Calcium Carbide Sector Faces Severe Challenges

By Wang Yu, China National Petroleum & Chemical Planning Institute

Calcium carbide (CaC2) is a basic chemical raw material used mainly to produce poly(vinyl chloride) (PVC), 1,4-butanediol, vinyl acetate, calcium cyanamide, dissolved acetylene and chloroprene rubber. It can also be used in desulfurizing steel. China is the biggest producer and consumer of calcium carbide, hosting more than 90% of the world’s capacity.

Sustained phase-out of outdated capacity

Pulled along by booming demand in downstream sectors such as PVC, vinyl acetate and 1.4-butanediol, China’s CaC2 sector has expanded rapidly in the new century. The number of producers increased from 220 in 2000 to 320 in 2013. At the same time, capacity and output increased from 4.80 million t/a and 3.40 million tons to 38.00 million t/a and 23.00 million tons, with an average annual growth of 17% and 16%. With the implementation of the Conditions for the Admission to the Calcium Carbide Sector (revised 2007), closed furnaces, an advanced technology that conserves energy and protects the environment, were put into use quickly, amounting to 25.00 million t/a capacity in 2013, up from less than 10% of the total capacity in 2005 to nearly 70% in 2013. The relatively outdated internal combustion CaC2 furnaces were retired steadily during the same period, reaching 30% of total capacity. Figure 1 shows the production and the consumption of CaC2 in China during 2000-2013.
About 80% of the CaC2 used in China goes into producing PVC, and the balance is used to make dissolved acetylene, vinyl acetate, 1.4-butanediol and calcium cyanamide. The 1,4-butanediol sector has also developed rapidly in recent years, becoming a new driver for the growth of CaC2 consumption. The proportion of CaC2 used in PVC is declining.
Calcium carbide production tends to be concentrated in the central and western regions in recent years. In 2013, Inner Mongolia, Xinjiang, Ningxia, Shaanxi, Gansu and Henan each produced more than 1.00 million tons of CaC2, and Hubei, Sichuan and Yunnan all made more than 500kt. The total output of CaC2 in these nine provinces was 21.10 million tons, accounting for 92% of the national total. Table 2 shows the production of CaC2 in major provinces of China during 2010-2013.
During the Eleventh Five-Year Plan period (2006-2010), 257 outdated CaC2 furnaces, with a total capacity of 3.463 million t/a, were phased out. The goal of phasing out 2.00 million t/a outdated capacity was exceeded. During 2011-2013, additional outdated capacity of 3.974 million t/a was phased out, completing the phasing-out task (3.80 million t/a) of the Twelfth Five-Year Plan period (2011-2015) in advance. This year, the Ministry of Industry and Information Technology has once again imposed a task of phasing out outdated capacity, this time 1.70 million t/a. Table 3 shows the phase-out of outdated CaC2 capacity during 2007-2013.

To save energy and resources

With the short supplies and rising costs of resources and energy, pressure grew in recent years to conserve energy and reduce emissions in the CaC2 sector. Producers have therefore taken immediate action, embraced advanced equipment and processes (e.g. large closed CaC2 furnaces), and strengthened the monitoring of energy utilization and the management of energy conservation, constantly reducing both the power consumption in furnaces and the comprehensive energy consumption per unit of product. Per unit consumption was reduced from 1 196kg standard coal per ton of product in 2006 to 1 024kg in 2012.

Active expansion of applications

The Program for the Development of the Calcium Carbide Sector during the Twelfth Five-Year Plan Period, prepared by China Calcium Carbide Industry Association, specifies that while ensuring the demand from PVC producers using the CaC2 process, efforts should be made to expand markets of 1,4-butanediol, vinyl acetate, chloroprene rubber, calcium cyanamide and their derivatives, develop new downstream products, highlight pesticides and medicines, promote the shift of the production planning downstream toward products with high added value, decreasing the percent of CaC2 consumed in making PVC to less than 60%. A trend of diversification in the consumption of CaC2 has already started, but the heavy dependence on PVC makers cannot change much in the near future. The PVC capacity that uses the CaC2 process reached 20.33 million t/a in 3013, and its output was 12.50 million tons, consuming 18.00 million tons (81.1%) of the nation’s calcium carbide supply. The total consumption of CaC2 in making 1,4-butanediol, vinyl acetate, calcium cyanamide, dissolved acetylene and chloroprene rubber was 4.20 million tons.
China’s demand for CaC2 is expected to reach 33 million tons in 2015, of which the respective requirements of the producers of PVC, 1,4-butanediol, vinyl acetate and calcium cyanamide, will be 20, 2.5, 5.4 and 1.6 million tons, while a combined 3.5 million tons will be used for dissolved acetylene production and steel desulfurization. The proportion of CaC2 consumption related to PVC will be further reduced to around 60% by that time.

Outstanding problems in development

(1) Capacity growth is unduly rapid and overcapacity is already serious: In the opinion of many economists, the economic growth in China has relied too heavily on investment as the primary driver for many years. Nearly 7.00 million t/a new CaC2 capacity was added in 2013, and the capacity of projects now under construction is around 15 million t/a. Yet another 15 million t/a is already approved for projects that have not yet broken ground. So it is expected that China’s CaC2 capacity will reach 54.00 million t/a in 2015. Even if all internal combustion furnaces are phased out by that time, the capacity will still reach 40.00 million t/a. In any case, the operating rate is unlikely to exceed 60% at that time. By 2020, the capacity will reach more than 55.00 million t/a, even if no new projects are approved, and the operating rate will likely be only 70%.
(2) Conflicts between industrial development and protection of both nonrenewable resources and environmental quality are still prominent: Calcium carbide is resource-/energy-intensive: energy accounts for 70% of the total cost. The sustained rise of China’s power and coal prices in recent years has drastically increased the production cost of CaC2, leading to a reduction in the overall competitiveness of the sector. Since the start of the financial crisis, in particular, most CaC2 producers without matched coal mines and power plants have been in a difficult position. Moreover, there is a loud cry for levying taxes on carbon dioxide emissions. If the carbon emission tax is imposed, CaC2 producers, as major carbon emitting enterprises, will surely bear heavier burdens.

