Sodium Silicate

Global Market Outlook on Sodium Silicate

Sodium silicate refers to chemicals like sodium metasilicate, sodium orthosilicate, and sodium pyrosilicate. This inorganic sodium salt is a white powder or available in colorless form. Sodium silicate is a generic name used for such compounds that are known as water glass or liquid glass. This alkali metal silicate is used in many areas.

This silicas and sodium compound is a chlor-alkali used as an adhesive as paper cement. It is used while drilling borewells with drilling fluids to prevent the collapse of borewells by stabilizing the wall. Liquid sodium silicate is used in the water treatment process.

Sodium silicate is used in the construction industry and to treat concrete. It is applied in making detergents; it helps to reduce surface tension allowing it to remove solid and dirt effectively. It is used in sand casting as a binder of sand, as well as in passive fire protection. It is used in automotive repair and metal repair.

Sodium silicate is used to seal leaks in containers that have water. In the paper & pulp industry, it helps make paper towels, paperboard laminates, and toilet paper. It is used as an additive in the food industry. It is used along with other silicates to make wrinkle removal creams. All these diverse applications of sodium silicate have helped in sodium silicate price growth.

• The sodium silicate market continued to face a supply crunch during 2022, due to existing supply issues in the market and production cuts by players

• The risk of supply shortage will continue to prevail in the sodium silicate market in the long term, as no significant capacity additions/expansions have been announced by the players till 2025

Global Capacity–Demand Analysis

The sodium silicate market will continue to face a supply crunch in 2023, owing to players operating at reduced rates. The market will continue to face a deficit up to 2025, as no significant capacity expansions have been announced.

Market Outlook

• Loss of Chinese capacity from the market – Owing to the environmental regulations in China, a few players were asked to shutdown their sodium silicate plants few years back, which has led to a capacity loss of 4,00,000 MT from the market. Some of these players are Shijiazhuang Shuanglian Chemical, Huayao Corporation, and Shangyu Huabao Chemical. The market is still undersupplied owing to the loss in capacity.

• The COVID-19 further widened the supply–demand gap in the sodium silicate market – Owing to the global COVID-19 crisis, most sodium silicate manufacturers operated at reduced rates in China, Europe, and the US, due to lack of downstream demand. This further tightened the supply situation in the market

• Supply has gradually eased out in 2022 compared to the previous years but still remains tight

Engagement Outlook

• Owing to difficulties in handling and transportation, sodium silicate is preferred to be regionally sourced

Global Trade Dynamics : Sodium Silicate

• North America is dependent on sodium silicate imports to bridge the supply–demand gap, while the Europe’s exports have been slightly higher than its imports

• China is a net exporter of sodium silicate, especially to other Asian countries. However, the capacity loss from China has decrease the exports volume.

Industry Drivers and Constraints : Sodium Silicate

Drivers

• Healthy demand from silica – Apart from the setback in demand during Covid-19 pandemic outbreak, due to lack of consumer demand in buying cars, demand for silicas will continue to remain high for the next 2–3 years, as it is an important ingredient in Green Tire applications

• Rise in demand from soaps & detergents – Owing to the increasing need for cleanliness and hygiene in the wake of the COVID-19 pandemic, demand for multi-functional soaps and detergents is expected to witness a surge. Soaps, which offer cleansing capabilities for both hand and home, will be popular among consumers

• Increasing demand for bio-fuel production – The use of liquid sodium silicate in catalyst cracking and transesterification operations for producing bio-diesel will also witness a spike in the next 2–3 years, as there will be a growing shift from fossil fuels to natural, green alternatives

Constraints

• Lack of capacity expansions – The market has become a deficit in supply after the capacity loss of 400,000 MT from China. The lack of significant capacity expansions or additions after that has led to a supply crunch in the market, which is expected to act as a deterrent for growth

• Volatility in feedstock prices – Soda ash is used in the production of sodium silicate if furnace route is followed and caustic soda is used in the hydrothermal routes. Raw materials constitute to more than 70 percent of the overall cost of production for sodium silicate, and thus, feedstock availability and price volatility will play a role in determining sodium silicate prices

Sodium Silicate Cost Structure Analysis

Raw material cost is the key driver in the overall cost of production for sodium silicate, which is the lowest in the US, due to feedstock cost advantage. Sodium silicate manufacturers are expected to enjoy significant profit margins, owing to the supply deficit in the market.

• Sodium silicate is manufactured via two production processes. Soda ash is the raw material used in the furnace process and caustic soda in the hydrothermal process

• Raw materials constitute to the major cost of production of sodium silicate and tracking or monitoring these feedstock prices would help to gain better visibility

• The overall cost of production of sodium silicate continues to remain the lowest in the US, owing to feedstock cost advantage, while it is the highest in Europe. 90 percent of soda ash is manufactured by refining natural deposits of hydrated sodium carbonate called ‘Trona’

Porter's Five Forces Analysis – North America

Supplier Power

• 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 five 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

Buyer Power

• Silica buyers vs. detergent buyers – The buyer power will be tilted more in favor of the specialty Silica buyers and Zeolites, which is gaining importance as a refinery catalyst

• Zeolite demand – The demand for zeolite in various refinery processes, including FCC, catalytic reforming, and hydrotreating, is steadily increasing, owing to increased oil & gas production activities in the US

• The overall buying power is expected to be low