Page 96 - Tata_Chemicals_yearly-reports-2017-18

Industry Structure and Developments parties) to serve TCL’s customers in India. Similarly, part of the UK
demand is also met from imports from the Company’s US unit.
The Company is a leading global manufacturer of basic inorganic
chemicals, including soda ash and sodium bicarbonate, with As new Turkish capacity came on-stream during the year, it exerted
manufacturing presence over 4 continents; North America, Europe, pressure on soda ash prices, especially in its preferred catchment areas
Asia and Africa. Our global supply chain gives us a unique advantage of Western Europe and Latin America. This was mitigated to a large
to serve our customers with assured supply and efficient service at extent by strong growth in global demand especially in Asia. Chinese
competitive prices. prices witnessed an upward trend during the year riding on marginal
domestic demand growth following capacity consolidation over the
With a capacity of ~4.3 million tonnes per annum, TCL is currently
last two years. US prices remained largely firm with strong export
the world’s 3rd largest soda ash manufacturer. More than two-
thirds of this capacity is natural soda ash located at Tata Chemicals sales. Regional fluctuations in demand-supply balance, shipping and
Soda Ash Partners, Green River facility, Wyoming in the USA, where energy costs, exchange rates and other geopolitical considerations
the world’s largest known deposits of trona are found and at Tata continued to impact soda ash prices. While regional price variations
Chemicals Magadi, Lake Magadi in Kenya. In addition to having lower and supply-demand gaps will persist, it is expected that the global
manufacturing costs, natural soda ash helps the Company have a prices will continue to reflect movement in the global GDP growth
lower energy and environmental footprint. Synthetic soda ash and rates and broad energy price cycles.
sodium bicarbonate are manufactured at Mithapur, India and Tata
Sodium Bicarbonate
Chemicals Europe, Lostock, UK to largely cater to their respective
domestic markets. This process uses raw salt/brine (salt water) and Sodium bicarbonate is a versatile product finding use in a wide array
limestone as key raw materials. of applications including food additives, animal feed, pharmaceuticals,
dyes and textiles and air pollution control. The Company believes
Soda Ash
that given its wide range of existing and new applications, sodium
After couple of years of relatively sluggish growth, the global soda bicarbonate is expected to sustain volume growth rates at above-
ash demand in 2017 is estimated to have grown at an above-average GDP levels along with offering significant value addition potential in
growth rate of ~4% p.a. to reach ~58 million tonnes. This was on the the future. The Company is among the top 5 producers of sodium
back of a rebound in Chinese demand, that had been flat over recent bicarbonate globally with a total capacity of ~0.2 million tonnes p.a.
years, and strong demand growth in emerging economies of South (4% of global capacity) spread across the India and UK sites.
America, South East Asia and India. Several other regions including
the developed markets of North America and Europe showed flat Indian sodium bicarbonate demand grew by 13% in FY 2017-18
to moderate growth during the year. Going ahead, world demand is against ~7% growth in the previous year. The key drivers of demand
forecast to grow at ~2% p.a. through 2022. included the food, animal feed and other industrial applications.
In addition to pursuing capacity expansion to defend TCL market
The Indian market demand growth in FY 2017-18 is estimated to leadership in Indian bicarb market, the Company has also made
be ~12% p.a. supported by both domestic capacity expansion and significant progress in improving the share of branded products
higher import volumes. North American volumes are expected to
in its bicarb portfolio. In FY 2017-18, TCL launched “Medikarb”, its
have grown marginally largely due to an increase in export volumes
pharmaceutical grade product which received excellent response
over the previous year. The UK market remained reasonably flat for the
from customers. “Alkakarb” and “Sodakarb”, the Company’s other
year with the Company retaining market leadership. Demand growth
bicarb brands have shown strong growth during the year. Going
in most of the key markets of the Company’s African operation like
forward, the Company is focused on retaining its volume and value
South East Asia and South Asia remained strong.
leadership in the bicarb market.
Global soda ash capacity is estimated to have grown by ~2.5 million
tonnes p.a. during the year. After 2 years of capacity consolidation in BRANDED BICARB VOLUMES AS A % OF (%)
China, 2017 witnessed a net capacity addition in excess of ~1 million TOTAL BICARB VOLUMES (INDIA)
tonnes p.a. Turkey was another region which added ~1.5 million
tonnes p.a. capacity during the year as part of its overall plan to exploit
FY 2017-18 42
its large natural soda ash deposits. India also witnessed ~0.3 million
FY 2016-17 36
tonnes p.a. capacity addition (10% of total Indian capacity) as leading
domestic players expanded operations at their existing production FY 2015-16 33
sites. Global capacity is forecast to grow in line with global demand
at ~2% p.a. through 2022, with Turkey and Asia leading this capacity Tata Chemicals Europe Limited (‘TCEL’), retained its UK market share
addition. in sodium bicarbonate during the year. The real success for TCEL has
been continued strong export growth in accounts across the globe,
India continues to be a significant importer of soda ash with ~0.84
thus helping the business grow strongly in the year.
million tonnes of imports in FY 2017-18, accounting for a little under
Cement
a quarter of the total domestic demand. The Company recognises
the global nature of the soda ash market, characterised by almost a In addition to soda ash and sodium bicarbonate, the Company
quarter of global volumes being traded, and steadfastly supports fair also manufactures cement as part of its integrated operations at
trade practices. TCL continued to leverage its global supply chain by the Mithapur site. The cement plant not only demonstrates TCL’s
sourcing soda ash from its units in US and Kenya (along with third commitment to site sustainability, by utilising waste fly ash and other
94 Annual Report 2017-18