Table 1   Output and consumption of calcium carbide in China, 2000-2013 (kt)

?Year    2000    2010    2011    2012    2013
Output    3 400     16 500     18 500     20 000     23 000
Capacity    4 800     22 500     24 000     32 300     38 000
Operation rate    70.8%    65.0%    72.4%    61.9%    60.5%
Export volume    100    140    185    158    143
Apparent consumption     3 300    16 360    18 310    19 840    22 860

Table 2   Output of calcium carbide in key provinces of China, 2000-2013 (kt)

Province    Inner Mongolia    Shanxi    Shaanxi    Ningxia    Gansu    Xinjiang    Guizhou    Sichuan
Output in 2010    4 118    322    1 049    2 374    975    1 734    395    760
Proportion (%)    28.17    2.20    7.18    16.24    6.67    11.86    2.70    5.20
Output in 2011    4 768    353    1 156    2 731    1 021    2 784    469    723
Proportion (%)    27.4    2.0    6.7    15.7    5.9    16    2.7    4.2
Output in 2012    4 951    426    1 467    3 095    1 268    3 121    373    707
Proportion (%)    24.8    2.1    7.3    15.5    6.3    15.6    1.9    3.5
Output in 2013    7 201    256    1 673    3 196    1 267    4 354    230    796
Proportion (%)    31.3    1.1    7.3    13.9    5.5    18.9    1.0    3.5


Table 3   Phase-out of outdated capacity in China’s calcium carbide sector, 2007-2013 (kt/a)

Year    Capacity phased out    Furnaces phased out (piece)    Enterprises involved (number)
2007 (first batch)    574.2    91    83
2007 (second batch)    221.4    22    20
2008    1 047.6    66    48
2009    466.8    31    28
2010    1 153    47    39
Total during 2006-2010    3 463    257    -
2011    1 519    78    48
2012    1 320    55    30
2013    1 135    41    30
Grand total    3 974    174    -

(3) Most CaC2 producers have no matched production downstream: Only 100 CaC2 producers have matched downstream products. Forty three of them have PVC units, with a combined capacity around 14.00 million t/a. Twelve of them have vinyl acetate units, 13 have 1,4-butanediol units and over 30 have calcium cyanamide units. Besides meeting their own demand, these enterprises also sell some CaC2 in the open market. The remaining about 200 CaC2 producers have no matched downstream production facilities.
Due to these problems, the economic viability of the CaC2 sector in 2014 involves unprecedented risk and challenges. The overall operating rate is less than 50%, and 90% of the producers are losing money. Producing 1 ton of CaC2 today likely causes a loss of RMB150, and the prices of CaC2 have nearly hit bottom. The ex-factory prices of CaC2 have been reduced by around RMB150/t since January. The ex-factory price of CaC2 in North China has come down from RMB3 250/t at this time last year to RMB2 600-2 680/t today, a reduction of nearly RMB600/t. The production cost in most enterprises is however as high as RMB2 750/t.

Countermeasures and suggestions

To achieve sound and sustainable development, the CaC2 sector must somehow mitigate the capacity surplus while conserving energy and other resources. Specific measures should be as follows:
(1) Actively regulate the total capacity: By the end of 2015 the capacity for CaC2 should be limited to 42.00 million t/a, the combined capacity of closed furnaces should exceed 80% of the total, and the overall operating rate of the sector should be no lower than 60%. By the end of 2020, capacity should be limited to 50.00 million t/a, only closed furnaces should be in use, and output should be basically balanced with demand.
(2) Further phase out outdated capacity: Before the end of 2015, internal combustion furnaces ≤12,500KVA should be phased out, and in some regions all internal combustion furnaces should be phased out.
(3) Guide enterprises in M&A, reducing the number of enterprises and increasing the industrial concentration.
(4) Actively expand markets for CaC2 downstream products: 1,4-butanediol, ethylene glycol, ethanol, chloroprene rubber, polyvinyl alcohol and calcium cyanamide and their derivatives. Develop new downstream products and increase the percent of CaC2 output that is going into non-PVC products to more than 40%.
(5) Raise the utilization level of resources and energies through renovation and upgrading: Efforts should be made to basically achieve comprehensive utilization of CaC2 furnace gas in 2015 and reduce the comprehensive energy consumption to 1 000kg standard coal per ton of product.
(6) Actively promote the commercialization of the oxygen heating process for CaC2 production: In the oxygen heating process, rich oxygen or pure oxygen is used to heat and melt carbon. The heat energy and the chemical energy of coal gasification are used. Much power is saved, and industrial residue is reduced. The process not only produces CaC2 but also generates a great deal of carbon monoxide. It is hoped to become a new technology for the comprehensive utilization of coal.
(7) Enhance the dissemination of advanced energy-saving processes and equipment: Focus on energy-saving technologies making chemicals from furnace gas and recovering heat during CaC2 production, as well as advanced equipment such as hollow carbon electrodes, carbon ovens and limestone furnaces.