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Soap is manufactured at the alchemist's laboratory from animal tallow and lye. Soap is stored in bar/block stockpiles and shows up in the z-stocks menu under bars. It has no use except as a trade item.
Usually soap tends to have a low value, also because it does not have quality levels. However it can become quite valuable if it is made from the "right" creature; its value is 25 multiplied by the material multiplier (aka [MODVALUE]) of the creature whose fat it is made from. This means that soaping is a good way to get wealth out of megabeast fat. For example, a soap bar made from dragon or hydra tallow is worth 1250☼, summing up to 12,500☼ for one such creature (since one yields 10 fat). The lengthy production chain, high labor demand, consumption of wood (for the ash for the lye) and potential scarcity of tallow however makes most players largely ignore soap and go for easier trade goods like stone crafts.