Status of China's Calcium Carbide Industry    

After 60 years of development, China's calcium carbide industry has grown into an important basic chemical raw materials industry. In recent years, driven by constant increase of downstream demands, the domestic production capacity of calcium carbide has expanded quickly. However, some industry problems, such as low industrial concentration, scattered enterprise layout and low technical and equipment level, also were exposed.

1. Current status and development trend of upstream and downstream industries   

    (A) Supply of raw materials is guaranteed    

Coal and lime are two prime raw materials for calcium carbide production. In 2007, verified coal reserves in China were about 720 billion tons, a net increase of about 45 billion tons over 2006. That same year, China's coal output stood at 2.523 billion tons, up 8.2% on the previous year's same period. If calculated in this way, China's coal resources will be sufficient for at least 200 years. Therefore, the development of coal chemical industry, represented by calcium carbide industry, will enjoy fully guaranteed supply of raw materials. China also has abundant lime resources which further ensure the sustainable development of the calcium carbide industry.

    (B) Downstream demands will continue to grow    

In China, calcium carbide is mainly used to produce PVC (polyvinyl chloride), and the consumption of calcium carbide in this sector accounts for over 75% of the total apparent consumption. Coming second is metal-cutting gases (such as acetylene) which accounts for about 10% of the total calcium carbide consumption. The rest are used for producing chloroprene rubber, polyvinyl alcohol (PVA), calcium cyanamide (CaCN2) and its derivatives, and so on. Therefore, the marketing trend of domestic calcium carbide hinges critically on the development of the PVC industry.
    It's estimated that China's PVC production capacity will reach 22 million t/a in 2011, of which, PVC capacity using calcium carbide process in production will increase from 12 million t/a in 2008 to 18 million t/a. Calculated at 80% to 90% operating rate, the production of calcium carbide process PVC will reach about 14.4 million to 16.2 million tons, consuming about 21.6 million to 24.3 million tons of calcium carbide if calculated on the basis of every one ton of PVC production will consume 1.5 tons of calcium carbide.

2. Opportunities and challenges for calcium carbide industry    

In the next few years, the domestic calcium carbide industry still have development space, and rational expansion of its production capacity will help meet the growing demands in downstream industries. However, China's calcium carbide industry also faces with many challenges.

    (A) Coal-to-olefin process poses potential threat   

Given the current low oil prices, to manufacture PVC with ethylene produced by coal-to-olefin process has clear cost advantage over the traditional methods that using ethylene in petroleum cracking process or using calcium carbide process. In addition, compared with PVC production adopting calcium carbide process, coal-to-olefin process also features low energy consumption, less pollution and other advantages.
    Although the coal-to-olefin process is still in its infancy stage and will not pose a threat to the traditional chemical industries (eg, the calcium carbide industry) in the short term, it can foresee that, once its trial equipments are developed successfully, and along with continually expanding industrial scale and ever-increasingly mature technology, this process will reveal its advantages gradually and bring enormous impact on calcium carbide industries.

    (B) Product competitiveness is checked by oil and coal prices   

Calcium carbide process and ethylene process are competitors each other in PVC production, and their competitiveness depends on the comparison between the production costs of calcium carbide and the international oil prices. In July 2009, the international oil price dropped from the highest US$140/barrel to US$60/barrel, so the production costs of ethylene process decreased substantially. However, the domestic coal price at that time still remained at a high level, (eg, semi-coke, raw materials for calcium carbide, was priced at RMB900/t), thus eroding the competitiveness of calcium carbide process PVC production and resulting in sales difficulties.

    (C) Industry admittance standards are raised    

Pushed by high growth in PVC demands in the domestic market, China's calcium carbide industry expanded quickly in recent years. However, low-level redundant constructions and blind development also lead to irrational layout and serious overcapacity.
    China's adjustment and stimulus program for the petrochemical industry, which was promulgated in February 2009, rules that no coal chemical projects (like coke, calcium carbide) simply for expanding capacity will be approved in the next three years. China's calcium carbide industry is overwhelmed with problems like high energy consumption, high pollution and outdated technology now. So the program also points out that China will speed up the elimination of outdated calcium carbide capacity so as to prevent and control pollution. In the future, a considerable number of PVC enterprises using calcium carbide process will have to face raw material shortage.

3. Industry problems    

    (A) Low industrial concentration    

Domestic calcium carbide manufacturers differ greatly in production scale. For example, the production capacity of the largest enterprise can reach 300 000 t/a while that of some small enterprises is only a few tens of thousands of tons per year. In 2008, there were altogether over 400 calcium carbide manufacturers in China with an average capacity of less than 50 000 t/a and an average output of less than 40 000 tons. Among them, only 67 (15% of all the enterprises) enterprises realized an individual output of over 50 000 tons and their overall output were 6.51 million tons (48% of the total output in 2008). Over 350 enterprises (85% of all the enterprises) realized an individual output of less than 50 000 tons and their overall output were 7.1 million tons (52% of the total output).
    Scattered enterprise layout is another problem restricting the sustainable development of China's calcium carbide industry. At present, apart from Jilin, Guangdong, Hainan provinces, Tibet autonomous region, Beijing, Tianjin and Shanghai, calcium carbide production plants have been built in every other province and Chongqing municipality in China.  

    (B) Equipment level needs to be improved   

Compared with advanced foreign equipments, China's calcium carbide production equipments still have much room to improve. Firstly, in China, the production capacity of advanced calcium carbide close furnace only takes up a small proportion of the total capacity. In 2008, the capacity of calcium carbide produced in close furnace was about 4 million t/a, accounting for merely 20% of the total. Secondly, the outdated internal combustion furnace mainly used in China can not recover and reutilize byproduct carbon monoxide. Instead, it can only transform carbon monoxide into carbon dioxide through combustion and then release it into the air, thus not only increasing greenhouse gas emissions, but also wasting resources and energy.