Recently, the spot price of soda ash rose from 1,200 yuan/ton to 1,300-1450 yuan/ton, and the futures price fluctuated sharply in the range of 1,350-1450 yuan/ton. In the short term, the bottom of spot prices appears, and the key to subsequent rises lies in whether they can continue to destock.
Production has picked up
From April to June, the supply of soda ash declined rapidly in the context of intensive maintenance and limited production. At present, the production of soda plants across the country has gradually recovered, the operating rate has recovered from the lowest point of 62% to more than 78%, and the weekly output of soda ash has also recovered from 430,000 tons to about 540,000 tons.
As of the end of July, the soda ash capacity that has been overhauled accounts for 70% of the total capacity, and the supply reduction caused by the equipment overhaul in the later period will be reduced. With the decline in inventory and the stabilization of spot prices, the overall supply of soda ash in the later period will be higher than that in the first half of the year. It is expected that the average weekly output in the third quarter will be maintained at around 560,000 tons, and in the fourth quarter at around 580,000 tons. The supply in the second half of the year will increase by 3 compared to the first half %-10%. From this point of view, the supply pressure of soda ash in the later stage is still under the condition of unlimited production.
Consumption expected to pick up
The main products of soda ash are divided into light soda and heavy soda. The downstream of heavy soda is concentrated in the glass industry, while the downstream of light soda is more dispersed and distributed in the chemical, food, printing and dyeing, metallurgical and other fields. The heavy alkali end glass consumption was strong, and the glass production line was ignited in the second quarter. At present, the daily melting volume of glass has returned to 156,000 tons, which is an increase of about 2% compared to 153,000 tons in the same period last year. It is expected that in the second half of the year, under the stimulus of high profits, glass production lines will continue to increase, which will support the growth of soda ash consumption. The downstream of light soda is relatively scattered, and the consumption of light soda is gradually recovering. Overall, the growth of soda ash consumption in the second half of the year was 2% to 5% from the first half of the year.
On the other hand, although the current manufacturer's soda ash inventory has dropped from 1.7 million tons to around 1 million tons, the warehouse receipts have registered nearly 200,000 tons, and the unregistered spot of 100,000 tons is in circulation, so part of the inventory is only transferred, and the real demand for soda ash has recovered. The degree needs to be discounted.
In the second half of the year, we should focus on whether the growth in demand for soda ash can match the recovery of supply. If the inventory remains high and oscillates, it will drag down the soda ash spot increase process; if the inventory continues to deplete, the spot can continue to rise, then the pattern of soda ash supply exceeding demand can confirm the reversal.
In short, the most difficult period of the soda ash spot market has passed. With the gradual improvement in fundamentals, manufacturers are in a strong mood to rise, and the bottom price of soda ash appears. In the later stage, the focus will be on whether the inventory can be effectively eliminated.
Source: Chemical Network
