CSIA Appeals for Controlling Soda Ash Capacity    

In 2009, amid pressures of financial crisis and overcapacity, China's soda ash industry faces heavy losses. Some large enterprises may have suffered losses over ten million RMB and the losses for some small and medium soda ash producers are estimated to exceed over RMB1 million, China Soda Industry Association (CSIA) estimated. With the beginning of 2010, the negative impact of the financial crisis on China's soda ash industry is gradually fading away, but the problem of overcapacity all over the industry is still worsening. Therefore, Mr. Wang Xiling, the vice president and secretary general of CSIA, indicates that it is the priority in 2010 for domestic soda ash industry to strictly control capacity expansion and maintain market stability.
    In 2009, China's soda ash production capacity has already reached 24 million t/a, and the total output was 20 million tons, with 4 million t/a capacity idled. The domestic demand for soda ash is expected to be around 17 million tons and the exports are estimated to be less than 3 million tons. "Even if the financial crisis would not have taken place, the overcapacity problem in the soda ash industry will certainly appear in 2009," said Wang Xiling. He also predicted that the new projects in 2010 will add nearly 2 million tons of soda ash capacity to the total, while the most optimistic estimation for the domestic demand is around 18 million tons, and exports are predicted to be 2 million tons. Thereby, the capacity surplus in the soda ash industry will be more serious in 2010.   
   Wang Xiling thought that the soda ash exports in 2010 will continue to shrink, and the exports is expected to be 300 thousand tons less than that in 2009. He also commented that on October 6th, 2009 Indian Ministry of Finance issued the final ruling notice to impose a 20% special tariff on soda ash imported from China, effective April 20th, 2009 to April 19th, 2010. The Indian competitors will also apply for an extension of period. This trade constrain will lead to the substantial decrease of soda ash exports to India. In Turkey, a 1 million t/a trona based soda ash factory came on stream in 2009 and will impact China's soda ash exports to the Middle East. The United States, the largest soda ash exporter worldwide, has begun to compete with China for soda ash market by low price since the beginning of the financial crisis, which will also have a big impact on China's soda ash exports in 2010. In addition, the Solvay Group also has joined the competition in the Asian market, and has begun to export soda ash to Asia in 2009.
   With the full recovery of the national economy and the continuing growth of GDP in 2010, the domestic soda ash consumption will increase compared with 2009, and the average selling price will be higher too. "If the total supply amount can be controlled well, the overall losses in the industry will be much reduced. Otherwise the losses in some enterprises will be expanded," Wang said.
    Therefore, "this year's keys for the soda ash industry are to control the total capacity, reduce losses, and run at 80% of the full capacity in order to ensure a basic balance between supply and demand. This needs support and cooperation of large enterprises in this industry. CSIA hopes that the large-scale soda ash enterprises, the soda ash enterprises that have good locations such as convenient transportation conditions, close to the energy and raw materials production, and the soda ash enterprises with high levels in equipment, technology and management control consciously their production capacity to avoid expansion, ensure their net profits, help to stabilize the market price and eliminate outdated and poorly-operated companies."
   With the aid of CSIA, the Ministry of Industry and Information Technology of China (MIIT) released publicly on November 27th, 2009 the "Entry Requirements of the Soda Ash Industry" (drafted version) to solicit comments from the public.(CCR2009 No.35) The Entry Requirements are to lift the standards of new soda ash projects and existing soda enterprises, in the aspects of production layout, capacity scale, energy conservation and pollution reduction, product quality and etc., in order to curb overcapacity and expansions in the soda ash industry. Presently, CSIA has completed the collection of feedback and started to modify the drafted version. The official version will soon be issued.