Global Soda Ash Overview - glassmanevents.com · Soda Ash Trade has Grown Faster than Demand...

Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Global Soda Ash Overview

Global supply/demand overview and how Mexico fits

into the global picture

GLASSMAN LATIN AMERICA 2018

Wednesday 21 March 2018


Rank Company Caps MMT/Share

1 Solvay 6.79 / 15.5%

2 FMC 3.50 / 8.0%

3 General Chemical 2.55 / 5.8%

4 Sterlitamak 2.30 / 5.2%

5 OCI Enterprises 2.09 / 4.8%

6 Brunner Mond 1.48 / 3.4%

7 IMC Global 1.36 / 3.1%

8 Ciech 1.10 / 2.5%

9 Lianyungang Soda 0.90 / 2.1%

10 Shandong Haihua 0.90 / 2.1%

Top10 23.0/52.4%


1 Solvay 7.32 / 10.7%

2 Tata 3.73 / 5.5%

3 Tronox (FMC) 3.68 / 5.4%

4 Ciner Group 3.06 / 4.5%


6 NIRMA 2.70 / 4.0%

7 Ciech 2.41 / 3.5%

8 Sanyou Chemical 2.30 / 3.4%

9 Hubei Yuhua 2.10 / 3.1%

10 Sisecam 1.93 / 2.8%

Top10 32.1/47.0%


1 Solvay 7.32 / 10.3%

2 Ciner 4.60 / 6.5%

3 Tata 3.73 / 5.2%

4 Genesis Alkali 3.68 / 5.2%


6 NIRMA 2.73 / 3.8%

7 Ciech 2.43 / 3.4%

8 Sanyou Chemical 2.20 / 3.1%

9 Hubei Yuhua 2.10 / 2.9%

10 Sisecam 1.93 / 2.7%

Top10 33.6/47.0%

Soda Ash Capacity Dynamics are Constantly Shifting

2000 2018

2017 Calculated on a shareholder basis


World Capacity Changes

Annual Net Change

Cumulative Total

Net Increase

Net Decrease

Includes Turkey

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

201

8

Mil

lio

n M

T

NAM

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

200

0

200

3

200

6

200

9

201

2

201

5

201

8

Mil

lio

n M

T

CIS

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

200

0

200

3

200

6

200

9

201

2

201

5

201

8

Mil

lio

n M

T

West Europe

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

200

0

200

3

200

6

200

9

201

2

201

5

201

8

Mil

lio

n M

T

S.E.Asia

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

200

0

200

3

200

6

200

9

201

2

201

5

201

8

Millio

n M

T

Africa

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

201

8

Mil

lio

n M

T

SAM

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

201

8

Mil

lio

n M

T

CEP

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

200

0

200

3

200

6

200

9

201

2

201

5

201

8

Mil

lio

n M

T

Middle East

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

200

0

200

3

200

6

200

9

201

2

201

5

201

8

Mil

lio

n M

T

ISC

-5

0

5

10

15

20

25

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

201

8

Mil

lio

n M

T

N.E. Asia


Capacity by Geography and Type

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Europe Asia Africa/ME US ROW

World Capacity Change

Source: IHS Markit © 2018 IHS Markit

Mil

lio

n M

etr

ic t

on

s

Natural 26%

Synthetic

Solvay 46%

Synthetic Hou 23%

Synthetic Other

5%

Hou process is mostly in

China, co-produces NH4Cl (a

low grade fertilizer)

US has biggest commercial

reserves of natural soda ash.

