HOUSTON (ICIS)--The natural soda ash market in the US is seeking to maintain its competitiveness relative to the Chinese synthetic soda ash industry, the main global competitor for US soda ash.
Downstream, about 50% of soda ash goes into glass-making production, which is utilised in the automotive industry and building trades in the US and exported globally.
A major challenge is the growing capacity of soda ash from China over the past few decades, which has threatened the profitability of US soda ash miners, most of whom are located in the State of Wyoming.
About 90% of the US production of sodium carbonate (soda ash) comes from the Green River Basin of Wyoming.
Over the past few decades China has become the world’s largest soda ash producer, whereas it had been a net importer.
China has an estimated 60 synthetic soda ash plants, according to ICIS estimates. China may also have the largest reserves of natural soda ash in the world, after the US.
However, the US Geological Survey (USGS) has not been able to quantify the extent of the Chinese reserves, according to Wally Bolen, a Commodity Specialist with the USGS.
“The Chinese don’t differentiate between natural and synthetic, but you get the impression that China produces mostly synthetic. However, there are large natural deposits of trona in China,” Bolen said. Soda ash is derived from trona.
Bolen, who is a 30-year USGS veteran, has been the USGS’s data analyst for salt and soda ash for about two years. His predecessor, Dennis Kostick, met with a geologist who had travelled to China to study and map the trona deposits several decades ago. “Dennis always wondered why the Chinese did not fully exploit their trona deposits,” Bolen said.
US NATURAL SODA ASH INDUSTRY SEEKS TO MAINTAIN GLOBAL COMPETITIVENESS
Natural US soda ash from trona mine (Image courtesy of a 1998 report by the Wyoming State Geological Survey)
“There are reportedly large deposits of trona in Chinese provinces,” Bolen said. “From an economical point of view, you use more energy in the manufacturing process in synthetic plants vs mining trona naturally,” he added.
To combat the Chinese market threat, which has been growing for decades, several governmental leaders and industry officials have been strategising on ways to overcome this.
One action taken by the US soda ash industry involved US miners banding together in the 1980s into an organisation called the American Natural Soda Ash Corporation (ANSAC), which has allowed them to transport and sell soda ash more efficiently and profit-ably to global markets.
According to Robert Fennell, ANSAC Marketing Manager: “We are able to streamline logistics costs since we move product as unit trains (every railcar is soda ash) to our ports, which are dedicated ports that only have soda ash going through them.”
“This allows for better throughput and removes the chance for cross contamination, better use of ships since we commonly fill the entire vessel with soda ash, and better use of foreign warehouse space,” Fennell added.
The US miners recently built a ship called the ANSAC Wyoming, which is now transporting 33,000 tonnes annually of soda ash to global markets.
The three US member companies supplying ANSAC with soda ash are Tronox, Tata Chemicals and Ciner Resources. The organisation has offices in the US, Hong Kong and Singapore.
A second option for enhancing the competitiveness of US soda ash is to reduce the miner’s royalty rate on federal lands from 6% to 2% for five years. US Senator John Barrasso (R-WY) introduced legislation in Congress called the American Soda Ash Competi-tiveness Act.
However, the bill was referred to committee and did not pass in 2015 legislative session.
Another challenge for the US soda ash market is new production from Turkey, which is expected to come online in August of 2017. New Turkish production will increase global soda ash capacity by 2.5m annually.
Turkey may have the fourth largest natural reserves, following China (if confirmed), the US and Botswana.
To overcome the Turkish production challenge, US miners and buyers have been negotiating longer-term contracts (eg 2-3 years) for 2017. This to hedge against new Turkish production coming online.
The chart below shows soda ash contract and spot prices for the US and southeast Asia respectively, as assessed by ICIS.
Pricing for US soda ash is set annually at the beginning of each calendar year. Prices for 2017 dropped about 3% over 2016. Pricing will likely drop again in 2018, after the new Turkish production hits the market place.
US NATURAL SODA ASH INDUSTRY SEEKS TO MAINTAIN GLOBAL COMPETITIVENESS
Jan ′14 Jul ′14 Jan ′15 Jul ′15 Jan ′16 Jul ′16 Jan ′17
Soda Ash Dense FOB US Contract Price Assessment Bulk (Mid) (USD/st)
Soda Ash Dense, 99% Purity CFR Asia SE Assessment Bulk (Mid) (USD/tonne)
US
D/s
t
US
D/tonne
235
230
225
220
215
210
205
200
195
190
185
260
255
250
245
240
235
230
225
220
215
210
Images courtesy of ANSAC showing ANSAC Wyoming and cargo bay views, which carries soda ash to global markets
Some good recent news for the natural soda ash industry is that demand for natural US soda ash in Asia is expected to increase in 2017 due to a supply crunch in the synthetic Chinese soda ash market. Some Chinese producers were operating at full capac-ity to fulfill orders, but as winter began in 2016, some plants in northern China were heard to have reduced their operation rates due to environmental issues.
More good news is that production from Wyoming’s trona mines in the US increased since the economic downturn of 2009.
This has led to annual rises in soda ash production, according to Robert Gregory, who is a project geologist with the Wyoming Stage Geological Survey (WSGS).
“Back in 2008 there was a big reduction in commod-ities, so from 2009 the industry has bounced back,” Gregory said. “Production in Wyoming seems to be strong as it’s growing 1 to 2% a year,” he added.
Gregory says there are 109bn tonnes of mineable trona reserves left in Wyoming, of which two-thirds is soda ash. The WSGS has also forecasted an increase in production through 2020.
Exports of soda ash from the US in October 2016 were 560,000 tonnes, 22% more than same month in 2015, according to US Census Bureau (USCB) data.
Brazil and Mexico were the top export destinations in October 2016 with equal volumes of 88,100 tonnes each of soda ash. Australia and the UK each received approximately 35,000 tonnes each, which was up 100% over the prior month for both countries.
Major producers of soda ash in the US are CINER Group, Nirma (Searles Valley Minerals), Solvay Chemicals, Tata Chemicals, and Tronox.
US NATURAL SODA ASH INDUSTRY SEEKS TO MAINTAIN GLOBAL COMPETITIVENESS
Market Reporter Robbie Wilcox covers soda ash for ICIS as well as paraxylene, orthoxylene, phthalic anhydride, polyethylene terephthalate and plasticizers. Prior to joining ICIS, he worked for more than 25 years in procurement, supply and logistics with Chevron and BHP Billiton, and between those two stops worked as a journalist for various publications.
750,000
700,000
650,000
600,000
550,000
500,000
450,000
400,000
350,000
US Soda Ash Exports
tonn
es
458,000
560,000
October 2015 through October 2016Oc
t
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Sep
Oct
CINER GroupGreen River2,950,000Operating
Tronax IncGreen River3,220,000Operating
Tronax IncGranger1,180,000Operating
NirmaArgus1,320,000Operating
Solvay Chemicals IncGreen River2,690,000Operating
Tata ChemicalsGreen River2,540,000Operating
CINER Group Nirma (Searles Valley Minerals) Solvay Chemicals Inc
Tata Chemicals (Soda Ash) Partners Inc Tronax Inc
25
23
21
19
17
15
13
11
9
7
5
Met
ric to
nnes
– m
illio
ns
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Actual Projected
Wyoming Trona Production
Image courtesy of the Wyoming State Geological Survey, volumes converted to metric tonnes
Image from ICIS Plants & Projects database – Actual operating locations and volumes may vary
