Ahead of WE Soda Ltd’s initial public offering, Liberum analysts took the time to delve into the 60mln tonne per annum, US$18bn soda ash market.
Soda ash, or sodium carbonate, is used in the likes of glass, detergents and food additives, with the market boasting a “long history of reporting modest, steady growth,” according to brokers.
“That’s about it,” Liberum admitted, though since a boost to prices in 2022, "it’s a bulk trade in flux,” the investment bank said.
Inflation stemming from the Ukraine war prompted the price spike in 2022, which analysts reckon will be sustained thanks to growing pressure on companies to comply with strong economic, social and governance (ESG) policies.
“Eventually carbon markets of Europe and China will add soda ash to their lists of regulated emitters, the broker said, likely prompting “another cost hike”.
“Likely outcome? Supply growth slows, while demand lifts even higher,” Liberum added.
This would translate to a “ballooning deficit” for the “critical” commodity, meaning price upsides would continue after 2022’s inflation-driven spike.
WE Soda is the largest miner in the market meanwhile, with a capacity of five million tonnes per annum, outdoing rivals such as Genesis Alkali and Sisecam.