Short Supply Will Lead To A Further Rise In The Prices Of Soda Ash In India

Lower Soda Ash Production Is Expected By GHCL In The Next Two Quarters

As a consequence of an unexpected mechanical breakdown in one line of the lime kilns, GHCL announced that the malfunction would cause the production of Soda Ash to lower by an assessed 15K MT in the current quarter (i.e. 1st Quarter of FY 2023-24). All possible efforts are being made by the management to resolve the issue and bring things back to normal as soon as possible.

The Demand For Soda Ash In India Is Expected To Reach 60 Lakh Tonnes By 2030 On The Back Of Solar Power And EV Initiatives.

The soda ash demand in India is expected to reach 60 lakh tonnes annually, owing to the possible consumption in the emerging solar energy and electric vehicles sectors.

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RS Jalan, Managing Director, GHCL Ltd. (the second-largest soda ash maker in India), stated that the latest growth opportunities in the sector would arrive from the government's green initiatives apart from the traditional growth drivers, including rising detergent use by the urban middle class and residential sector expansion.

Soda ash is the raw material employed for the production of silicates, detergents, glass, and solar glass for solar panels etc.

Increasing Demand

The government launched green initiatives for increasing solar capacities to 300 GW from 50 gigawatts (GW) will have massive requirements for soda ash. Also, with rising pollution concerns, there is a higher need for soda ash for processing the flue gas emitted from large power producers' boilers. This is excluding the rise in consumption of detergent and glass demand in the housing sector, as per Jalan.

Also, there is a developing demand for lithium carbonate in India and worldwide for its application as a precursor to the lithium compounds employed to make Li-ion batteries for electric vehicles (EVs) and electronics.

At present, the Indian annual soda ash requirement is between 42 and 43 lakh tonnes. This is expected to reach 60 lakh tonnes by 2030.

Imports Down

According to the data collected by the Alkali Manufacturers Association of India (AMAI), the installed soda ash capacity in India as of March 31, 2022, was at 42.96 lakh tonnes per annum spread throughout 6 manufacturers, called GHCL, Nirma, RSPL, Tata Chemicals, DCW, and Saurashtra Chemicals, a division of Nirma. The companies produced 35.50 lakh tonnes of soda ash between 2021–22, with an average capacity usage of 83 percent.

But, to fulfil the deficit, India imported around 7 lakh tonnes of soda ash a year ago. To note, the imports have lowered compared to a record level of 9 lakh tonnes between 2019–20.

To meet the developing demand by 2030, they will require the construction of additional capacities per Jalan.

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It is understandable that a few of the top players are including new capacities, like Tata Chemicals and RSPL, apart from GHCL itself. The majority of India’s soda ash capacities are present in Gujarat.

New Plant

GHCL is making a 500,000-tonnes-per-annum plant in Kutch with a ?4,000 crore investment along with the present capacity of 12 lakh tonnes in Saurashtra already installed.

The development of the new facility is underway, and they have finished over 70 to 75 per cent of the land acquisition. Their goal by 2025 is to commission the plant.

If soda ash is not made in India, it will have to be imported in large amounts, which will be bad for the country.

Presently, soda ash is sourced from the US, Russia, Iran, and Turkey.

GHCL Received Consent Amendment For Increasing The Production Capacity Of Soda Ash.

GHCL Ltd. acquired the requisite regulatory consent in January 2023 to raise the Soda Ash production capacity by 1 lakh tonnes per annum.

As per the article by Procurement Resource, soda ash prices experienced an upturn in the short-term period owing to the unexpected mechanical breakdown in the line of the lime kilns in a GHCL plant. In the long term, soda ash prices are likely to follow an upward trajectory in tandem with the anticipated rising demand from the burgeoning solar power and EV initiatives.

In order to meet the rising domestic soda ash demand and cut India’s import dependence on the United States, Russia, Turkey and Iran, national players such as GHCL are investing significant resources to build state-of-the-art soda ash production facilities.