Soda Ash Weekly: The soda ash market is stable but weak, and the supply and demand game continues (2024.12.26 issue)

01 Industry News This Week
"Sanyou Soda Ash: Unlocking the "New Posture" of Potential Digging and Creating Efficiency | "Tailoring" to Solve Problems"

"Recently, the new heavy ash solid phase circulating water pump has suffered bearing damage and abnormal vibration problems. It is currently a critical period for efficiency. The maintenance frequency and cost must be strictly controlled, and a solution must be found." At the regular equipment meeting of the heavy ash workshop, the maintenance section chief Hao Yancheng said.

According to the feedback from the post personnel, the No. 2 and No. 3 circulating water pumps in the workshop need to replace bearings and wearing parts every once in a while, and the monthly maintenance cost is at least more than 1,000 yuan, which not only affects the production progress, but also greatly increases the maintenance workload. In order to completely solve this thorny problem, the process group and the equipment group held several meetings, formed a special group, and carried out a series of in-depth analysis and improvement measures.

"To completely solve the problem, we must start from multiple aspects such as repair, modification and installation, and conduct a comprehensive "physical examination" of the circulating water pump." Technician Wang Shuo hit the nail on the head. "The foundation of the No. 2 circulating water pump had cracks before. Although it was repaired by welding, the strength was still insufficient, causing the water pump to vibrate sometimes during operation. The No. 3 water pump also caused vibration problems due to foundation deviation and the alignment accuracy could not meet the requirements." Technician Kou Bo talked about the root cause of the vibration problem.

"Since there are problems with the foundation of the circulating water pump, we will make a new water pump foundation to replace the original old foundation." Technician Wang Shuo's words made everyone suddenly enlightened. After identifying the problem and the solution, everyone started to work. Wang Shuo was responsible for verifying the pump foundation size on site and drawing detailed foundation drawings based on the specifications and parameters of the water pump. Hao Yancheng, the head of the maintenance section, also took into account the strength and installation accuracy requirements of the foundation. In conjunction with the maintenance personnel, the 16 mm steel plates eliminated from the workshop project were processed and made, which were more durable than the original 14 mm foundation steel plates. This not only saved the cost of purchasing a new foundation, but also ensured the accuracy and strength of the foundation, fundamentally solving the problem of pump vibration.

"The circulating water pump foundation produced this time not only solved this long-standing production problem, but also saved at least about 1,000 yuan in maintenance costs per month, greatly reducing maintenance costs, and at the same time reducing production fluctuations caused by reverse parking due to faults." Wang Shuo and Hao Yancheng said with relief as they looked at the smoothly running circulating water pump.

"Over 2 billion lawsuits were not disclosed in time, natural soda leader Yuanxing Energy and several executives were fined"

"On December 23, Yuanxing Energy issued an announcement stating that the company received the "Administrative Penalty Advance Notice" issued by the China Securities Regulatory Commission. The Inner Mongolia Regulatory Bureau of the China Securities Regulatory Commission found that Yuanxing Energy did not disclose major lawsuits and progress involving the company in accordance with regulations.

The Inner Mongolia Regulatory Bureau of the China Securities Regulatory Commission intends to decide to order Yuanxing Energy to correct, give a warning, and impose a fine of 4 million yuan; give a warning to the then chairman Song Weitu and impose a fine of 2 million yuan; give a warning to the then director and general manager Sun Zhaohui, and the then deputy general manager and board secretary Ji Yuhu, and impose a fine of 1 million yuan each. Yuanxing Energy did not disclose the above major lawsuits and progress in a timely manner as required. , nor was it disclosed in the 2021 semi-annual report or the 2021 annual report, and the aforementioned matters were not disclosed until April 12, 2022. On November 8, 2024, Yuanxing Energy issued an announcement stating that it had received the "Notice of Case Filing" from the China Securities Regulatory Commission, and was filed for suspected failure to disclose major lawsuits of its equity-holding subsidiaries in a timely manner. Shortly thereafter, Song Weitu, then chairman of Yuanxing Energy, resigned as chairman of the company. After resigning, Song Weitu still serves as a director of the company, a member of the board of directors' strategic committee, and a member of the board of directors' audit committee. At the same time, Dai Jifeng, the nephew of Dai Lianrong, the actual controller of Yuanxing Energy, succeeded as chairman of the company.

Yuanxing Energy stated that as of the date of disclosure of this announcement, the company's production and operation are normal, and the above matters will not have a significant impact on the company's production and operation. Yuanxing Yuanxing Energy was established in 1997 and listed in the same year. Its main businesses include the production and sales of soda ash, baking soda, urea and other chemical products, among which baking soda occupies a dominant position in the domestic market. In the first three quarters of 2024, benefiting from the increase in the output of alkaline chemical products, Yuanxing Energy achieved revenue of 10.372 billion yuan, a year-on-year increase of 29.04%; net profit of 1.805 billion yuan, a year-on-year increase of 19.84%. In June and September of this year, China Coal Energy applied to the China International Economic and Trade Arbitration Commission and the court for property preservation and was approved, involving property worth 990 million yuan in the name of Yuanxing Energy and its 34% (estimated value of 1.341 billion yuan) equity in Mengda Mining. Yuanxing Energy stated in its 2024 third-quarter report that the arbitration matter has not yet been adjudicated. The impact on the company's future profits is uncertain. As of the close of December 24, Yuanxing Energy's share price was 5.87 yuan per share, with a total market value of 21.949 billion yuan.

