Soda Ash Prices Under Pressure Amid Weak Demand and Increasing Supply

The Soda Ash market is experiencing a pause in the prices in the Asian market towards the termination of June 2024, due to increasing supply pressure and weak downstream demand. The downstream demand in the glass industry has been on a decline, exacerbating the market risk. Futures saw a sharp fall at the opening, fluctuating weakly at a low level before plunging again near the end of the month. The main contract fell by over 5% in the Chinese market. Meanwhile, Brenntag Essentials was appointed by Tata Chemicals as a distributor of Soda Ash to expand key markets in Southeast Asia.

The Asian chemical sector has been particularly weak, with the Soda Ash market exhibiting the pressure. Downstream industries are strongly resistant to high prices, leading to a loosening in domestic spot market quotations for Soda Ash. Terminal enterprises are replenishing inventory primarily based on rigid demand. Weak macroeconomic sentiment has contributed to the average performance of the Soda Ash market recently. The latest spot price of the commodity is expected to loosen this week, with traders selling at low prices and the industry operating at a high level, increasing supply pressure.

According to the latest insights, the overall operating load of Soda Ash manufacturers has recently increased, leading to a rise in market supply. Demand for light alkali remains sluggish, while demand for heavy alkali has seen little change, prompting Soda Ash purchases as needed. The futures market price has moved downward, with middlemen actively shipping. New orders from Soda Ash manufacturers have been average, and overall inventory has increased. Manufacturers have become more flexible in accepting orders and shipping, resulting in a decline in the price of new orders. Most Soda Ash industry players are pessimistic about the outlook, and the domestic spot market may operate weakly in the short term.

The demand for light alkali has declined rapidly, leading to an accelerated accumulation of Soda Ash. As of June 24, 2024, the total inventory of domestic Soda Ash manufacturers stood at an increase of 6.34% from the previous week. Light alkali inventory increased by 8.06% while heavy alkali inventory rose by 4.19%. The accumulation of light alkali has particularly accelerated.

In the downstream glass sector, daily output has remained stable, but inventory has continued to rise. In the North Chinese market, shipments have slowed due to low-priced sources, leading to an obvious inventory build-up. In the Central China market, poor production and sales have caused Soda Ash inventory to increase.

As per  ChemAnalyst, the Soda Ash price future attention will focus on the terminal real estate situation and the capital and order conditions of glass deep processing companies. In parts of the South China market, affected by rainfall and rigid demand, shipments have been average, and overall inventory has shown an increasing trend. Real estate policy support has improved future demand expectations for glass, but downstream deep processing has not shown significant improvement.