Rains in Saurashtra hit soda ash output, prices

Rains in Saurashtra hit soda ash output, prices
Comment E-mail Print Share
First Published: Mon, Oct 22 2007. 10 00 PM IST

Tough time: An SI Group India Ltd chemical plant on the outskirts of Mumbai. Soda ash is an important raw material for detergents and soap manufacturers, glass industry and chemical facilities.
Tough time: An SI Group India Ltd chemical plant on the outskirts of Mumbai. Soda ash is an important raw material for detergents and soap manufacturers, glass industry and chemical facilities.
Updated: Mon, Oct 22 2007. 10 00 PM IST
Ahmedabad: Heavy rainfall in the Saurashtra region of Gujarat, which accounts for about 90% of the soda ash production in India, has added to the woes of soda ash users in the country.
Soda ash is the main raw material for detergents and soap manufacturers, glass industry and chemical units. Severe rains in August and September in the region led to shortage of the product and a steep rise in soda ash prices.
Large capacities are located on the west coast, mainly in the Saurashtra region, due to easy availability of salt and limestone, two key inputs for production of soda ash.
Easy availability of power, limestone and salt at relatively low costs are critical to sustain margins. Power accounts for 30% of the total cost of input.
“This belt accounts for almost 100% of total production of soda ash in the country. Heavy rains had completely flooded the units, severely affecting supply,” said a senior marketing executive at a soda ash company who didn’t want to be identified.
Tough time: An SI Group India Ltd chemical plant on the outskirts of Mumbai. Soda ash is an important raw material for detergents and soap manufacturers, glass industry and chemical facilities.
The other problem, some industry people say, is that the plants of Nirma Ltd and Tata Chemicals Ltd are not operating at their optimum capacities.
Nirma officials were not not available for comment and an email query to Tata Chemicals didn’t elicit any response.
Prices of soda ash have increased by 25-30% in the last six months from $230-240 (Rs9,370-9,778 then) per tonne to $290-300 per tonne.
India produces and consumes around 2.2 million tonnes (mt) of soda ash annually.
Though the demand-supply is finely balanced, some manufacturers prefer to export around 200,000 tonnes per annum (tpa) due to high domestic logistics cost, says an industry watcher.
What has disturbed the demand-supply balance this year, he adds, is that many units have not been operating at their full capacity, leading to a shortage of supply.
The situation is no different at the global level. China, which normally exported soda ash to India and other markets, is believed to have cut down its production this year.
“Even some European nations have seen soda ash production down this year and the prices that were ruling at around $190 per tonne six months back are today at $240-250 per tonne internationally,” says a consultant to two soda ash manufacturers, who didn’t want to be named.
Tata Chemicals has a 875,000tpa soda ash plant near Mithapur, in Jamnagar district of Gujarat.
The other key suppliers are Nirma, with a capacity of more than 1.05mtpa, and Gujarat Heavy Chemicals Ltd (GHCL), which has a capacity of around 800,000tpa.
The “supply chain has adversely been affected for some time now. The plant of Tuticorin Alkali Chemicals & Fertilizers (100,000 tonnes capacity) in Tamil Nadu, too, has been non-functional for over six months now. This, coupled with monsoon and the global shortage, has added to problems of Indian soda ash consumers”, said Sunil Bhandari, marketing manager, GHCL.
GHCL is now planning to import soda ash from its Romanian plant to meet the shortfall for the first time. Soda ash absorbs moisture quickly so its makers cannot keep high inventories for long periods.
Market observers say the supply is likely to remain tight for some time to come.
“We are witnessing a huge demand coming in from detergent makers, particularly the big branded guns of the industry. They have long-term contracts for most of their needs, but with high growth rates, they too are looking for soda ash from the spot market at higher prices. This could well affect profitability of many of the soda ash consumers in this year,” says a consultant to soda ash manufacturer.
Comment E-mail Print Share
First Published: Mon, Oct 22 2007. 10 00 PM IST