The soda ash market bottomed out and the volume rebounded

Since September, with the increase in the operating rate of downstream glass and alumina companies, the domestic soda ash market has gradually risen from its trough, forming a trend of volume and price rising, and even local stocks are out of stock. At present, the mainstream price of light soda ash is around 1600 yuan (ton price, the same below), and the chain growth rate is more than 15%. The reason for this is that the domestic enterprises have low output, demand starts up, and transportation is limited. The trend of market heating is expected to continue.

Taken together, the soda ash market in the recent period reflects the following characteristics:

First, the company overhauled its production and tightened the supply of goods in the market. Since the price of soda ash has been low at around 1200 yuan since the beginning of the year, the sales price of each company is on the edge of cost. As a result, some small-scale enterprises have lost money and parking, large-scale enterprises continue to reduce load production, combined with periodic centralized maintenance of domestic enterprises, such as Shandong Haihua production, maintenance of Lianyungang Soda Plant, etc., the country's total production has dropped significantly. According to customs statistics, in August domestic exports of 13,928 tons of soda ash, an increase of 15.98%, also contributed to tight supply factors in September.

The second is that demand stimulates the market and the market rebounds quickly. Since September, domestic glass companies have been affected by the rebound in the market, and the operating rate has increased, which has increased the purchase of soda ash. As a result, there has been a shortage of soda ash in local areas, prompting the market to heat up. For example, the mainstream transaction price in South China was the first to increase from 1600 yuan to 1,800 yuan at the end of September, with a monthly increase of 12%, which has led to price increases in other regions; the Central China region rose from 1300 yuan in August to 1600 in September. Yuan rose more than 23% month-on-month; the mainstream transaction price in East China also rose from 1300 yuan to 1,500 yuan, up 15%. All around showed a pattern of rapid rebound. The alumina companies in the northern region have also seen relatively low levels of soda ash in the previous period, and their purchase volume has significantly increased, which has boosted the prices of the northern markets.

Third, local transportation is limited and there is a shortage of low-cost supplies. According to reports from downstream companies in East China and South China, the ex-factory price of soda ash in Inner Mongolia and other northwestern regions is around 1,100 yuan, but due to the limited transport of trains in the near future, it cannot be sent to the station normally, making the supply gap. At the same time, soda ash manufacturers to ensure the smooth flow of sales channels, the use of Qiyun to send, so that transport costs increased by nearly 40%, resulting in the arrival price is higher than the normal train transportation more than 200 yuan, the market showed a trend of rapid price increase.

It is worth noting that with the rapid rise of the market, the negative factors such as the increase in the operating rate of soda ash enterprises and the wait and see in the lower reaches of the high prices will also occur. The market outlook should also be vigilant in adjusting risks.

The first is the increase in the operating rate of enterprises, and the output is expected to increase. With the overhaul period of all soda ash enterprises in China, the start of business gradually returned to normal, coupled with the recent market continues to take a good step, giving companies the confidence to expand the start. After entering October, there has been a gradual increase in production. According to statistics, China's soda ash production capacity will increase by 3 million tons on the basis of 24 million tons in the previous year, which will be reflected in the fourth quarter. The overcapacity in the industry is still the biggest pressure for the long-term stabilization of the soda ash market. Although the market is rapidly rising, but with the gradual improvement of factors such as insufficient production and limited transportation, low-cost sources once again flow into the market, do not rule out the possibility of market shocks again.

Followed by the downstream pressure, facing the trend of production cuts. It is understood that with the recent warming of the glass, alumina and other industries, demand has increased, but its sales price did not rise significantly. Therefore, the increase in soda ash will inevitably increase the pressure on the production costs of downstream companies. Some glass companies have started to reduce production. Some alumina companies also have reduced the demand for soda ash and increased the purchase of caustic soda, thus hindering the continued recovery of the soda ash market. .

Once again, it is a rapid increase in the recent market. The hype factors also play a role in fueling the situation. This will allow downstream companies to increase inventory for stocking and form a “dormant period” for subsequent purchases by companies, causing a short-term imbalance in supply and demand. Therefore, the risk of adjustment will also increase, and we must be alert to the negative impact on the market. Right now, it is recommended that companies do not blindly follow up, to avoid sharp fluctuations in the market. On the one hand, we must continue to maintain the stability of exports and promote the steady recovery of the domestic market. On the other hand, the industry still needs to make joint efforts to release new production capacity smoothly to ensure that the favorable situation will continue.