Calcium Carbide Industry Expects Miracles

By Sun Weishan, Jiang Shunping, China Carbide Industry Association

The year 2014 was extremely tough for China’s calcium carbide industry, which saw 10.4% and 13% YOY growth in capacity and output, respectively, reaching 41.83 million tons and 26 million tons. However, calcium carbide prices hit a five-year low after a continual fall in 2014, and can hardly turn around this year.

Progress in 2014

Propelled by downstream sectors like polyvinyl chloride and 1.4-butanediol, a number of calcium carbide projects were kicked off, increasing the domestic capacity to 41.83 million t/a (nearly doubling 2010’s level) at the end of 2014. Of that, 31.06 million tons or 74.2% were contributed by closed calcium carbide furnaces, while the proportion of internal-combustion calcium carbide furnace capacity fell 7% from a year earlier.
1. Output and consumption grew stably
During the 2011-2015 five-year plan period, domestic output and consumption of calcium carbide rose continually, both growing more than 13% annually from 2011 to 2014.
2. Capacity and output hit new record highs
The domestic capacity to make calcium carbide increased 10.4% YOY or 3.93 million tons in 2014, when the output hit a new record high of 26 million tons, growing 13% YOY. At the same time, the calcium carbide industry was characterized by relatively high operating rates of large calcium carbide furnaces, tumbling proportions of small and medium-sized furnaces and generally higher monthly output compared to 2013.
3. Calcium carbide capacity is increasingly concentrated in central and western China
The abundant coal resources of central and western China have attracted more and more calcium carbide enterprises in recent years. In 2014, Inner Mongolia, Xinjiang, Ningxia, Shaanxi and Gansu contributed 81% to the nation’s total calcium carbide output.
Because of strict policies concerning energy conservation and environmental protection, small calcium carbide enterprises that failed to meet requirements were shut down or switched to other products. Domestic calcium carbide firms with a furnace capacity of more than 100 000 kVA/a reached 66 in 2014, boasting a total furnace capacity of 16.70 million kVA/a, accounting for over 70% of the nation’s total.
4. Exports expanded
China exported 168 900 tons (up 18.2% YOY) of calcium carbide in 2014. Most of the exports were sent to Southeast Asia, where calcium carbide products are mainly used in desulfurization in iron and steel making, cutting, welding, and in downstream products like lime nitrogen.
5. Main problems
1) Decreasing prices
Declining prices troubled the calcium carbide industry in the past year. In Wuhai for example, prices fell from a peak of RMB2 770/t to a bottom of RMB2 430/t in December 2014.
2) Quite a lot of new capacity
The domestic capacity of calcium carbide rose by more than 5 million tons in 2014, and an additional 2-3 million t/a of capacity is expected to be put into operation in 2015.
3) Excessive reliance on PVC
Domestic PVC output grew 6.5% YOY to 16.30 million tons in 2014. Although a smaller part of the calcium carbide output has been used in PVC in recent years, the decrease was slight, reaching 78% in 2014 from 80% in 2012.

Table 1    Top ten calcium carbide companies in China, 2014

Company    Capacity (kt/a)    Proportion (%)
Xinjiang Tianye Group    2 890    6.9
Hubei Yihua Group    1 820    4.3
Xinjiang Zhongtai (Group) Co., Ltd.    1 780    4.2
Ordos Chemical Group    1 300    3.1
Ningxia Guodian Younglight Energy Chemical Group Co., Ltd.    1 270    3.0
Inner Mongolia Junzheng Energy & Chemical Industry Co., Ltd.    1 070    2.5
Mahatma Xinjiang Energy Co., Ltd.    950    2.3
Chiping Xinfa Huaxing Industrial Co., Ltd.    840    2.0
Inner Mongolia Elion Energy Co., Ltd., Dalate Branch    740    1.8
Wuhai Zhonglian Chemical Co., Ltd.    730    1.7
Total    13 390    31.8


4) Other downstream products
Vinyl acetate producers risk breaking the balance between supply and demand. The domestic capacity to make vinyl acetate by the calcium carbide process was 1.79 million tons in 2014, accounting for 62% of the nation’s total. However, 760 000 t/a new projects are under construction in northwest China. Upon their completion, the domestic vinyl acetate industry will be heavily impacted, as its current operating rate is just 53%, and then oversupply will be another trouble for vinyl acetate enterprises.
In 2014, China’s BDO capacity reached 2.19 million tons, and around 42% was contributed by calcium carbide acetylene-formaldehyde process, which accounts for 78% of the new capacity (1.4 million tons) of ongoing projects. BDO enterprises are mainly located in northwest, northern, eastern and central China, which host 75% of the nation’s total BDO capacity. BDO prices stayed at RMB12 000-13 000/t. With new projects put into production, the proportion of BDO produced by calcium carbide acetylene-formaldehyde process has grown gradually, propelling the demand for calcium carbide. However, as the proportion remained relatively low, the calcium carbide industry can hardly escape a downturn in the short term.
Sixty percent of lime nitrogen enterprises risked suffering losses in 2014, when product prices fluctuated from RMB2 200/t to RMB2 450/t.
China’s neoprene capacity was 58 000 t/a in 2014, and it is estimated to increase by 12 000 tons this year. But neoprene enterprises consumed a very small part of the calcium carbide supply, only 100 000 tons in 2014.