02 Soda Ash Market Analysis

2.1. Soda Ash Market Analysis

The domestic soda ash market was generally stable but weak this week. As of Thursday this week, the mainstream price of light soda ash remained at 1,500-1,700 yuan per ton, and the price of heavy soda ash was 1,600-1,900 yuan per ton. Affected by the maintenance of some units, the domestic soda ash supply has dropped sharply, and the output has fluctuated at a low level. Downstream demand is mainly based on rigid demand purchases, and the order volume has not seen significant growth; the glass industry has a stable demand for heavy soda ash, but the operating load of some deep processing links has decreased, and demand is slightly weak; chemical and light industry procurement is stable, and the market atmosphere is light. Supported by the company's pending orders, the inventory pressure in the factory has eased, but the distribution is uneven; although the overall inventory is still at a high level, some companies have reduced inventory due to maintenance, and the supply is tight in some areas. In general, due to limited improvement on both the supply and demand sides, the price of soda ash did not fluctuate much, the mainstream price remained stable, and some regions adjusted slightly due to logistics and transportation and supply and demand differences.

In terms of futures, the overall soda ash futures price showed a strong oscillation with a trend of rising and falling during the week. The main reason was that there was a disturbance on the supply side of soda ash itself, and the liquidity of low-priced sources in the market was tight. Coupled with the recent increase in freight rates, the near-month futures price was supported by the increase in comprehensive delivery costs. In addition, the macro sentiment stabilized to a certain extent during the week due to the news of the issuance of 3 trillion special treasury bonds in the market. The overall soda ash price did not have further deep negative feedback problems. The short-term market focus is still on the pricing of near-month contracts due to the interpretation of low-priced sources in the near month.

Forecast for the future market:
1. Subsequent equipment maintenance plans and changes in enterprise operating rates will affect market supply;
2. Some downstream enterprises may launch winter storage plans, which will provide certain support to the market;
3. Under the background of two-way adjustment of supply and demand, it is difficult for soda ash prices to fluctuate significantly in the short term, and the market will be mainly stable and slightly consolidated.

2.2. Comparison of soda ash market prices

03 Statistics of soda ash process profit this week

3.1. Soda ash process profit situation
As of December 26 this week, the profit of the soda ash process was 15.10 yuan/ton, an increase of 10 yuan/ton from last week; the profit of the ammonia soda process was -52.45 yuan/ton, the same as last week. The cost-end price was slightly lowered during the week, and the soda ash price was also slightly lowered, and the profitability of the soda ash process enterprises was eased.

3.2. Soda ash production profit trend

04 This week's soda ash enterprise equipment maintenance and start-up situation

4.1. List of soda ash enterprise equipment situation

4.2. Statistics of soda ash enterprise operation rate during the week
This week, the soda ash industry started about 79.75%, a decrease of 2.63% from last week. According to incomplete statistics, the output of soda ash manufacturers this week was about 665,000 tons.

05 Statistics of soda ash inventory this week
This week, the total inventory of domestic soda ash manufacturers was 1.455 million tons, and last week it was about 1.553 million tons, a decrease of 98,000 tons from the previous month, a decrease of -6.74%.

06 Analysis of upstream and downstream products of soda ash
6.1. Comparison of spot prices of raw salt this week
This week, the domestic raw salt market was weak and stable as a whole. As of Thursday this week, the mainstream ex-factory price of domestic sea salt remained at 280-420 yuan/ton, the mainstream ex-factory price of well salt was 310-450 yuan/ton, and the mainstream ex-factory price of lake salt was 270-290 yuan/ton. During the week, the downstream purchased on demand, the price of raw salt remained stable, and the overall trading atmosphere was light. Overall, the current raw salt market supply is relatively abundant, but affected by the decline in the operating rate of downstream enterprises, the demand side is weak, and the mood for stocking up at the end of the year is not high, the market trading atmosphere is light, and the price is stable; it is expected that under the imbalance of supply and demand, the price of raw salt may continue to be weak in the short term.

6.2. Analysis of float glass market this week
This week, the domestic 5mm float glass market was weak overall, with price adjustments ranging from -50 to 10 yuan/ton. The price in the southwest region dropped by 50 yuan/ton to 1,380 yuan/ton, regional demand was weak, and market transactions were sluggish; the price in the east China region fell slightly by 20 yuan/ton to 1,480 yuan/ton, and the pressure on manufacturers to ship goods increased; the price in the south China region dropped by 10 yuan/ton to 1,390 yuan/ton, and the improvement in terminal demand was limited, and the purchasing sentiment was flat; the overall price in the north China region fell by 10 yuan/ton to 1,310 yuan/ton, but the Beijing-Tianjin-Tangshan market rose by 10 yuan/ton against the trend, and the supply and demand game was prominent; the price of 5mm large plates in Shahe region dropped by 20 yuan/ton to 1,224 yuan/ton, and the small plates dropped by 12 yuan/ton to 1,168 yuan/ton at the same time, and the shipment performance was uneven; the prices in other regions remained stable, the demand side did not change much, and the market trading atmosphere was relatively flat. Overall, the shutdown of individual production lines during the week led to a decrease in daily melting volume, but the lack of winter storage policy reduced the downstream willingness to stockpile goods; deep processing orders in the southern region improved, while those in the north showed a downward trend; although the short-term decline in supply and demand limited the room for price increases, the demand for rush work and the expectation of winter storage may boost market sentiment, and the downward space for prices is expected to be limited.