The newest commercial

natural production is in Turkey


NAM

13.5 MMT

SAM

250 KT

SEA

0 kt

AFR

700 KT

WEP

5.5 MMT

NEA

31.3 MMT

Capacity by Geography CIS

4.6 MMT CEP

3.8 MMT

ISC

3.9 MMT MDE

4.4 MMT

SAM 0.4%

NAM 20%

NEA 46%

ISC 6%

WEP 8% CEP

6%

CIS 7%

NAM

13.5 MMT

MDE 6%

AFR 1%


Soda Ash Use Patterns Change

Chemical

s 9%

Flat Glass 27%

Container Glass

20% Other Glass

6%

Soap & Det

[PERCENTAGE]

Mining [PERCENTAGE]

P&P [PERCENTAGE]

Others 17%

World Demand 2017 = 58.9 MMT

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

China WEP U.S. CIS India Mexico SAM CIS World

World Demand by End Use

The biggest end use is flat glass,

is driven by Construction

2nd biggest end use is Container

glass. Niche for Alcoholic Beverages


NAM

6.6 MMT

SAM

2.6 MMT

SEA

2.9 kt

AFR

1.4 MMT

WEP

6.3 MMT

NEA

27.3 MMT Demand by Geography CIS

3.6 MMT CEP

1.5 MMT

ISC

4.4 MMT MDE

2.3 MMT

NAM [PERCENTAGE]

SAM [PERCENTAGE]

CIS [PERCENTAGE]

CEP [PERCENTAGE]

WEP [PERCENTAGE]

NEA [PERCENTAGE]

SEA [PERCENTAGE]

ISC [PERCENTAGE]

MDE [PERCENTAGE]

AFR [PERCENTAGE]


Demand by Geography

• Much of the world’s demand is in China, 44%

• Driven by housebuilding

• WEP and US are mature markets

• SAM growth driven by Lithium

• ISC growth has been driven by soaps &

detergents – Potential for Glass

• SEA growth is mixed but includes a lot of new

glass capacity

• Africa growing but from a very low base

US

[SERIES NAME],

India

WEP

CEP

CIS

MDE

Africa

China

-2

0

2

4

6

8

10

12

14

16

18

20

22

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0

Million Metric Tons

Bubble Size: Demand

Per Capita Demand 2017

Source: IHS Markit © 2017 IHS Markit K

g p

er

Ca

pit

a


Outlook for Global Supply vs Global Demand

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2010 2012 2014 2016 2018 2020 2022

NAM Middle East ISC NEA Europe ROW

World Capacity Changes


Mil

lio

n M

etr

ic T

on

s

0

5

10

15

20

25

30

35

40

198

0

198

2

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

201

6

201

8

202

0

202

2

China World Excl. China

Soda Ash Demand, China vs ROW


Mil

lio

n M

etr

ic T

on

s


Shifting Market Dynamics

• Markets seeing increased volatility

• Soda ash supply/demand dynamics shifting

• Chinese market has matured and new

environmentally focus impacting on supply

• Volatility in energy/raw materials

• A new supply source, Turkey, entering the

market

• Flat glass still drives demand, also some

traditional & new demand sectors supported by

environmental concerns

110

130

150

170

190

210

230

250

270

290

310

330

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Do

lla

rs P

er

Me

tric

To

n

Calc Export Price (FOB)

Avg Dom Price, Light Ash (Del), Excl. VAT

Avg Dom Price, Heavy Ash (Del), Excl. VAT

China Soda Ash Price Comparison


Confidential. © 2017 IHS MarkitTM. All Rights Reserved. Confidential. © 2017 IHS MarkitTM. All Rights Reserved.

Soda Ash Trade Soda Ash Trade


Soda Ash Trade has Grown Faster than Demand

• Trade is very important in soda ash industry

• 25% of production is shipped to be consumed

in other regions

• World trade has grown faster than demand

• Since 2010 World demand has grown by

3.5%/y vs trade growth of 4.3%/y

• The biggest change is in the Middle East

• Net exports from Turkey are growing as new

capacity comes on stream -4.0

-2.0

0.0

2.0

4.0

6.0

8.0

MiddleEast

Africa CEP CIS WEP SEA NEA ISC NAM SAM

Imports Exports Net Exports 2017 Net Exports 2022

Soda Ash Regional Net Trade 2017


Mil

lio

n M

etr

ic T

on

s


NAM

+5.6 MMT

SAM

-2.3 MMT

SEA

-2.9 MMT

AFR

902 KT

WEP

-1.6 MMT

NEA

+189 KT Net Exports by Region

CIS

+32 KT CEP

+1.8 MMT

ISC

-884 KT MDE

+926 KT


• Natural soda ash producer, the US, is

dominant exporter

• China historically 2nd largest exporter

• Turkey becoming a major player

• Beypazari (expansion) and Kazan (new

plant)

