Home > News > Industry News > Asia 2009 soda ash talks stall on financial malaise

Asia 2009 soda ash talks stall on financial malaise

Post Time:Dec 09,2008Classify:Industry NewsView:362

Asia’s soda ash contract discussions for 2009 have stalled on the back of weaker demand for consumer items such as glass and detergents, said buyers and traders on Tuesday.

“The automobile industry in Japan which is one of our largest end-users, has seen plummeting sales numbers over the past few months. This has forced major car makers to reduce their production shifts from three to two per day, which in turn cuts their demand for our product by more than 30%,” said a source from Asia’s largest glass maker, Asahi Glass Co (AGC).

Soda ash is used in float glass construction which is in turn utilised for the production of car windscreens and building construction.

AGC has cut output at its glass factories around the world to 70% in December on the back of poorer downstream demand.

Soda ash term negotiations started in early October with non-Chinese sellers quoting term soda ash from $350/tonne (€248.50/tonne) cost and freight (CFR) Asia, which prompted counter-bids by end-users at $200-250/tonne CFR Asia in early December.

“Demand for our end products has fallen by about 20-30% so the number of $200-250/tonne CFR Asia is reasonable since it represents an equivalent drop from supplier’s offers. If they (sellers) really don’t want to compromise, then we will just wait it out since we have enough inventory to last until the end of 2008,” said an end-user from southeast Asia.

The decline in spot prices due to weakening demand was also discouraging some market players to lock in on long-term contracts, market sources said.

“Since spot prices are falling, we are considering buying more soda ash from the spot market instead of on a term (basis). We will take our time negotiating next year’s contract to secure a good price instead of settling early like what we did last year,” said the AGC source.

Soda ash spot prices were assessed at $210-$240/tonne FOB (free on board) CMP (China Main Port) last week, down from the peak of $300-320/tonne FOB China in mid-October, based on global chemical markets intelligence service ICIS pricing.

 “In the first three quarters of 2008, demand for material outstripped supply but this was turned on its head from October. China’s domestic requirements took a nosedive due to the key downstream glass and dyeing sectors cutting production. This freed up Chinese supplies for export, resulting in a glut of material,” said a veteran market watcher in southeast Asia.

This supply overhang triggered a reversal of fortunes for spot prices which softened in October after gaining for 18 months.

Chinese sellers were heard to be discussing contracts for 2009 within buyers’ desired price range although this could not be confirmed at the time of writing with any of the country’s major suppliers.

A major non-Chinese supplier to Vietnam and Thailand, however, told ICIS news that it was willing to initiate contract negotiations below the $300/tonne CFR Asia level in order not to lose its foothold in the region.

Major producers of soda ash include Belgium’s Solvay, China’s Shandong Hai Hua and FMC Corporation from the US.http://www.solvay.com/

The big buyers of soda ash are Japan’s Asahi Glass, Procter & Gamble and Unilever.

($1 = €0.71)

Source: ICIS newsAuthor: shangyi

Hot News

返回顶部