Scientific Development Planning for China's Salt Chemical Industry      

By Sun Fengge, China National Petroleum and Chemical Planning Institute    

1. The crude salt market layout has changed    

China is one of the world's largest producers and consumers of salt. In 2004 - 2006, the annual growth rate of its crude salt output was around 20%. But it fell to only 7.8% in 2008, the slowest in the last 20 years (CCR2009 No.9).China possesses abundant resources of sea salt, well salt and lake salt.
   Sea salt is mainly distributed in Liaoning, Hebei and Shandong provinces, and Tianjin, eastern China and Jiangsu province. Well and rock salt is widely distributed in about 18 provinces in central and southwestern China. Over 10 salt deposits have been identified to have a proven sodium chloride reserve of more than 10 billion tons each. Lake salt is mainly distributed in northwestern regions such as Inner Mongolia, Tibet and Xinjiang regions, and especially Qinghai province where there is a proven lake salt reserve of more than 300 billion tons. In these regions, the production cost of salts is extremely low, but because of the backward local economy, the local demand for salt is small. Long-distance transport is another bottleneck for the development of the salt industry.
   Over the past 10 years, the rapid development of the salt chemical industry and its downstream sectors has brought a rapid rise in the demand for crude salt. China's crude salt output was around 60 million tons in 2008, ranking first in the world, and is expected to reach nearly 70 million tons in 2010. In China, among the salt resources, sea salt has the biggest production capacity, well salt is next, and lake salt has the smallest. Recently, due to the wave of constructing industrial parks and projects in China's coastal areas, the size of the salt field in northern China's sea salt production zone has been shrinking year by year, and the sea salt capacity there is unlikely to increase in the future. Well salt is abundant and widely distributed in China. Its production technology is very mature, and its market-entry investment is not high. In recent years, its production capacity is increasing rapidly, and its proportion of China's total salt output increases year by year. Currently, more than 10 million t/a of production capacity for salt (mainly well salt) is under construction. China's salt industry has a trend of shifting activity from eastern areas to central and western areas.
   Compared to developed countries, China's salt industry is still plagued with a lot of problems. First, its industrial concentration level is low. There are over 800 registered salt production enterprises in China, with an average capacity of less than 100 000 t/a. The average scale is very small, and their technical levels vary widely. Second, the product portfolio is relatively single. The development of high value-added salt products for highways' snow melting, animal husbandry, water treatment, bathing and industrial uses have not met the market demand from the aspect of quantity, variety and quality. In particular, the development and utilization of liquid salt is still at a low level, accounting for only 12% of the total salt output. Third, China's salt industry is still mainly centered on salt production and suffers from inefficient byproduct resources utilization. In sea salt production, the utilization rate of brine is less than 20%. In lake salt production zones, the extraction of salt has resulted in serious magnesium pollution which contaminates lake salt resources. In well salt production zones, the joint extraction rate of byproduct Glauber's salt is less than 10%, but in developed countries, this figure can reach almost 100%. Fourth, its industrial layout is irrational. More than 50% of crude salt needs to be transported to markets more than 200 kilometers away. A relatively low proportion of transported salt is pipeline-conveyed in liquid form.

2. Salt chemicals occupy a leading position in the consumer market    

In China, 73% of crude salt is consumed by the salt chemical industry, and 16% is used to make edible salt. Soda ash and chlor-alkali are two major salt-based industries. In recent years, the production of sodium chlorate and metallic sodium has also developed fast but does not consume much salt - less than 5% of the total salt consumption - and has a relatively small impact on the industry-wide balance of supply and demand. The production of soda ash and caustic soda boosts the development of the salt industry. China has formed a salt chemical industrial layout that is led by soda ash and chlor-alkali and flanked by downstream products.
   The global economic crisis that began in the second half of 2008 resulted in macroeconomic decline for China, making China's salt chemical industry also face an enormous pressure. But driven by China's economic stimulus policies, the market is now gradually recovering. The demand for salt chemicals in China is expected to increase in the "Twelfth Five-Year" period (2011-2015) but may have slightly slower growth in this period than in the "Eleventh Five-Year" period (2006 - 2010).

3. Suggestions for the healthy development of the salt chemical industry   

1) Carefully treat the local resource advantage issue of salt enterprises and the export expansion issue of soda ash and caustic soda

    The salt chemical industry uses salt as the main raw material, but its major products are energy intensive with high emissions. The production costs of soda ash and caustic soda do not depend on the price of salt but to a large extent on the prices of electricity, steam and ammonia, which in turn are determined by the price of coal. The profits of salt chemicals primarily rely on the competitiveness of the local coal chemical industry. Therefore, areas only having salt resources but no cheap coal resources or hydropower resources do not possess the conditions to develop a large-scale salt chemical industry.
   In recent years, China's exports of soda ash and caustic soda have been growing rapidly, both exceeding 2 million tons in 2008. Due to the rise in international energy prices, developed countries do not encourage the development of the energy intensive, high-emission salt chemical industry. So the production capacity of salt chemicals in developed countries has grown slowly in recent years. In China, cheap coal supplies and relatively low expenditures for environmental protection give salt chemical products a cost advantage, promoting an increase in the export of salt chemicals.
   Compared with China's soda ash, the USA's natural soda ash has a marked advantage in cost, quality and service. Even in Southeast Asia, which is the major export market of China's soda ash and caustic soda, USA's natural soda ash is competitive with China's soda ash. But U.S. firms have been striving to stick to the high-price and high-margin market principle and so have not launched a price war with Chinese firms. However, if China's exports threaten their fundamental interests, the U.S. companies will take action to curb China's exports. Chinese enterprises should realize this and prudently expand their exports of salt chemical products, especially soda ash.  

2) Plan in advance and change strategies according to concrete situations
    The uncertainty of China's future economic development trends, the sharp contrast between markets and resource distribution in both east and west China, and China's increasingly stringent environmental impact assessment policy and land approval policy for energy-intensive chemical projec