• 3 MMT new capacity on stream in 2017/18

• New natural capacity has low production

costs

• Now the 2nd largest exporter in the world

Top Exporters, Turkey becoming a Major Player

0%

10%

20%

30%

40%

50%

60%

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

China US Turkey Bulgaria

Top Exporters, Share

Source: IHS Markit © 2017 IHS Markit S

hare

of

Glo

bal

Ex

po

rts


• Three most

significant

importers are

SEA, SAM and

WEP

• All regions are

being targeted

by new Turkish

capacity

Major Import Markets

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

NAM SAM WEP CEP CIS AFR MDE ISC NEA SEA

Imports by Region


Mil

lio

n M

etr

ic T

on

s

SEA SAM WEP


Supply

Cost Volatility & Impact on Supply


Chinese Price Volatility

• Price volatility in China

influenced by availability

• And also by changes in costs

• China is a significant exporter

and thus can impact Rest of

World

• Exports fell from 1.98 Million Mt

in 2016 to 1.52 Million Mt in

2017 110

130

150

170

190

210

230

250

270

290

310

330

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Do

lla

rs P

er

Me

tric

To

n

Hou Cash Costs (Excl NH4Cl credit) Solvay Econo. Cash Costs

Calc Export Price (FOB) Avg Dom Price, Light Ash (Del), Excl. VAT

Avg Dom Price, Heavy Ash (Del), Excl. VAT

China Soda Ash Price Comparison



Changes in China

• China’s government is moving to greener

economy

• Reducing pollution through government checks

• Implementing stricter controls on industrial

capacity

• Incentivising air/water waste emission

reduction

• Decrease energy consumption by 15% by 2020

• Reduce VOC emissions by 10% by 2020


Environmental restrictions in China helped push up prices from Jan 2016 to Dec 2017

Thermal coal:

¥399 to ¥748 per ton

Coke: ¥629 to

¥2204 per ton

Power:

¥0.47/kWh to

¥0.60/kWh

Steel: output

grew 5.7% in

2017

Steam:

¥62.1 to ¥107.4

per ton

Ammonia:

¥326 to ¥451

per ton

Metallurgical coal:

536¥ to 1418¥ per ton


Raw material/energy costs saw increases in 2017 driven by environmental checks

0

50

100

150

200

250

300

China Hou 2016 China Hou 2017 China Solvay2016

China Solvay2017

WEP 2016 WEP 2017 US 2016 US 2017

Salt Ammonia CO2 Energy Coke Limestone Trona Fixed Cost

Raw Material and Energy Costs for China, US and West Europe


US

$ p

er

mt


Delivered Costs to Major Import Regions

0

50

100

150

200

250

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

WEP Coal WEP NG Turkey US

Delivered to the Mediterranean


$ P

er

Me

tric

To

n

0

50

100

150

200

250

300

350

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

US WEP China Solvay Turkey

Delivered to Brazil


$ P

er

Me

tric

To

n


Regional Market Dynamics


Demand | Million Metric Tons

NEA

+2.7% +1.1%

ISC

+3.9% +4.4%

CIS

-0.3% +1.3%

CEP

+0.8% +2.4% WEP

+1.0% +0.8%

SAM

+0.9% +4.5%

NAM

+0.6% +1.6%

AFR

+3.3% +3.4%

SEA

+3.2% +3.6%

Region

AAGR 12-17 AAGR 17-22

-

10

20

30

2017 2022

0

10

20

30

2017 2022

-

10

20

30

2017 2022

-

10

20

30

2017 2022

-

10

20

30

2017 2022

-

10

20

30

2017 2022

-

10

20

30

2017 2022

-

10

20

30

2017 2022

-

10

20

30

2017 2022

-

10

20

30

2017 2022

Regional Demand

MDE

+1.0% +1.8%

-

10

20

30

2017 2022

Confidential. © 2017 IHS MarkitTM. All Rights Reserved. Chemicals Enter New Frontiers: Industry Innovates and Adjusts to Uncertainty in Energy and Economy

