In mid-to-late November, soda ash futures prices plunged sharply, breaking below the lower boundary of the month's trading range and approaching annual lows. On one hand, following the coal-to-gas conversion shutdown of four production lines in Shahao, Hebei at the beginning of the month, multiple downstream float glass production lines will enter cold repair before year-end, weakening marginal soda ash demand. On the other hand, the imminent commissioning of Yuanxing Energy's Phase II natural soda ash project will further intensify supply pressure, weighing on soda ash prices.

Glass Line Cold Repairs Weaken Marginal Demand

In early November, Shahe announced plans to halt and cold repair four coal-fired production lines. Weak demand has driven continuous inventory buildup and falling prices. Compounded by fuel switching and heating demand significantly increasing production costs, float glass production margins have deteriorated sharply. An increasing number of lines have fallen into losses, creating immense financial pressure that is forcing enterprises to gradually suspend operations and reduce output.

By late December, China's daily float glass output is projected to drop to 154,000 tons, with monthly production falling to 4.818 million tons. The monthly average daily output may hit a new low for the year.

While float glass demand declines, photovoltaic glass demand also remains sluggish. Despite benefiting from the peak installation season, photovoltaic glass faces oversupply issues, with daily melting volume stabilizing at 88,700 tons. Some production lines, such as a 1,200-ton/day line undergoing cold repair in November, have reduced heavy soda ash procurement.

Demand for light and heavy soda ash diverged. Limited growth in downstream demand for lithium carbonate and detergents from light soda ash users failed to offset the decline in traditional industries like float glass and photovoltaics.

New Capacity Approaching, Supply Pressure Mounting

Significant new soda ash capacity was added this year. New facilities including Zhongtian Group's 300,000-ton, Jiangsu Debang's 600,000-ton, Lianyungang Alkali Industry's 1.1 million-ton, and Hubei Shuanghuan's 400,000-ton units all commenced operations in the first half of the year. Yuanxing Energy's Phase II 2.8 million-ton natural soda project is expected to start production by late December. Additionally, Xindu Chemical's 600,000-ton and Hubei Jinjiang's 2 million-ton facilities are scheduled for commissioning next year. Amid the current market environment of ample soda ash supply, the continuous release of new capacity further intensifies supply pressure.

Existing soda ash plants maintain high operating rates. Some previously reduced-capacity units have resumed production, and localized maintenance has only resulted in marginal reductions. The overall pattern of ample supply remains unchanged. In November, the capacity utilization rate of soda ash enterprises stood at 83.30%, down 3.28 percentage points month-on-month. Soda ash production in November reached 3.1123 million tons, down 230,300 tons (6.89%) month-on-month. Total manufacturer inventories at month-end stood at 1.6157 million tons, decreasing by 86,300 tons (5.07%) month-on-month. Despite production fluctuations and a slight decline in output this month, overall supply remains at elevated levels. December maintenance schedules are sparse, indicating a trend toward increased soda ash supply.

Factory inventories and delivery warehouses remain elevated. Current domestic soda ash manufacturer inventories total 1.5874 million tons, down 57,000 tons (3.47%) from last week. Despite recent inventory declines, overall stockpiles remain near multi-year highs for this period. Exchange-registered warehouse receipts plus valid forecasts reached 6,605 contracts, also at elevated levels. Among these, heavy soda ash faces significantly greater destocking challenges than light soda ash due to declining demand from float glass and photovoltaic glass sectors.

Regarding profits, as of November 27, the theoretical profit margin for China's combined soda-ammonia process soda ash (per double ton) stood at -140 yuan/ton, an increase of 13.50 yuan/ton from the previous week. The theoretical profit margin for the ammonia soda process soda ash was -38.50 RMB/ton, unchanged from the previous week.

Overall, with the concentrated cold repairs in float glass production and the imminent release of new soda ash capacity, the supply-demand dynamics are expected to weaken marginally. Consequently, the soda ash market is projected to remain in a relatively weak pattern.

As an integrated internet platform providing benchmark prices, on December 2, the benchmark price of heavy soda ash from SunSirs was 1206.43 RMB/ton, unchanged from the beginning of the month. On December 2, the benchmark price of light soda ash from Business Society was 1252.00 RMB/ton, an increase of 2.29% compared with the beginning of the month (1224.00 RMB/ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.