Soda ash producers confounded by high salt prices

28 Jan '11

3 min read

Manufacturers of soda ash, who add up to around 40 across India are feeling the pinch of a steep increase of industrial salt prices, a vital raw material used in production of soda ash, which in turn has led to a rise in production costs. Global supply of salt as such is shrinking, which is increasing exports of this vital commodity from India.

Informing fibre2fashion about the reasons for rising prices of salt, Dr YR Singh, Executive Director, Alkali Manufacturers' Association of India (AMAI) said, “Salt is normally produced during the dry period i.e., October to mid-June. However, during the year 2010 the prolonged monsoon up to November 2010 has badly affected restarting of salt production activities.

“This delay and the severe cold this year have also compounded the problem further as reasonable evaporation of water has not occurred in the salt ponds. Due to the above said problems, production of salt in Gujarat this year may stand reduced by about 25-30%. This figure has been taken in to account considering that, normal monsoon in the next season will begin by mid-June. Any deviation in the start of rain will affect production on either side.

“The salt inventory in general for a calendar year used to stand at around 7-9 million tons. However, in December 2010 the stocks were only about 3 million tons, which has also created panic in the market. Exports from India are generally in the region of 2.5-3.0 million tons of industrial grade salt to various countries. However, there are now a lot of inquires from various countries due to floods in Australia and parts of China. Severe snowfall in Europe is further aggravating the salt demand which is used for deicing. The industry may end up exporting much larger volumes this year”.

When asked about the trends he expects in salt prices, he replied by saying, “Salt manufacturers are expecting huge hike and shortage of the material during the middle of this year. Last year the price were between Rs 250- 350 per ton for industrial grade salt, but currently price has gone up to above Rs 400 per ton, while in Kutch it is above Rs 600 per ton , due to close proximity to the port”.

He was apprehensive that, if unhindered exports are allowed to continue, domestic prices of salt are likely to hit their peak and the industry may not be able to get quality salt as desired by Alkali units. Industry has no option except to buy the raw material at a higher price and booking the quantities with potential manufacturers / suppliers at the earliest, but salt manufacturers are not committing quantities.

Speaking about the current status of the soda ash industry, he said, “The soda ash industry has being going through extremely turbulent times in the recent past, wherein they have been hit by cheap imports on one side & escalation in prices of all basis raw materials; like, lime stone, salt and coal on the other. There is also an impending threat from cheaper imports of soda ash which is continuing, due to which, an extremely efficient industry is suffering”, he concluded this very informative chat by saying.

Fibre2fashion News Desk - India

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