Several bright spots are appearing on the horizon as global economies advance with their new climate goals and transitions. Sodium-ion batteries (NIBs) have been hitting the headlines for quite some time now as attention switches to new battery technologies offering better alternatives to lithium-ion batteries. NIBs are increasingly being considered a transformative phenomenon for the automotive battery industry. They are seen as a remedy to high lithium prices, sustainability and supply concerns. The International Energy Agency (IEA) projects that sodium-ion batteries will account for around 10% of annual energy storage additions globally by 2030 and will continue to grow significantly beyond that. According to the IEA, China is at the forefront of sodium-ion battery development, hosting over 90% of the announced manufacturing capacity. With the world’s production house (China) ramping up manufacturing capacity, sodium-ion batteries should soon become more widespread, thus boosting demand for the raw material – salt.
Until recently, energy storage systems and light two-wheeled vehicles were the primary uses of NIBs. However, over the last couple of years, major car manufacturing companies have experimented with, and subsequently adopted, sodium-ion batteries as a major step in the automotive industry’s pursuit of achieving climate and financial goals. Several companies, including Sumitomo Electric Industries, Hitachi and Yuasa Battery, HiNa have already developed NIB technologies, and many others have announced plans to establish production or scale up existing production in different locations and regions. The escalating need for NIBs will be the significant growth driver for the seaborne salt.
According to the U.S. Geological Survey, global salt production stood at 274 mln mt in 2023, up 4% y-o-y. At a time when the overall surge in production in 2023 can be attributed to higher-than-normal heat waves, a general opinion prevails that the number of months for salt production has been reduced to six months from nine months previously due to the changing climate. China (53 mln mt) was the major producer of salt, followed by the US (42 mln mt) and India (30 mln mt). However, of all the major salt-producing countries, only China and Russia saw an annual production decline.
Industry experts expect the global salt market to grow by 5% in 2024. This should be driven by industrial demand. From chemical production to food processing and from manufacturing to preservation, salt serves as a fundamental ingredient. The chemical industry requires high-purity salt. Australian and Mexican salt is well regarded as a high-quality product while Chinese and Indian salt is a mix of grades which limits its uses in high-end chemical industries. Moreover, around 95% of salt produced by the top two major countries - China and the US, is consumed domestically. It can be argued that the shift in sectorial demand is changing the market as demand from different industrial sectors rises, traditional European salt supplies have been eclipsed by rising exports from, amongst others, Australia, India, and Chile.
According to AXSMarine data, last year, Australia was the major seaborne salt exporter (about 12 mln mt) followed by India (about 11 mln mt) and Chile (about 8 mln mt). However, this year India is emerging as the exporter with strongest growth as its exports soared by 42% in the first nine months of 2024. In comparison, Australia posted the second strongest growth globally as its shipments inched up by 3%.
Although Asia is a major salt-producing region in the world, accounting for overall 53% of global exports in 2023, it is also the globe’s largest consuming region. China, Japan, South Korea, and Taiwan are the key markets in Asia. AXSMarine data suggest that Australian salt shipments have been steady to the traditional markets of Japan, China, Indonesia, and Taiwan. Meanwhile, salt shipments out of Chile mainly head to the US and Brazil. Japan mainly procures high-quality salt, making it the preferred destination for Australian and Mexican salt.
Salt exports from India have surged mainly due to increased industrial demand in China and from the rising demand for sodium-ion batteries in South Korea’s automotive sector. China’s chlor-alkali industry is also booming and most of the production facilities in China are located close to ports, which makes it economic for them to import salt by sea. Further, recent unplanned salt supply outages in Australia and China, have helped boost Indian seaborne salt exports to other destinations besides its traditional export markets of Japan, Indonesia and Vietnam. Some pockets of demand are also emerging in the EU. Demand growth for salt in the EU can be attributed to two factors: firstly, expanding demand from the chemical industry, and secondly, climate goals.
It is crucial to note that the export of salt is more about logistics and less about the cargo. Salt prices vary depending on the country of sale, end-use market, product quality and method of production. There is no exchange-traded or index price for salt. Logistical costs account for more than 50% of the FOB cost of salt and the irony is that logistics costs have only been increasing over the years making Indian salt less competitive in export markets. Surging inflation post-Covid has also hit salt markets by way of increased energy, labour and transportation costs. Since salt is a low-value commodity with international prices having remained stable over the past few years against the background of the aforementioned increased costs, this has challenged exporters. Ref to BCI Mineral’s Mardie salt project study, Ocean freight accounts for approximately 40% of the delivered cost of salt in Australia. Historical prices for Australian salt delivered into Asia have ranged from approximately $33/t to $60/t CIF over the last decade, with an average of $44/t CIF. Elsewhere in Mexico, salt generally incurs multiple trans-shipping transfers, increasing logistics costs to deliver cargo to most Asian regions.
Salt is mostly traded with smaller parcel sizes. Salt Ex-India to China and South Korea, is mostly shipped on Supramaxes (50,000 – 59,999 Dwt) and Ultramaxes (60,000 – 67,999 Dwt). Similarly, salt exported to the US from Chile, Mexico and Egypt is shipped on Supramaxes. Meanwhile, salt shipped from Canada to the US is mostly carried by Handymaxes (25,000-49,999 Dwt). On the contrary, shippers find Baby capes (100,000-124,999 dwt) more attractive to ship salt from Mexico and Australia to Japan. Putting this in a global context, currently salt shipments do not have a significant impact on the Baltic route Indexes as salt accounts for less than 1% of total seaborne dry bulk commodity shipments. However, considering expectations of soaring demand from the automotive and chemical industries, salt’s influence will grow and therefore provide more employment opportunities to ships in the aforementioned lifting zones.