House Building Drives Soda Ash Sector to Recover    

In China, the chemicals that are mainly and directly used in the house building sector involve polyvinyl chloride (PVC) and soda ash. Around 40% of soda ash is used to make glass that is mainly consumed by the house building sector.
   After experiencing a short downturn, China's house building sector began to recover from the beginning of 2009. In the first eleven months, according to the National Bureau of Statistics, the total investment in this sector reached RMB3 127.1 billion with a year-on-year growth of 17.8%, new house construction increased by 15.8% annually and the sale of house rocketed by 53%.    
   The booming investment in the house building sector drove the soda ash sector to recover from September 2009, as evidenced by the monthly growth in production. In the first eight months, the soda ash output witnessed a year-on-year drop of 3.11%. The output in September increased by 9.24% annually to 1.75 million tons, hitting year's high. The output in October and November was 1.69 million tons and 2.05 million tons respectively, up 3.15% and 52.2% year over year.
   Price did not match with the production pick up. Compared with the RMB2 050/t offer in October 2008, the price of soda ash has hovered between RMB1 100/t and RMB1 280/t in 2009. Market insiders attributed the low price to the oversupply that was said to be 27% surplus.
   Given the driving dynamic from the house building sector, it is expected that the demand for soda ash will continue to pick up, stimulating a recovered operation rate. The latest entry threshold (CCR2009 No.35 page 17) is also bringing a good sign for existing soda ash makers.