US soda ash equipment will still operate at full capacity

“Soda ash industry in the United States is expected to continue to maintain its strong momentum in 2012. Both domestic and export demand in the United States will increase enough to support continued production recovery. In 2012, we expect global soda ash production capacity utilization to be around 80%, taking into account the US’s low cost advantage. We expect that the soda ash plant in the United States will still be operating at full capacity,” said Mark Douglas, president of Industrial Chemicals at U.S.

This view of Douglas is very representative in the industry. From the performance of the first two months of 2012, the global soda ash market remains healthy. He expects the global soda ash market demand will reach 55 million tons in 2012, an increase of 5% over 2011.

In addition to manufacturing companies, consulting companies are also optimistic about global soda ash market demand. The US consulting company IHS Chemical Co., Ltd. stated that the global soda ash market demand is about 52.2 million tons in 2011. This market is expected to increase at an average annual rate of 4.3% in the next five years and reach 64.6 million tons by 2016. Among them, the demand for the Chinese market is growing at a faster rate and will grow at an annual rate of 5.3%.

According to statistics from the United States Geological Survey, the soda ash production in North America was approximately 10.7 million tons in 2011, which is still between 4% and 5% higher than the 2008 peak of 11.3 million tons. IHS Chemical Company stated that the US soda ash production will increase at an average annual rate of about 2.3% from 2012 to 2016 to meet the growth of domestic and export demand. It is estimated that by 2015, the United States will add 1.3 million tons of soda ash production.

IHS Chemicals further analyzed the soda imports and exports in North America. In 2011, North America remains the world's major net net exporter of soda ash. It is estimated that the export volume will exceed 5.5 million metric tons. This figure will increase to 6.4 million metric tons or more by 2016, mainly because exports from the United States will increase substantially. Soda ash imports in the region mainly occur in Canada and Mexico.

The industry believes that the United States has a significant cost advantage over China, which has a relatively high cost of production. Therefore, even if there are soda ash production surpluses in some regions of the world, US producers can maintain a good level of profitability. Mark Douglas pointed out: "At present, global soda ash production capacity is in surplus, especially in China and Europe."

Recently, soda ash producers in North America have successfully raised the prices of domestic and export goods in 2012, although the price increase varies according to the terms of the contract. For the U.S. market, the average price increase in 2012 is about US$9 (t price, the same below): For large customers, the contract price rises to US$155-190 (Wyoming outbound price); for small customers, The contract price rose to 191~219 U.S. dollars (Wyoming outbound price).

Sustained by the growth in market demand, Phu My Company has reactivated its idle soda production facility in Granger, Wyoming. Douglas said: “This soda ash plant with an annual output of 500,000 tons is currently operating at full capacity, and the output in 2011 was only 200,000 tons. In addition, we also plan to build a new 700,000 tons per year at the Granger Plant. The soda ash production facility is currently undergoing a feasibility study and it is expected that decisions can be made within the year."

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