GHCL Ltd. expects China's excess capacity and weak demand will continue to put pressure on the global soda ash market, at least in the near term. The company further confirmed that the China factor may lead to a slowdown in the industry in Q2 and beyond.
Speaking to NDTV Profit's Know Your Company show, GHCL's Managing Director R.S. Jalan forecasts a tough second quarter and expects pressure to persist in 'one or two more quarters'.
“In the short term, we do see implications of the China factor on the overall soda ash business, and that will have an impact on the Indian industry as well,” he said.
“Q2 and maybe one or two more quarters will be challenging for the industry. But if you see a longer time horizon, we expect things to pick up," he added.
GHCL is the second largest manufacturer of soda ash in India, with a market share of around 26%.
Soda ash, a key input for glass, detergents and other chemical products, has been rocked by global volatility. Over the last two years, massive capacity additions in China, coupled with softening demand, have led to a global oversupply.
The management of GHCL has acknowledged that China's role in the soda ash industry remains immense, and there has been capacity addition, though they maintain that the demand has been robust.
"China has around 45% of global capacity. It has a major role to play in the global market. Although they have added capacity, the demand has been very high," he said.
Despite the global headwinds, GHCL has managed to cushion its profits through manufacturing efficiencies and cost optimisation, the management added.
In recent months, the Indian government has extended the Minimum Import Price (MIP) for soda ash until December 2025, aiming to provide relief to domestic companies such as GHCL.
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