Crude Salt Industry in 2008                       
  
By China Inorganic Salt Industry Association    

In 2008, the financial crisis in America triggered a global economic recession, and caused an inevitable downturn in China's crude salt industry.
   The output of China's crude salt in 2008 was 59.528 million tons, up by 7.8% from 2007, slowest growth in recent 20 years.
    The output of related downstream industries like soda ash and caustic soda declined greatly, and the demand for crude salt dropped rapidly.
    At present, the economic crisis is creeping throughout the world and may become more intense; the crude salt industry will face still further trials.  

Production     

In 2008, there are about 198 crude salt producers in China, the total output is 59.528 million tons, increased 7.8% from 2007. The apparent consumption was 57.5293 million tons in 2008.
    In December 2008, China's crude salt production was 3.12 million tons, 30.9% down from 2007, the biggest monthly decline in recent 20 years.
    The declining demand of the market and the high price of the energy sources both had negative influence on the production of crude salt.
    The majority of small crude salt enterprises ceased production, while large and middle sized enterprises reduced their yield one after another, basically carrying out the sales orienting production policy. The market is quite slow.
    In 2008, the quality of crude salt is commonly low, the superfine quality products are relatively scarce, and the products with its quality under first grade made up the bulk.
To reduce the production cost, demand for high quality crude salt in caustic soda and soda ash enterprises increased, but the supplying of high quality crude salt is in scarcity.
   
Industry chain analysis   

In 2008, affected by the financial crisis in America the state crude salt market got abnormally gloomy. The continual decline of market demand in the main downstream industries like caustic soda and soda ash had a huge negative influence on the crude salt market.
    The common problems the crude salt enterprises face are the high inventory and the slow flow of liquid capital. In the first half year of 2008, the state crude salt market was in tight supply, while in the second half of the year, the market was severely oversupplied.
    In the second half of 2008, the demand in the main downstream industries like caustic soda and soda ash slumped, especially with the sharp decrease sales of PVC, which led to a big decrease of operating rates, immensely affecting caustic soda production.
    Because the chlorine's balance capability drops down greatly, some caustic soda enterprises shut down for an early overhaul.
   Especially in the fourth quarter 2008, the average monthly operating rate of PVC production facility was only about 40%. In the fourth quarter, export orders were reduced by about 70%, which caused a lot of suspension, production reduction, even closing down, especially in weaving and clothing making enterprises. This greatly reduced the demand for caustic soda and soda ash, and then this effect spread to the crude salt market.
    Most caustic soda and soda ash producing in China was suspended, the average interval of caustic soda and soda ash enterprises was about 30 days, and the facility's production operating rate kept declining after manufacturing recovery.
   In the fourth quarter, the average monthly operating rate of caustic soda was only 50% and soda ash was about 60%. Slow business for caustic soda and soda ash put big pressure on the crude salt industry.
    To reduce the production cost and improve the production efficiency, the caustic soda and soda ash enterprises enlarged the demand for high quality crude salt, but the limited output of high quality crude salt can not meet their demand. Under the excessive supply circumstances of the crude salt market, the market price of high quality crude salt raised a little, but the prices of other grades of sea salt did not change. The price of well and rock salt went down continually, and now the average ex-factory price came close to that of sea salt.
    China's crude salt market price fluctuated greatly in 2008. The price went up from RMB210/t at the beginning of the year, to RMB475/t at the mid year, and then fell to RMB220/t at the end of the year.

International trade     

Although China is one of the largest producers and consumers of crude salt, the output is inadequate, and import is still needed.
   In 2008, China's total import volume of crude salt reached 1.9398 million tons, decreased 20.7% from 2007, accounting for 3.2% of the total domestic trade in crude salt. With declining market demand, caustic soda and soda ash enterprises exploited international markets, increasing their export volume to decrease the market pressure in China. In 2008, both caustic soda and soda ash export volumes hit record highs.
    Caustic soda export added up to 2.075 million tons, a whopping 40.9% over 2007, and accounting for 11.2% of the current years' output. Export of soda ash reached 2.129 million tons, accounting for 11.3% of the total output in 2008 and 24.8% more than in 2007. The greatly increased export of caustic soda and soda ash played a rather important role in alleviating the crude salt market pressure.
   In 2009, the global economic activity will continue to slow down, the demand in the international market for caustic soda and soda ash will decrease, the yield of caustic soda and soda ash will still shrink, a great many difficulties lie in the way of crude salt industries, the price will still wander around the bottom, the excess supply of crude salt will not change much.