According to the Commodity Analysis System of the Business Society, in the first half of 2023, the overall decline of soda ash was observed, with a “parabolic” pattern. At the beginning of the year, the average market price was 2648 yuan/ton, and on June 30th, the price was 1960 yuan/ton, a decrease of 25.98%.
From the annual price comparison chart of soda ash, it can be seen that the highest price of soda ash occurred around November 2021, and in the first half of 2023, the overall trend was high and low.
According to the Commodity Analysis System of the Business Society, the first half of 2023 showed four stages as a whole, with prices rising from January to early February. The period of price consolidation from February to April, followed by a downward trend in prices from April to early June, and finally showing a consolidation trend.
Phase 1: Upward phase. At the beginning of the year, the price was 2468 yuan/ton, and on February 6th, the price was 2730 yuan/ton, with a price increase of 3.1%. Because during the Spring Festival, although the supply of soda ash is relatively stable, downstream glass is stocked up before the festival, and the price of soda ash has slightly increased.
Second stage: consolidation stage. On February 6th, the price of soda ash was 2730 yuan/ton, and in early April, it was 2760 yuan/ton, with a price increase of 1.1%. The supply of soda ash is relatively stable, and the market trading atmosphere is relatively mild. However, downstream glass is mostly purchased according to demand, with a wait-and-see attitude, and supply and demand are still in a game.
Phase 3: Downward phase. At the beginning of April, the price of soda ash was 2760 yuan/ton. On June 6th, the price of soda ash was 1950 yuan/ton, a decrease of 29.36%. The supply of soda ash is relatively sufficient. According to data from the National Bureau of Statistics, the cumulative production of soda ash in China from January to May was 13.14 million tons, an increase of 1.03 million tons or 8.47% compared to the same period last year. The downstream demand for soda ash is average, and it is still mainly purchased on demand, with a strong wait-and-see sentiment. Market participants have a strong bearish mentality in the upstream and downstream supply and demand game.
Stage 4: It is also a consolidation stage, but the price is far lower than the beginning of the year. The entire June was consolidated at around 1960 yuan/ton. The soda ash plant is relatively stable, and the overall trading atmosphere is acceptable. Recently, downstream soda ash has been purchased on demand, with supply and demand playing a game and soda ash prices fluctuating.
Forecast: Supply side
Data shows that as of July 6th, the inventory of domestic soda ash production enterprises was 395800 tons, which is at a five-year low level. The maintenance of soda ash from July to August is relatively concentrated, and it is expected that domestic soda ash inventory will slightly decrease in the short term.
In terms of demand
From the comparison chart of soda ash and glass price trends, it can be seen that the spot market of glass rose from January to June 2023. The average price in the monitored area was 18.68 yuan/square meter on January 1, and 21.35 yuan/square meter on June 30, with a comprehensive increase of 14.29% in the first half of the year. Although the price of glass slightly increased from April to May, it fell behind in stage replenishment after May, weakening market confidence, and the price of glass continued to weaken.
Analysts from Business Society believe that there will be more companies engaged in equipment maintenance for soda ash from July to August, and overall inventory will decline, providing favorable support for soda ash prices. However, based on the glass situation, real estate support is average, market confidence is average, and there is little room for soda ash prices to rise. In addition, although there are many short-term maintenance plans for soda ash, the production capacity deployment cycle for soda ash will also start. If new production capacity is launched on schedule in September, the inventory of soda ash will continue to accumulate. Data shows that the total inventory of domestic soda ash is expected to increase by 500000 to 700000 tons in the fourth quarter, with upstream inventory exceeding 1 million tons. Overall, it is expected that after a slight increase in the price of soda ash in the short term, the price may decline under pressure, depending on downstream market demand.
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