How Turkey Competes

44%

Turkey % Share in MDE

3.6 MMT 6.0MMT 2.4MMT

44%

Demand

87%

Capacity

Turkey

Eti Soda – Beypazari 1MT/Y Trona based

Expansion: 0.5MT/Y, March 2017

Trona based

Kazan Soda – Kazan 2.5MT/Y, Aug 17 / Q1 2018 Trona based

Sisecam – Mersin 1.3MT/Y Solvay based

327 km

255 km

Derince

Mersin

Kazan

Beypaziri

99%

Exports


Europe Challenges

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Capacity Demand

CEP Capacity vs Demand


Mil

lio

n M

etr

ic T

on

s

0.0

0.5

1.0

1.5

2.0

2.5

2008 2009 2010 2011 2012 2013 2014 2015 2016 YTDNOV17Turkey CEP CIS United States ROW

Imports to West Europe


Mil

lio

n M

etr

ic T

on

s


China is the biggest & most Dynamic Market in the World

• Largest, fastest growing market in last 20 years,

but growth has slowed

• China dominates its own domestic market

• Has built capacity to meet demand

• 90% synthetic capacity, Hou process dominates

• Capacity exceeds demand - exports to

surrounding regions

• Historically World’s 2nd biggest exporter now 3rd

• Greater focus on environmental issues

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Demand Capacity

China Demand and Supply


Mil

lio

n M

etr

ic T

on

s


US Historical Context

• US capacity far exceeds demand

• Domestic demand fell after the financial crisis

• But exports have grown

• US dominates North America (Canada,

Mexico) region thanks to its low production

costs

• US also has influence in other parts of the

world

• No 1 exporter in the world

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Domestic Demand Exports Capacity

US Supply Demand Dynamics

Source: IHS Markit © 2017 IHS Markit M

illi

on

Me

tric

To

ns


US rail costs reduce competitiveness

Port

Arthur

North

Carolina

Portland

Freight from

Turkey $40

• Exports are 58% of production;

have grown by 6%/y since 2010

• Exporters saw significant rail

freight increase since 2016

• Turkey has better freight to east

coast

• Domestic demand is below

pre-recession levels

• Container glass, largest end

use, is declining

• 11 float-glass plants shut

between 2007-2014, demand

has recovered but local glass

plants struggling to keep up

• No major soda ash capacity

expansions scheduled


US dominance in NAM is absolute but its influence in other markets is threatened

• North American (US, Canada, Mexico)

supply almost exclusively originates

from the US

> Low cost position makes competition

from outsiders difficult

> But, Canada, Mexico only account for

around 20% of US exports

• Asia, South America are also big

markets for US producers

> US market share in these markets is

potentially threatened by new Turkish

capacity

US exports by region

0%

10%

20%

30%

40%

50%

Total Asia NEA SEA SAM WEP NAM ROW

US Export Destinations


Sh

are

of

To

tal E

xp

ort

s

NAM 20%

SAM 26%

Asia 42%

Europe 7%

Other 5%


Mexico supplied through the US via rail – Some local production exists

Industria del Alcali

1 local synthetic producer –

meets approximately 19.5% of

total supply in Mexico

Rail Gateway

Soda Ash Plant

Port Laredo –

Largest Soda Ash Rail Gateway

Mexico is the worlds 2nd largest importer

of soda ash – mostly from the US

Rail Costs

Much of Mexico’s supply comes via

Union Pacific Rail - costs are increasing

Trona Reserves

Mexico is home to natural

Trona reserves that yet to be

exploited

US Imports 80.1%

Other Imports

0.4%

Domestic

19.5%


Mexico demand is seeing changes through investments

Lithium Project

Gold Project

Flat Glass

Container Glass

Timmins Gold

San Francisco mine Gold

output increase planned this

year – new mine in Sanora

O-I/Constellation

Ambitious plans to expand

container glass Bacanora Lithium

Set to be the first Lithium

project to extract from clay Vitro Expansion Monterrey

Expansion plans currently on

hold

Chemical

s 4%

Flat Glass

[PERCENTAGE]

