Soda ash looks promising for 2009

Doom in the financial markets, gloom in the chemicals markets However, through the murk there is a glimmer, and that small ray of light is soda ash (sodium carbonate)

THE EUROPEAN soda ash market has so far resisted the side-effects of the global financial crisis. Demand has remained stable and producers are running their plants at near 100% capacity. In addition to this good news, demand looks set to increase next year.

The detergent industry comprises roughly 10% of European soda ash consumption, and this figure shows no sign of decreasing in the near future. According to producers, the application of soda ash in the detergent manufacturing process might even rise over the course of 2009.

Looking at today’s growing focus on greener products and a more environmentally friendly chemical industry, soda ash seems a viable, eco-friendly alternative to one of its fiercer cousins, caustic soda (sodium hydroxide) in detergent production.

Caustic soda is an extremely strong base, which can cause chemical burns, permanent injury or scarring, and blindness, whereas soda ash is a biodegradable and far less corrosive source of alkalinity. It is also effective at removing hardness ions from water, an important characteristic for a detergent.

Soda ash could, then, seem to be a logical replacement for caustic, although there is a hurdle to overcome. Switching from one to the other would involve a potentially costly structural change to a production facility.

“Caustic is added to the detergent process as a liquid. Soda ash is a powder. It has to be transported to and within the site, made into a solution, and once it is as the correct level of alkalinity it can then be pumped,” said John Kerrigan of Brunner Mond , the UK’s leading soda ash producer. “You are basically adding another step, when it might seem easier to have a drum of liquid caustic.”

In the late nineties, the picture was rather different. Caustic prices sank low enough to compete with soda, and many producers decided to make the switch over the course of 1997-8 in particular. However, the wheel seems to have turned full circle because over the past few months the switch from caustic to ash might be considered an economically feasible option, as a growing disparity between the two price levels has developed.

Looking at pricing over the course of 2008, caustic has risen continually against ash, and is assessed by global chemical market intelligence service ICIS pricing at $650-660/dry metric tonne (DMT) (€514-521/DMT) free on board (FOB) northwest Europe (NWE). Dense soda ash is pegged at $315-335/tonne (€249-265/tonne) FOB NWE (BAGS) and light at $315-325/tonne FOB NWE (BAGS), under half the price.

“Recent shutdowns by plastics companies, especially those dealing with polyvinylchloride, means that chlorine production is extremely low. Over the next five to six months, the availability of caustic soda will tighten and prices will rise. We might see many producers switching to soda ash in the new year,” a European soda ash producer said.

Rising energy costs in Europe mean that soda ash producers will be looking to raise prices by around €40-50/tonne ($51-63/tonne) in 2009, to pass these additional costs downstream. Producers maintain that this price hike would not affect soda ash’s competitive edge against caustic, and believe the swing potential was certainly in soda ash’s favor, and that it would still be worth the difficulty of plant alteration.

It is not just producers who have this opinion: “Soda ash is an inexpensive filler to enhance the storage and dissolving properties of detergent,” a European buyer of soda ash involved in the detergent market said. “It is safer, more stable, and more cost effective than caustic, and is a good carrier of surfactants and dyes. It’s got a bright future in the industry.”

The use of soda ash in other applications, such as pulp and paper manufacture, chemical production, glass, flue gas desulphurisation and carbon capture, is increasing, so soda ash’s outlook for 2009 is looking particularly bright as recession hits the chemical industry. “Looking at soda ash consumption in the detergent industry, it’s definitely not going to decrease,” Kerrigan said. “Even in a recession, people still need to wash their clothes.”

Stuart Moir is a markets reporter for ICIS pricing covering a range of chemicals in the styrenics, chlor, and polyurethane (PU) chains (and soda ash). Previously he reported for the BBC Russian Service in London and the Noyan Tapan News Agency in Yerevan, Armenia.