The demand for two alkaline substances shows different trends; the future market movements may continue to diverge.

Soda ash and caustic soda can substitute for each other in certain fields, including monosodium glutamate, some inorganic salts, and water treatment. In terms of substitution ratios, 1.325 tons of soda ash is equivalent to 1 ton of 100% liquid caustic soda. However, there is no substitution relationship in their largest downstream fields; the glass production process requires soda ash for fluxing, while the Bayer process, the mainstream production method for alumina, can only use caustic soda and not soda ash. Sixty percent of soda ash is used for glass production, including float glass, photovoltaic glass, and daily-use glass, while caustic soda is thirty percent used for alumina production. Although soda ash and caustic soda can substitute for each other in some fields, their demand is mainly determined by the performance of their respective main downstream sectors. From 2020 to 2024, the price difference between caustic soda and soda ash in the East China region ranged between -1395 and 1228 yuan per ton. In the second half of 2024, the price difference between the two expanded from a negative value in the first half of the year to a positive value, ranging between 162.5 and 1221 yuan per ton.

The growth rate of supply is higher than that of demand, and the soda ash market continues to decline.

The growth rate of supply is higher than that of demand, and the supply-demand situation in the soda ash industry will shift from a tight balance to an excess in 2024. In 2023, the new capacity of soda ash will reach 5.5 million tons, and it will reach full capacity in the first half of 2024, with an additional capacity of 2.5 million tons in the first half of that year. The pressure from new capacity is significant, and maintenance is decentralized, leading to a substantial increase in soda ash production in 2024. In 2023, there was a tight supply of soda ash, and in 2024, downstream glass companies increased their imports of soda ash, resulting in a significant increase in import volume.

In 2024, the demand for light soda ash saw a significant increase, driving up the growth rate of soda ash demand. The increase in light soda ash demand is partly due to the continuous expansion of downstream production capacity in some light soda ash sectors, such as lithium carbonate, soda ash, and monosodium glutamate, among others. On the other hand, the price advantage of soda ash for most of the year meant that light soda ash replaced some of the demand for caustic soda. However, since the second half of the year, the demand for heavy soda ash has significantly declined, which has greatly dragged down the demand for soda ash. By the end of 2024, there were a total of 288 float glass production lines in the country, with 225 in operation, and a daily melting capacity of 158,000 tons, a decrease of 15,000 tons compared to the end of 2023. By the end of 2024, there were a total of 434 operating photovoltaic glass production lines in the country, with a daily melting capacity of 92,000 tons (some facilities were operating at reduced capacity, leading to lower actual production), a decrease of 7,000 tons compared to the end of 2023. Due to limited incremental demand from abroad, the decline in soda ash prices in 2024 did not change the situation of a decrease in annual export volume.
Changes in the supply and demand landscape resulted in a significant drop in soda ash prices in 2024, shrinking profits, and even losses, with inventory continuously increasing, and the price difference between soda ash and caustic soda widening. The average price of light soda ash fell by about 1,200 yuan per ton, and the average price of heavy soda ash fell by about 1,300 yuan per ton throughout the year.

Domestic and international demand support is strengthening, with the caustic soda market trend being low at the beginning and high at the end.

In 2024, China's caustic soda market will continue to see a situation where supply exceeds demand. There will be a significant increase in demand for caustic soda in the second half of the year, driving a noticeable phased increase in prices. China's production of caustic soda is expected to reach 42.1801 million tons in 2024, an increase of 2.1871 million tons compared to 2023, with a growth rate of 5.47%. Domestic consumption is projected to be 38.0849 million tons, an increase of 1.7929 million tons compared to 2023, with a growth rate of 4.94%. Export volumes are expected to reach 2.95 million tons, an increase of 464.2 thousand tons compared to 2023. The increments in supply and demand are not significantly different, and the supply-demand situation is expected to continue from the 2023 scenario.

In 2024, China's caustic soda production capacity was 48.6 million tons, with an increase of 1.415 million tons. Under conditions of profitability for most of the time and generally no external force majeure impacts, chlor-alkali enterprises mostly operated at full capacity. Monthly operating rates were often between 87%-89%. For most of the time, caustic soda supply was abundant. Due to poor profitability of chlor-alkali enterprises in July and August, there were more maintenance shutdowns, and some chlor-alkali enterprises also conducted routine maintenance in spring and autumn, leading to a significant reduction in supply during these periods.

