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Due to the weak demand of flat glass and glass containers, the most important end-users, market participants expected that the global consumptionof soda ash would decline in 2020.
Marguerite Morrin, executive director of IHS Markit, said the average soda use rate in 2020 will be 5% lower than that of last year. Plate glass is the largest end user of soda ash. The development of construction and automotive sectors have promoted the demand of soda ash. However, these sectors have been hit hard by the COVID-19, and in particular by the closure of economic activities as a result of the multinational blockade. Overall, the demand for soda ash in plate glass production is expected to fall by 19% in 2020, equivalent of 1.5 million tons."
Glass containers demand, the second largest end-user, is expected to reduce soda ash demand by 13% (equivalent of 1.2 million tons). The use of glass containers is driven primarily by the demand from the beer and liquor industries and is supported through tourism and hotel-related activities, which have also been hit hard by COVID-19, Morrin said.
On the glass side, solar glass production has brought positive news. Mr. Morrin added that the solar glass plant would generate 1 million tons of a new demand for soda ash, driven by the green Recovery Programme, while there is little support for the new project given weak overall demand and the poor economic outlook.
At the same time, China still has excess capacity for soda ash. Matthew Hancock, chief analyst at IHS Markit dealing with soda ash business, said that while there were plant closures, project rationalisation was offset by new capacity. In the short term, Chinese producers will continue to operate, with little demand growth leading to losses and little support for weak prices.
China's soda ash demand is expected to recover in 2021, while other areas around the world is expected to recover even later, with demand not expected to recover until 2022 at the earliest, Morrin said.