The Soda Ash prices have experienced a continuous decline in the Chinese market, attributed to a combination of factors, including the expansion of production capacity, the accumulation of inventory, and weak downstream demand in the domestic and international markets. The new capacity additions have resulted in a shift in market dynamics, causing a weakening of market sentiment.

One of the primary factors influencing the decline is the substantial increase in production capacity within the industry. As of May 25, the inventory of Soda Ash has increased, more than doubling in absolute terms compared to the end of March, representing a substantial increase of 115.77%. The two-month accumulation period has shifted the inventory level from a sub-low level, as observed in the previous five years, to a relatively high level. The ongoing decline in the Soda Ash market in China also resulted from the weak demand in anticipation of the imminent release of products from the increased production rates in the market. Downstream enterprises are adopting a cautious approach, reducing their current purchases to secure Soda Ash at potentially lower prices once the products enter the market. This hesitancy to stockpile significant inventory ahead of the new supply has resulted in a lack of procurement demand for Soda Ash in the market. The Yuanxing Phase I project has acquired significant attention. It was reported that on May 20, the project's boiler was successfully ignited, though slightly delayed from the initial estimate of May 6, and has contributed to the overall increase in Soda Ash production capacity.

In addition to the Yuanxing Phase I project, the industry has witnessed the introduction of other new production capacities. Jinshan Chemical Industry, for instance, has added 2 million tons of production capacity this year. Furthermore, the delayed capacity increase of enterprises such as Anhui Hongsifang, Chongqing Xiangyu, and Lianyungang Debang will further contribute to the growth in production capacity. Under optimistic circumstances, these developments are expected to result in an additional 8 million tons of production capacity, accounting for nearly a quarter of the industry's current total production capacity, including long-term shutdowns. With these additions, the total production capacity of Soda Ash is projected to exceed 40 million tons, with expectations of continued growth over the next three years.

As per ChemAnalyst, the Soda Ash prices are anticipated to decline for the second quarter of 2023, owing to the high inventory levels in the Chinese market and lower demand from the downstream glass industry.