|Soda Ash Demand Will Continue to Witness Reasonable Growth|
|- Dr Ravindra Aglave, Director-Chemical Process, CD-adapco|
In the coming 2-3 years, GHCL Ltd (GHCL) is expecting to invest approximately Rs 500 crores across all its
verticals namely soda ash and textiles segments. The investment in soda ash is approximately of the value
of Rs 350 crores and for textiles it is around Rs 150 crores, says R S Jalan, Managing Director of GHCL Ltd.
Currently our soda ash plant of GHCL has a production capacity of 8.50 Lacs MTPA against the total Indian manufacturing capacity of 30.76 Lacs MTPA. In 2014-15, the company had produced 7.39 Lacs MT against 7.12 Lacs MT in the previous year, reveals Jalan. “Our capacity utilisation was 87 per cent against the industry average of 85 per cent. We have also achieved highest domestic sales of 6.74 Lacs MT against 6.44 Lacs MT in the previous year. It is expected that on the back of further pick-up in economic growth, demand for soda ash will continue to witness a healthy growth.”
Jalan says that the new investment in soda ash will witness a capacity expansion in the production. In the textiles division, it will be used for debottlenecking of processing capacity and implementing energy conservation measures by installing Green Energy (Wind Mills) to reduce carbon footprint.
Growth of Soda Ash Industry
The major consuming sectors for Soda Ash in India are Detergent and Glass (Flat and Container) industries, Jalan comments while explaining the driving element for the industry. “The growth of detergent is based on increasing Urbanisation and the subsequent growth in rural income. The driving factors for growth in glass industries are Construction (Real Estate), Automobiles, Conversion of Food and Medical supplies from Plastics to Glass Containers etc. All these factors are currently active in the Indian economy and shall remain major drivers for growth of Soda Ash in India,” he adds further.
According to Jalan, it is expected that on the back of improved GDP growth projected and the growth in Glass (Constructions/ Automobiles) and Detergent(FMCG penetration and growth) manufacturing industries, Soda Ash demand will continue to witness a reasonable growth. And Jalan believes that the Indian manufacturers will be able to meet the demand themselves. “The domestic market size is around 3.3 million MT which is projected to be around 4 million MT by 2019 and to cater to this projected increase in demand, a number of projects are under implementation or consideration to address the situation,” Jalan comments.
He further elucidates that other than the expansion of GHCL which is around 100000 MT in the first phase, Nirma is expanding around 200000 MT and RSPL’s Greenfield project is going to add another 500000 MT in the quantum of soda ash production. Tata Chemicals is also waiting for regulatory clearances to expand its capacity. Going forward the Indian manufacturers will be capable of meeting the demand growth in the country; however, as is currently the case any small deficits will be made up by imports.
Challenges for the Industry
Cheap import from China has always been an issue with Indian manufacturers. However, Jalan says that the Chinese volume of import in India has actually reduced this year. He further explains that in 2014-15 the total imports from China were 1.38 Lac MT. In the period between April-September 2015, the quantity was 45000 MT against 70000 MT during the same period previous year. The growth in terms of volume is far below what was expected. However, the prices of Chinese Soda Ash are currently soft and if it remains to be same then we need to see what shall be the impact of it in near future. Jalan also talks about other challenges and mentions that in view of the non-allotment of limestone mines in the last 5-6 years, the availability of limestone is a major concern for the soda ash manufacturers in India. “Salt prices are consistently going up as majority of salt produced in the coastal belt of Gujarat is ‘Solar Evaporated’ and hence production can get adversely affected by vagaries of weather. Also export options to countries like China, Japan etc, who offer higher price creates a periodic shortfall in salt availability.”
Commenting on the viability of HOU’s process, Jalan reveals that the process is very popular in China since it produces a by-product ie, Ammonium Chloride (NH4Cl) while manufacturing soda ash. This is a cheap fertiliser which has a number of end uses in China. In India, however, the use of this product is not encouraged as most of the agriculture is using Urea, which is a superior fertiliser. Hence HOU’s process is not a viable option in India.
Expectation from the Government
Currently the Indian chemical industry is fighting hard in the Global market against its Chinese counterparts. Support from the government in earnest is required to enable Indian chemical industries to compete with China. We also wish to see some reduction in the taxes which are levied on the purchase of raw materials for this industry to enable them to stay afloat with competitive pricing.