Importance of the Chinese chemical industry for the salt market

The chemical industry accounts for almost 90% of the overall Chinese salt consumption. By far the largest part is used to produce chlorine and soda ash.

The chemical industry’s depends on construction markets

Demand for both products depends to a large extent on the construction market. Chlorine is mainly used to produce PVC for pipes, tubes, and window frames. Soda ash is to a large extent used to produce glass for windows.

Weakness of the Chinese construction market

Turmoil among Chinese property developers began in 2021, and it has resulted in a slowdown of the construction industry. Decreasing construction activity reflects in the development of cement production in past years.

Demand of the main downstream products glass, and PVC, from the domestic construction industry has been decreasing massively. It is reasonable to assume that the decline was inline with cement production of about 20%.

Chlor-alkali and soda ash production kept growing

One would expect that production of chlor-alkali and soda ash declined in line with the reduced demand of their main downstream products in the construction industry. However, Chinese statistics show an almost opposite trend for both products.

Reasons behind continuing growth of chlor-alkali production

The decline of PVC demand from the domestic construction industry coincided with the strong increase of energy prices at the beginning of the Russian attack on Ukraine. China could increase PVC exports replacing European products that were no longer competitive.

Reasons behind the continuing healthy demand for soda ash

Soda ash output decreased slightly from 2021 to 2022, but the decline was much less pronounced than expected from the decline of the construction market. The main reason is a strong demand growth of solar glass for PV installations in the same period, as well as a continuing growing demand from the automotive industry.


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