Global Market Outlook on Sodium Silicate
The sodium silicate market is currently balanced with no major feedstock issues. The market is expected to become tight by 2021 with more supply being directed towards Precipitated silica rather than detergent applications.
Global Capacity Demand Overview
- Capacity Demand Dynamics - Sodium silicate capacity is currently sufficient to meet global demand with a moderate CAGR of ~2.5 percent (2017-2021)
- However, due to the lack of significant capacity additions, the market is expected to become tight by 2021
- Parallel downstream industry threat - The major downstream industries of sodium silicate are Silica derivatives followed by the detergents industry. Parallel downstream threat is likely to increase in the next few years as more sodium silicate gets directed towards the manufacture of Precipitated Silica which is used in Green Tire manufacturing
- Developed vs. Developing Regions - The downstream demand for sodium silicate from certain segments in the developed regions (N.America and Europe) is expected to be quite weak. For eg: demand from the detergents industry is likely to be low owing to the rise in use of liquid laundry detergents which do not require sodium silicate
- The demand for sodium silicate in APAC and MENA region will be high owing to increased automobile production and construction activities. Growing awareness about the importance of hygiene and willingness to spend on high-end brands will also propel detergent growth
Global Supply Demand Overview – Sodium Silicate
The sodium silicate supply demand dynamics are currently balanced. However, owing to the lack of significant capacity expansion announcements between 2018-2021, the market is expected to become tight by 2021.
- Developed vs. Developing regions - The global sodium silicate market is expected to witness moderate growth up to 2021 boosted by demand from the MENA and LATAM region. This is due to the rapid growth of the automobile industry coupled with environmental regulations in Asia and Latin America which will propel the demand for ‘Green Tires’ for which sodium silicate is a key feedstock.
- The demand is expected to be more subdued in the developed regions as the market is mature here and the growing preference for Liquid Laundry detergents which does not require sodium silicate
- Market Constraints – Rising feedstock costs, transportation costs and health hazards associated with direct intake of sodium silicate can hamper the growth of the market
Supply Market Overview – Sodium Silicate
- Sodium silicate market is oversupplied with surplus capacities in China . However, owing to the EPA inspections carried out by the Chinese government, production was hampered by temporary shutdowns in 2017. The most affected regions include Shandong and Zhejiang where most of the sodium silicate plants are located
- There has been no announcement of permanent shutdowns of sodium silicate plants in China. However, it will take a while before plants start operating at full capacities.
Market Share by Products – Sodium Silicate
Parallel downstream threat for the use of sodium silicate from silicas (especially precipitated silica) will be moderate owing to the rising demand for Green Tires.
Silica segment is expected to witness the highest growth rate of CAGR of 3.5 percent between 2017 and 2021. Paper and pulp segment is anticipated to record the lowest application growth rates.
- Silica has a wide application scope as a filler in tire and rubber manufacturing. Demand for sodium silicate is expected to witness a surge from the automobile sector owing to increase in Environmental Regulations and subsequent rise in need for ‘green tires’
- Paper pulp and detergent industry has the largest direct application share of 35 percent. The growth rates of paper and pulp are expected to be low in the developed regions due to decrease in the use of paper products owing to environmental implications
- Increasing awareness of the importance of hygiene and sanitation especially in Asia and LATAM countries will propel the demand for sodium silicate from the detergents industry
- The use of liquid sodium silicate in catalyst cracking and transesterification operations for producing bio-diesel is gaining momentum owing to the rising demand for fuel and current uptrend in crude oil prices
Porter’s Five Forces Analysis – North America
- Backward Integration – There are limited sodium silicate manufacturers in the US market with Occidental Petroleum Corp enjoying significant raw material advantage as they are backward integrated to caustic soda.
- Consolidated market – Both caustic soda and soda ash market are highly consolidated in the US with the top 5 manufacturers occupying 50 percent market share and multiple markets to place their products and enjoy higher power
Barriers to New entrants
- Established supplier base - The barrier to new entrants will be high owing to the presence of established players in the market.
- Downstream market maturity - The downstream market is not as mature as the European market. However, the growth rates exhibited by some of the downstream applications is not sufficient to attract new players to invest in the market
Intensity of Rivalry
- Backward integration – Occidental Petroleum Corp enjoys a distinct advantage over the other players owing to their backward integration.
- Competitive Pricing - The competition among the players on the pricing front is moderate.
Threat of Substitutes
- Low Substitution Threat - The threat of substitution is expected to be low as it is difficult to replace Sodium silicate completely.
- APSM - The only potential substitute for sodium silicate currently in detergent applications is Activated Poly Sodium metasilicate (APSM) which has been commercialized by a few Chinese manufacturers.
- However, APSM is being marketed more as a substitute for 4A Zeolite and STPP rather than sodium silicate.