Soda ash prices in Asia are expected to continue rising in the near-term, driven by soaring raw material costs, and with demand likely to pick up in the summer months amid decreasing supply, market experts said on 26 May 2011. Spot prices rose by 20% from mid-April to around USD 300/tonne (EUR 213/tonne) CFR (cost and freight) Asia on 25 May, led by the Chinese market, according to ICIS data. Market sources said that in the domestic Chinese market, dense soda ash prices have gone up by around CNY 200-300/tonne (USD 30.8-46.2/tonne) to CNY 2,050-2,150/tonne DEL (delivered) over the same period. Prices of dense 99% purity bulk soda ash parcels had increased to USD 280-310/tonne FOB (free on board) China in the week ending 25 May, according to ICIS. The price spikes are in line with escalating costs of raw materials: salt and petroleum coke, and crude prices. Crude salt prices vary widely across China, with the factories located along the coast heard offering at around CNY 270-300/tonne ex-mine this week, up around CNY 10/tonne from April. Meanwhile, July NYMEX crude was hovering at above USD 100/bbl on Thursday. One tonne of soda ash requires between 1.3-1.5 tonnes of salt. With salt prices rising, soda ash producers' profit margins are being squeezed. Current margins were estimated at around CNY 200-300/tonne ex-tank , industry sources said. Discussions for the 2Q and second-half 2011 contracts will begin in June, with expectations that prices will increase. Meanwhile, consumption of soda ash from the downstream container glass industry is in for a seasonal pick-up during the summer. In China, however, soda ash production is being curtailed by power shortages affecting the industrial bases in the eastern and southern regions.
