ZHEJIANG AOSITE AUTO PARTS CO.,LTD , https://www.aositebelt.com
The demand for soda ash in downstream industries has outpaced the growth of soda ash production, and with international soda ash prices remaining high, domestic producers have already managed to meet full market demand. Recently, soda ash prices have surged significantly, with ex-factory prices rising by 12.5% since the beginning of the year. By the end of 2008, the pace of new production capacity expansion is expected to lag behind growing demand, leading to a clear supply shortage. As a result, soda ash prices are likely to reach a new peak. The industry is entering a new business cycle, with supply constraints expected to persist until the end of 2008.
In response to rapid industrial growth, the Chinese government has implemented macro-control measures to curb excessive capacity expansion. The National Development and Reform Commission (NDRC) issued a "Currently Stopping Low-Level Duplicate Construction Catalogue," which prohibits the construction of ammonia-alkali plants with annual capacities below 600,000 tons and alkali-connected units under 200,000 tons. In February 2006, the NDRC also released a notice emphasizing the need to balance economic development with environmental protection, and to strictly regulate new soda ash projects. These policies have helped to slow the expansion of production capacity.
Since 2004, the annual increase in soda ash production has remained around 1.7 million tons. In 2007, the increase was mainly due to early-stage projects coming online, with an estimated 1.2 million tons added. This marked the lowest growth rate since 2000, at about 7%. Major projects in 2007 included Hubei Yihua’s 600,000-ton combined alkali project, which started operations in November, as well as Shandong Haihua and Tangshan Sanyou Chemicals, each adding 200,000 tons of capacity in October. These additions will not be fully realized until 2008.
In 2008, key projects include the second phase of Qinghai Alkali Industry's 900,000-ton facility and Jinjing Technology’s 1-million-ton project, both scheduled to be completed by year-end. Their full output will not be available until 2009, meaning that the growth in production capacity will continue to lag behind demand, further tightening the supply situation.
Urbanization has also impacted the soda ash industry, as many companies have been forced to relocate due to land being repurposed for residential or commercial use. Companies such as Dahua Soda Plant, Tianjin Soda Plant, and others have faced relocation challenges, affecting their output. For example, Dahua’s production dropped by 36.29% in 2006, and it is expected to decline further in 2007. The Tianjin government has allocated RMB 5.3 billion for the relocation of its soda plant.
Meanwhile, downstream industries have grown at a much faster pace than soda ash production. From 2006 onward, apparent consumption growth has exceeded production growth, a trend that continued through October 2007. Export volumes increased sharply in 2006, reaching 18.1 million tons, or 11.3% of total output. However, in 2007, strong domestic demand limited export growth, with exports declining by 7.1% from January to October.
Industry data shows that the growth rate of soda ash production has lagged significantly behind that of downstream sectors. In 2007, flat glass production rose by 14.6%, daily glass by 26.8%, alumina by 49.7%, and synthetic detergents by 11.5%, while soda ash production grew by only 11.0%. This imbalance indicates increasing pressure on the supply side.
With downstream demand continuing to rise and limited capacity expansion, the soda ash industry is entering a new economic cycle. Prices have already risen sharply, with ex-factory prices reaching 1,350 yuan/ton—up 12.5% from the start of the year. Supply shortages are expected to persist, and prices may climb further. Given the time needed for new capacity to come online, this tight supply situation could extend into the first half of 2009.
October 08, 2025