Calcium Carbide Shortage will Be Normal as PVC Capacity Expands

Since this year, calcium carbide supply has been gradually tightening, and the prices went higher step by step. This phenomenon was different from the short-term shortage of calcium carbide in previous years, which was mostly caused by environmental protection or sudden factors such as transportation. The shortage of calcium carbide has lasted for a long time in 2018, which was affected by the development of the industry. The most immediate result of the shortage of supplies was the rise in prices. From the chart below we can see that the prices of calcium carbide kept fluctuating at a high level since the prices reached the peak in October 2017. According to data from SCI, the delivered prices of calcium carbide in Shandong averaged at RMB 3,297/mt in the first 8 months of 2018, rising by RMB 345/mt Y-O-Y. In recently, the calcium carbide prices rose again to a nearly six-year high.

The shortage of calcium carbide supplies was mainly because the growth rate of calcium carbide capacity was lower than that of PVC in recent years. As seen from the table below, from 2016 to 2018, the new capacity of calcium carbide-based PVC was 2,860kt/a. If producing 1 ton of PVC needs 1.4 tons of calcium carbide, the new PVC capacity needs 4,004kt more calcium carbide. However, the new calcium carbide capacity is only 2,965kt/a, thus the shortage of calcium carbide is 1,041.5kt/a.

Additionally, the production at calcium carbide producers was also influenced by the strict supervision of environmental protection. The production at limestone mines was unstable due to the inspections. The calcium carbide producers that fail to meet the environmental protection and safety standards were often forced to shut down or withdraw from the industry. Besides, the state further strengthened management of transportation of hazardous chemicals, and abolished preferential electricity prices for high energy consumption industries, which increased the production cost of calcium carbide producers to some extent, and also affected calcium carbide supply increment.

From the new projects of calcium carbide and PVC in 2018-2019, the growth rate of calcium carbide capacity is still significantly lower than that of PVC.

……

More detailed information, please click "Read more".