Sodium carbonate is one of the basic raw materials for the glass manufacturing industry, including flat glass, container glass and household glass. It is also used for the production of washing and cleaning products, in metallurgy and chemical industry, among others, to produce silicates, sodium bicar-bonate, lithium carbonate (used for battery production), as well as in the paper industry. On a global scale more than one half of the currently produced sodium carbonate is used for the production of glass. Further recipients of soda ash include the chemical industry as well as soap and detergent producers. 1/5 of available soda volumes is used by other branches of industry.
In Europe, the share of glass manufacturers and metallurgy sector in sodium carbonate purchases is much larger than on the global market. On the other hand, in Europe relatively lower volumes of soda are used in the production of soap and detergents.
As at the end of 2019, the global production capacities of sodium carbonate stood at approx. 72 million tonnes per year, of which over half is produced in Asia. More than a quarter of the capacity is concentrated in the European region (including Turkey and all of Russia), while the third key production region is North America, representing about 20% of the capacity. The largest sodium carbonate producers in the world, with capacity of 4 million tonnes/year or more, are the following four concerns: Solvay, Ciner Group, Tata Chemicals and Genesis Alkali. As at the end of 2019, these companies represented about 30% of global production capacity.
Last year, the production capacity of soda ash was increased mainly in China and Indian subcontinent. Over the next 3 years or so, significant increases in production capacity are planned mainly: in the United States (about 2.5 million tonnes/year) as well as in India and Turkey (in the latter 2 countries, a total of almost 1.5 million tonnes/year). In general, for the coming years the average annual growth rate of global capacity is expected to be similar to the growth rate of global demand for soda; i.e. at approx. 2%/year.
Significantly larger production capacity expansions (additional 5 million tonnes/year on the basis of natural deposits) were announced for 2024-2025 in the USA. Taking into account the scale of these projects and experience from the implemen-tation of similar projects in the previous years, one should take into account the possible prolongation of their implemen-tation.
The main sodium carbonate market for CIECH Group is Europe, especially Poland. The biggest producer in this region is Solvay, which owned factories in 6 locations around Europe in 2019, with total production capacities estimated at approx-imately 5 million tonnes/year. The second position in Europe in terms of production capacity last year was held by the CIECH Group with a total capacity of 2.6 million tonnes/year (4 plants: in Poland in Inowrocław and Janikowo, in Germany in Stassfurt and in Romania in Ramnica Valcea). There are no other manufacturers of sodium carbonate in Poland and Romania. On 18 September 2019, the production of soda was suspended at the Romanian plant as a result of the discon-tinuation of supply of process steam by the sole local supplier. Analyses on the possibility of resuming production in Roma-nia are underway.
In 2019, the Group’s share of the sodium carbonate market in Poland stood at approx. 95%, around 15% in Europe (including Russia and excluding Turkey) and more than 3% globally (Source: own estimates based on market data compiled by IHS Markit).
Demand for sodium carbonate in Europe (including CIS) is estimated at nearly 12 million tonnes per year. European (including Polish) market is a mature market with no rapid changes, with yearly growth rates ranging from 1.5-2.0%. Growth dynamics in Central Europe is usually higher by 1-2 percentage points than in Western Europe.
The structure of sodium carbonate consumption also hasn’t changed much for many years. The demand for sodium car-bonate depends mostly on the demand for flat and packaging glass. In Central Europe, the share of the detergent segment is relatively significant, and in Eastern Europe – the share of metallurgical sector.
We believe that the European soda market is now fairly well balanced. In the next few years, significant drivers for its further growth will include, among other factors, the growing interest in glass packaging (as more environmentally friendly compared to plastic substitutes) as well as growing requirements for energy efficiency of buildings and the associated trend of using 3-pane windows (instead of 2-pane ones). On the other hand, there are factors that may impede this growth: measures to increase waste recycling (including glass) and the downturn in the automotive industry responsible for a por-tion of demand for flat glass.
The CIECH Group has a diversified customer portfolio - the largest soda customer was responsible for less than 6% of the Group's revenues in 2019. The Group focuses on building lasting, long-term relationships with customers.
