Post Time：Sep 28,2021Classify:Industry NewsView：1180
A huge and increasing focus on renewable energy with government and private sector investment in such sources is strongly driving global demand for soda ash, particularly for flat glass in solar application, according to a senior Tata Chemicals official.
“Increased demand for flat glass caused by these drivers is one large contributing factor towards overall soda ash demand growth and one of the reasons for a sustained upward firmness in soda ash prices,” said Zarir Langrana, Executive Director and President (Global Chemicals Business), Tata Chemicals Limited.
Besides, sustained economic growth across the globe post the Covid pandemic will likely lead to a tight demand-supply balance for soda ash, he said.
Industries which use soda – also known as sodium carbonate – as a key ingredient in their manufacturing process have swung back into action and are operating at full capacity, besides new expansions are underway in these sectors.
“This robust growth has led to a snug to tight demand-supply balance for the product with most plants operating today at high capacity utilisation rates and likely to persist with no appreciable signs of demand slowdown and substantial increase in supplies,” said Langrana.
The primary factor driving the strong global soda ash market growth is the “fundamental growth-promoting variables in its application specific industries and sectors,” he said.
Flat glass demand across all geographies has seen a resurgence with many plants which had been temporarily shut coming back into operation. New plants were being built or announced and operating rates are sharply up, the Tata Chemicals senior official said.
“It is expected that this growth trajectory will continue with sustainable growth foreseen in both the construction and auto sectors. More significantly, disproportionate growth is and will continue to be witnessed in the demand for PV solar panels, a major component of which is high quality solar flat glass,” Langrana said.
He expects most of the discontinuous growth in demand to come from applications that are driven by a push towards sustainability. “Demand for solar glass is the one that we have talked about,” he said.
The strong push towards electric mobility and the growth of electric vehicles will be the second factor. “Soda ash is a key raw material in the processing of lithium, a key component of lithium-ion batteries. As governments seek to decarbonize the transportation sector, it is projected that demand for electric vehicles will increase, driving demand for electric storage batteries and soda ash,” Langrana said.
Tata Chemicals, a subsidiary of the Tata Group, is one of the world’s largest producers of soda ash, whose prices have more than doubled since the start of the year. This has also helped the firm’s stock prices to surge over 25 per cent year-on-year to ₹912.30 on Monday.
According to the Trading Economics website, soda ash prices have gained over 110 per cent since the start of the year. As per trading on a contract for difference (CFD), soda ash is currently ruling at 2,837.50 Chinese yuan a tonne (₹32,350), up 22 per cent in the last four weeks.
Soda ash is a key ingredient in the manufacture of flat and float glass for construction and automobiles, container glass for packaging of beverages, spirits, food and pharma, detergents and a host of chemical products soda ash has benefited positively by these sectors, Langrana, who was earlier the chief operating officer of the firm’s Indian operations, said.
“Soda ash demand shows a strong correlation with GDP and has bounced back post the pandemic as global economies recover. Soda ash demand across the world, including India, has shown a sharp and robust recovery. It is now across end-use applications and geographies back to its historic levels,” he said.
Demand growth in India and most emerging markets should track a sustainable CAGR (compound annual growth rate) of five per cent and with favourable tailwinds this has the potential of being higher, Langrana said.
The Tata Chemical global chemical business president’s views are in tune with the views of US-based Ciner Resources, world’s largest natural soda ash producer, that the commodity’s prices are steadily rising globally due to tightening market and higher costs.
In its annual report for 2020-21, Tata Chemicals said soda ash demand, after being hit during the pandemic, recovered by last year-end and the recovery continues sequentially across all application sectors.
“Growing personal consumption is driving demand for environment friendly glass packaging, recovering housing starts and construction activity and resurgence of auto demand resulting in increased flat glass usage,” he said.
Besides, increasing emphasis on health and hygiene driving growth in detergents, pharma and personal care segments have all been instrumental in driving the growth of the soda ash market.
The only downside risk for the commodity would be a collapse in demand in some sectors caused by the coronavirus and its variants leading to prolonged economic disruption. “But as countries step up vaccination and learn in other ways to deal with the virus this does not seem a very real possibility going forward,” the Tata Chemicals official said.
On other demand factors, he said as power utilities, waste incinerators and marine vessels drive towards meeting more stringent emission norms sodium bicarbonate, another key downstream product manufactured from soda ash, is emerging as a solution of choice for emission control applications.
“The continuing switch from plastics towards more sustainable glass packaging is a trend that continues to gain momentum and drives greater production of container glass and soda ash demand. Also, as the travel, tourism and hospitality sectors revive and open from their current constrained level the demand for container glass will increase on the back of increased demand for beverages and spirits,” he said.
On the Indian soda ash industry, he said: “the sector is competitively paced to stand on its own and has plant efficiencies and performance as good, if not better, than similar process plants across the world including safety, health and environment parameters.”
India produced over three million tonnes of soda ash last year to meet a substantial part of domestic demand, the highest in the world at five per cent CAGR growth.
Export demand for soda ash also continues to be strong and is expected to rise further. This will provide an opportunity for the Indian producers to ramp up exports after meeting domestic demand, which remains the key priority market, he said.
With the environment being conducive for investment, the domestic industry can not only meet growing export demand in key markets but can also be a competitive player. “Significant and substantial expansion and growth opportunities exist for this industry and this needs to be encouraged and nurtured,” Langrana said.
Source: https://www.thehindubusinessline.com/Author: shangyi
