salt Lake, Huachang Chemical and other soda ash plants briefly shut down for maintenance, resulting in a further decrease in the social inventory of soda ash. Affected by this, downstream customers of soda ash actively stock up, driving the mild strength of the soda ash market since the beginning of the year. According to the current market transaction situation of tight supply and increased demand, the market recovery trend may continue. Due to the soda ash warehouses of glass manufacturers The inventory remains low, and the market trend of heavy alkali will still be stronger than that of light pure alkali Henan trader Li Bing said so.
In addition, according to the futures weekly report released by Zhongyuan Futures, the recent high volatility in the market price of soda ash futures has boosted the trading atmosphere in the spot market, and the inventory of soda ash manufacturers has remained low. The industry holds a cautious and optimistic attitude towards the future market, and there is still a possibility of further upward shift in the focus of transactions in the domestic soda ash market in the short term.
Stable in the first half of the year or at a high level
According to statistics from Henan Chemical Network, the cumulative production of soda ash in 2022 was 26.417 million tons, a decrease of 9.3% compared to the previous year. According to data released by the National Bureau of Statistics, the cumulative production of flat glass in 2022 was 93.0292 million weight boxes, a decrease of 3.4% compared to the previous year. Although the production of the glass industry, which accounts for over 50% of soda ash consumption, has also decreased, the decrease is significantly lower than the decrease in soda ash production. This is also one of the main reasons why the soda ash market can maintain a relatively high level in 2022. “Zhang Aiping, a market analyst at the website, analyzed.
Zhang Aiping believes that based on the planned production of new production capacity for domestic soda ash in the first half of the year and the current supply and demand situation of domestic soda ash, although there were a small amount of new production capacity for soda ash in the first half of the year, the impact on the overall supply and demand pattern after being realized is relatively small. With the rapid development of the new energy industry, the demand for photovoltaic glass is bound to continue to grow. This year, the release of new production capacity in photovoltaic glass projects still creates new demand for soda ash. So before the first phase of Yuanxing Energy’s 3.7 million tons/year natural alkali project is put into operation in June, the pure alkali industry will continue the supply and demand pattern of low inventory and tight balance, and prices can also remain stable at high levels.
Rationality will decline in the second half of the year
Wei Jianyang, General Manager of Nanjing Kaiyan Chemical Co., Ltd., stated that breaking the balance between supply and demand in the market is always an iron rule that determines market trends. Due to the production of Yuanxing Energy’s new natural alkali project in the second half of the year, coupled with the recent high start-up rate of around 85% of domestic soda ash enterprises, the social supply of soda ash will continue to grow, especially in the second half of the year when there may be a phased imbalance between supply and demand in the soda ash market. Oversupply will make it difficult to sustain the high price of soda ash.
In addition, due to the lower cost of natural alkali projects, the impact on the market after the release of new production capacity is undoubtedly enormous, and the market supply and demand pattern will be completely reversed. It is expected that the rational decline in the pure alkali market in the second half of the year will be inevitable, and this should be a key concern for the industry, “Wei Jianyang emphasized.
But there are also industry insiders who have positive expectations for the demand side of soda ash. Under the “dual carbon” strategy, the rapid development of China’s new energy industry has put forward higher requirements for the performance of related materials. In recent years, the domestic chemical new material industry has been continuously innovating and upgrading, helping the new energy industry achieve leapfrog development. Therefore, the lithium carbonate industry will gradually increase the demand for light soda ash this year and even in the future. The overall demand for light soda ash is showing a rebound trend with the recovery of the macroeconomic environment, and it will also form a certain positive support for the overall market.
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Post time: Apr-19-2023