Downstream industries such as alumina, new energy, and pulp continue to expand production capacity. The profitability of some downstream sectors, including alumina, has improved, boosting production enthusiasm and increasing the demand for caustic soda. In particular, the alumina industry has seen continuous profit growth in 2024. With attractive profits, the 1 million-ton capacity of Inner Mongolia Zhi Xuan has been resumed, and Chongqing Jiulong Wanbo, Weiqiao, and Luyu Bocao have added a total of 2.6 million tons of capacity. Alumina companies are striving to increase their production loads, with the majority of alumina output increments concentrated in the second half of the year, providing strong support for the essential demand for caustic soda. In terms of exports, due to force majeure affecting some chlor-alkali enterprises in the United States in the second half of the year, resulting in unstable production and reduced caustic soda output, some of the original demand from the US has shifted to China. Additionally, with the expansion of downstream industries in Indonesia, the demand for caustic soda has increased. The demand from major export destinations abroad has risen, and there has been a certain arbitrage space for exports for most of the time. As a result, China's caustic soda export volume increased in 2024.

Under the fundamental condition of supply exceeding demand, the caustic soda market was weakly operated in the first half of the year, with the price of liquid caustic soda making slight adjustments. Particularly in the second half of the year, especially in October and November, the impact of the traditional peak demand season, the support from downstream expansion of production such as alumina, coupled with the impact of concentrated maintenance of chlor-alkali enterprises, the price of liquid caustic soda saw a significant increase. In December, with the recovery of supply and the weakening of downstream demand, prices fell, and the annual average price increased year-on-year. The average price of 32% liquid caustic soda in Jiangsu in 2024 was 920.05 yuan per ton, an increase of 3.22% compared to the average price of 891.39 yuan per ton in 2023.

The market demand growth for soda ash may slow down in 2025, with significant supply pressure still present.

It is expected that in 2025, the growth rate of soda ash demand will slow down, the consumption of heavy alkali will increase slightly, and the consumption of light alkali will keep growing. From 2022 to 2023, the new real estate construction area will continue to decline, which will have a great impact on the demand for completed real estate products in 2025. In 2024, some float glass enterprises will continue to operate at a loss. With the decline of demand, it is expected that the production capacity of float glass will further decline in 2025, and the amount of soda ash by float glass will decrease. Affected by the market downturn, some photovoltaic glass production lines have been completed in 2024 production time delayed, in 2025 there are still some photovoltaic glass production lines have ignition plans, it is expected that the photovoltaic glass demand for soda ash will further slow down in 2025. The demand for light alkali maintains a growth trend, and it is expected that lithium carbonate will still be the largest incremental product in the downstream products of light alkali in 2025.

From 2023 to 2025, there will be a concentrated release of new capacity in soda ash production, leading to increased supply pressure in 2025. The plan for new capacity addition in 2025 is 2.7 million tons. Although the pace of new capacity coming online has slowed down, the accumulated new capacity over the past two years remains high. At the same time, the inventory of soda ash enterprises is approaching a historical high, which will also put pressure on the supply in 2025. With a decline in capacity, the situation of oversupply in the soda ash industry in 2025 will still be difficult to alleviate, and market competition will become even more intense. The prices and profits of soda ash are expected to remain low.

In 2025, it is expected that there will be a mismatch in the supply and demand increase for caustic soda, with prices potentially being higher at the beginning and lower towards the end.

In 2025, it is expected that caustic soda supply will continue to grow, with the increase likely to be concentrated in the second half of the year. There are plans to put into production about 4.3 million tons of caustic soda capacity in 2025. Considering the construction progress and market conditions, actual production may be around 2 million tons or more, with most of the capacity likely to be introduced in the second half of the year. In the first half of the year, the existing capacity of caustic soda may still maintain a high operating load rate. However, in the second half, affected by the introduction of new capacity, the pressure to digest supply will increase, and the operating load rate of some enterprises may decline. Nevertheless, the load level is expected to remain relatively high, with supply in the second half of the year being greater than in the first half.

In 2025, some downstream industries will still expand, and the increment may be mostly concentrated in the first half of the year. Alumina, pulp and other downstream still have new capacity plan to put into production, the alumina industry because of its production capacity to be large, the caustic soda single consumption is relatively high, the most obvious, 2025 alumina plan 15.6 million tons, part of the replacement with the old capacity, and considering the bauxite supply situation, market situation, construction progress, is not all fall to the ground, the current part capacity production time, Shandong, Hebei and other places part of the production plan in the first half of the production, is expected in the first half of the caustic soda demand.

In 2025, both the supply and demand for caustic soda are expected to increase. However, the timing of new capacity coming online for caustic soda and its major downstream industries is mismatched. Demand is likely to grow first, potentially driving up the price of caustic soda in the first half of the year, leading to a generally higher price level. In the second half of the year, as new caustic soda capacity is released, prices are expected to decline overall.

According to the comprehensive situation of two alkali, it is expected that the oversupply situation of soda soda industry in 2025 is difficult to be significantly improved, and the price is low. In the first half of the year, it is expected to support a high price operation. In the second half of the year, under the pressure of supply digestion, the price pressure is downward. In 2025, the two alkali market trend or further differentiation.(chen qiusha;zhuochuang)