Soda ash pricing is usually steady because it's a high-volume commodity material with a transparent cost structure. However, pricing has increased considerably in the last year; and buyers are preparing for more upward movement.

Soda ash producers recently announced price hikes that are being implemented currently in buyer contracts. Solvay Minerals led with a $10/ton increase slated for July. General Chemical and FMC Corp. followed. IMC Global announced a $10/ton hike with a $5/ton increase scheduled to take effect in October. The other major suppliers, OCI and American Soda, announced $15/ton price hikes, effective in July.

Producers believe that the price increase is needed to move the market back to what FMC's marketing manager Bill Breunig feels is a fair market price. "We have seen general prices decline for the last few years," Breunig says. "And reinvestment in market infrastructure is in danger of being hampered by profit margins."

"For the most part, the price increase has held," says the product manager at another major soda ash producer. "We'll continue to see adjustments in the next few months as contract terms allow," she says.

Purchasing's monthly survey of chemicals buyers places average soda ash transaction prices at about $116-$118/ton. However, as increases announced in July are still being implemented, pricing should continue to rise gradually. Prices for third quarter 2001 will average about $120/ton and then increase to about $127/ton in fourth quarter.

July price hikes are finding their way into
the marketplace as buyers negotiate
annual contacts.

In a market that has been plagued historically by oversupply, soda ash producers have been curtailing production in the last year in order to tighten supply. Asahi Glass, Ltd., Tokyo, Japan closed a soda ash plant in first quarter 2001. Also, General Chemical closed one of its alkali plants in Canada. FMC Corp., mothballed its Grainger plant near Green River, Wyo., removing about 1.3 million tons of material from the domestic market. No restart of the Grainger plant has been announced.

"We're seeing a supply-side response to a tough couple of years," says FMC's Bill Breunig.

Overall, the market for dense soda ash is steady, with little demand change in either direction. Annual growth has been about 1%/yr for the last five years. However, in the current economic climate, annual demand growth is likely to drop to around 0.8%/yr for the next couple of years. Analysts expect domestic demand to reach 10.5 million tons by 2003.

"The soda ash market has been very difficult this year from a profitability standpoint," says one product manager. She expects demand to pick up somewhat in the next month and then remain flat through the first half of next year.

End use markets for soda ash are mature, and have been for many years. The majority of soda ash produced in North America goes into production of glass. Flat glass, glass containers and specialty glass grades make up about 38% of demand.

Industrial chemical processing, such as production of phosphates, makes up about 12% of total demand. Other end uses include laundry detergents, pulp and paper, and water treatment as an alternative to caustic soda.

Glass makers and export markets take
most of the annual U.S. soda ash supply.