Container

Glass 38% Other

Glass 4%

STPP & Detergent

s 17%

Metals/Mining 8%

Others 7%

Demand Growth

2012 – 2017 %AAGR: 1.7%

2017 – 2022 %AAGR: 3.7%

Auto Glass

Automobile production grew 8.9%

driving flat glass demand

Saint Gobain Saltillo

Plans to build new float plant


South America Market Profile

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2000 2004 2008 2012 2016 2020 2024

Capacity Demand

South America Supply Demand

Source: IHS Markit © 2017 IHS Markit M

illio

n M

etr

ic T

on

s

Brazil

Argentina

Chile

Venezuela

Colombia

Peru

-5

0

5

10

15

20

25

0 200 400 600 800 1000 1200 1400

South America Per Capita Demand


-000- Metric Tons

Kg

per

Ca

pit

a

Bubble Size: Demand


South America is an Attractive Market for Exporters

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

US Europe Turkey China ROW

Imports to Brazil, Argentina, Brazil, Market Share


Mark

et

Sh

are

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

US Europe Turkey China Other

Soda Ash Imports, Brazil, Chile, Argentina


Millio

n M

etr

ic T

on

s


Chapter Slide

Environmental Considerations driving demand

Summary & Conclusions


• Strong demand outlook

• Short term there is excess capacity

• Markets may be competitive

• China should resume exports but China

is very influenced by government policy

• New Turkish capacity will influence a shift

in global trade patterns

Global Soda Ash Outlook

70%

75%

80%

85%

90%

95%

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

World World, Excl ChinaSource: IHS © 2013 IHS

Soda Ash Operating Rates

Forecast


Summary Page

2000 – 2018 has seen saw significant shifts in profile of key soda ash market players

Growth in China has influenced global volatility

New trona based capacity in Turkey will challenge existing suppliers

Strong prospects for demand in Mexico and South America


Contact details

Marguerite Morrin

Executive Director \ Chemicals

+44 (0) 208 544 7858 tel

+44 (0) 773 9939893 mob

[email protected]

London

Matthew Hancock Senior Analyst \ Chemicals

+44 (0) 20 3159 3728 tel

+44 (0) 7973 935129 mob

[email protected]

London

IHS Markit Customer Care

[email protected]

Americas: +1 800 IHS CARE (+1 800 447 2273)

Europe, Middle East, and Africa: +44 (0) 1344 328 300

Asia and the Pacific Rim: +604 291 3600

Disclaimer

The information contained in this presentation is confidential. Any unauthorized use, disclosure, reproduction, or dissemination, in full or in part, in any media or by any means, without the prior written permission of IHS Markit Ltd. or any of its affiliates ("IHS Markit") is

strictly prohibited. IHS Markit owns all IHS Markit logos and trade names contained in this presentation that are subject to license. Opinions, statements, estimates, and projections in this presentation (including other media) are solely those of the individual author(s) at the

time of writing and do not necessarily reflect the opinions of IHS Markit. Neither IHS Markit nor the author(s) has any obligation to update this presentation in the event that any content, opinion, statement, estimate, or projection (collectively, "information") changes or

subsequently becomes inaccurate. IHS Markit makes no warranty, expressed or implied, as to the accuracy, completeness, or timeliness of any information in this presentation, and shall not in any way be liable to any recipient for any inaccuracies or omissions. Without

limiting the foregoing, IHS Markit shall have no liability whatsoever to any recipient, whether in contract, in tort (including negligence), under warranty, under statute or otherwise, in respect of any loss or damage suffered by any recipient as a result of or in connection with

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