The soda ash market in mainland China totalled approximately 31.6 million mt in 2023. During the course of last year, this market experienced many extremes. The country has recently seen a significant increase in production capacity, record high demand growth, and a sharp drop in net exports. Concurrently, producer and end user inventories are expected to increase while soda ash prices sharply decline.

Mainland China’s soda ash capacity has seen a net increase of 8.8 million mt in 2024 as compared to 2022. One component of this increased capacity is the new greenfield natural soda ash plant (5.0 million mt) which started ramping up in mid-2023. As mainland China’s capacity has increased significantly, so too has its demand growth. Following a remarkably strong demand growth rate in 2023 of 10%, or 2.9 million mt, apparent demand in mainland China has remained exceedingly positive this year-to-date, totalling 22.1 million mt in January-July 2024, up by 29%, or 4.8 million mt, year-on-year. This high demand growth has also caused mainland China’s year to date imports of soda ash to exceed its exports of the product. Imports in January-July 2024 totalled 812,000 mt, representing a year-on-year increase of 294%, while exports in January-July 2024 totalled 505,000 mt, representing a year-on-year decrease of 55%. Mainland China has not been a net importer of soda ash for approximately 35 years.

However, it appears unlikely that this double-digit demand growth will be sustained through the balance of the year, as various distress signals have developed in the market. Producer inventory in mainland China has been on the rise. Stocks ended August 2024 at 1.2 million mt, up from 340,000 mt at the end of 2023. Additionally, it’s understood that both flat and solar glass producers have high stocks of both soda ash and glass. In August, solar glass, a key driver for soda ash demand in mainland China, is understood to have also dropped for the first time in about two years.

Soda ash prices in mainland China have been on a declining trend this year. Prices started the year averaging RMB 2,415 ($337) per mt delivered, excluding VAT, for light soda ash, and RMB 2,487 ($347) per mt, delivered excluding VAT, for dense soda ash. By the end of  August, light soda ash prices declined to RMB 1,555 ($214) per mt delivered, excluding VAT, while dense soda ash prices averaged RMB 1,634 ($225) per mt, delivered excluding VAT. Prices at these levels are below cost for the average Solvay and Hou based producer in mainland China.

As such, some key questions pertaining to this vast market persist. Has demand growth peaked in a market that has one of the highest per capita rates in the world? At the same time, how long can the current price levels be sustained?

India has a similar population to mainland China of 1.4 billion. However, in terms of their respective soda ash industries, the two countries are very different. India has one of the lowest per capita demand levels for soda ash in the world, at approximately 3 kg per person. As a result, the Indian market is significantly smaller than mainland China, with demand levels totalling approximately 4.4 million mt in 2023. India has also seen demand growth develop at a more modest rate than mainland China as it averages between 3-5% per year. In India. total soda ash demand exceeds production, meaning that the country is a net importer. There is no natural soda ash capacity in India. In terms of demand, while India is receiving a boost from solar glass, its impact is less significant than that seen in mainland China. Additionally, lithium carbonate demand is absent in India, while it functions as a key demand driver in mainland China.

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