Keywords: PVC, ethylene, calcium carbide, chemical products, price difference
Introduction
According to the source of raw materials, Chinese PVC powder can be divided into two types: calcium carbide method and ethylene method. Due to the current energy situation of China's poor oil and rich coal, calcium carbide method is currently the main method of PVC powder in China. However, in recent years, the production speed of ethylene method PVC powder devices has accelerated, and the proportion of ethylene method PVC powder has gradually increased. The operation of the ethylene method market has an increasing impact on calcium carbide method PVC powder.
Current status of PVC powder process: calcium carbide method as the main method, supplemented by ethylene method
The production of PVC powder is mainly divided into two paths: one is from coal → charcoal → calcium carbide → vinyl chloride to PVC powder, which is called the calcium carbide process; the other is from crude oil → ethylene → dichloroethane → vinyl chloride to PVC powder, which is called the ethylene process. The ethylene process has a relatively wide range of processes, directly extracting ethylene, VCM, or coal to olefins, collectively known as the ethylene process. At present, due to the current energy situation of poor oil and rich coal in China, PVC powder in China has always been mainly produced by the carbide method, supplemented by the ethylene method. In addition, the EDC method is a new process that has emerged in recent years. In 2023, the 100000 ton EDC method plant in Texas was officially put into operation.
Changes in PVC powder process: gradually increasing proportion of ethylene method
In recent years, with the strict approval of new projects using calcium carbide method for PVC powder, the production capacity of calcium carbide method for PVC powder is relatively low, and the number of ethylene method expansion enterprises is increasing. The proportion of ethylene method PVC powder is showing an increasing trend year by year. According to statistics, as of May 2023, the total production capacity of PVC powder in China was 27.72 million tons, of which the EDC method had a production capacity of 100000 tons, the calcium carbide method had a production capacity of 21.05 million tons, accounting for 75.94%, a decrease of 6.85 percentage points compared to 2018, and the ethylene method had a production capacity of 6.57 million tons, accounting for 23.7%, an increase of 6.49 percentage points compared to 2018.
Analysis of the Reason for the Change in the Proportion of PVC Powder Process
In recent years, there have been many PVC powder ethylene process units put into operation, while there have been relatively few calcium carbide PVC powder units. In the future, there will still be more expansion of ethylene process units, mainly due to the following reasons:
Firstly, the ethylene production process is relatively more environmentally friendly and has relatively less policy restrictions.
In the Guiding Catalogue for Industrial Structure Adjustment (2011 edition), Order No. 9 of 2011 stipulates that carbide based PVC powder with high mercury catalysts will be gradually phased out, and carbide based PVC powder enterprises with low mercury catalysts will also be subject to investment restrictions. For ethylene based PVC powder, the production capacity is only required to be greater than or equal to 300000 tons. In addition, with the official entry into force of the Minamata Convention on Mercury in China on August 16, 2017, the calcium carbide process that had not been approved before August 16, 2017 cannot be approved thereafter.
Overall, although PVC powder was listed as an industry with strict control over new production capacity in the "Guiding Opinions on Adjusting the Structure of the Petrochemical Industry to Promote Transformation and Increase Efficiency" issued by the General Office of the State Council in August 2016, if there are new approved PVC powder production projects in the later stage, they can only be ethylene process or mercury free production process. Relatively speaking, the limitations of ethylene process are relatively small.
Second, with the development of large domestic ethylene projects and the rise of shale gas in the United States, ethylene supply channels are extensive, and cost advantages will gradually increase.
Starting from 2018, domestic large-scale ethylene projects have been launched again. 2019 to 2025 will be a few years when China's large-scale ethylene projects will be concentrated and put into operation, which will be accompanied by the demand for ethylene. The market competition for conventional downstream supporting products such as polyvinyl chloride, styrene, and ethylene glycol is fierce, and ethylene based PVC will become one of the choices for ethylene supporting products due to its technological advantages; On the other hand, with the implementation and operation of ethylene projects, the domestic ethylene commodity volume has increased, while the rise of shale gas in the United States, the cost advantage of ethylene in North America is obvious, and the imported ethylene will also impact the domestic market, so the ethylene market competition is intensified. With the increase of ethylene commodity volume and the relatively low price, it also stimulates the production of new projects of outsourcing ethylene based PVC powder.
Market changes brought about by changes in PVC powder process: the price difference of B electricity and the pressure on the operation of the inverted calcium carbide method
Due to the advantages of raw materials and processes, the price of ethylene method is generally higher than that of calcium carbide method. From historical data, the price of ethylene method is generally 200 to 400 yuan/ton higher than that of calcium carbide method. However, as the proportion of PVC powder produced by ethylene method gradually increases, the market operation of ethylene method and calcium carbide method also changes, and the price difference of B electricity gradually narrows. This change is particularly evident this year. As of May, the average price difference of B electricity has narrowed to around 120 yuan/ton, and in some regions (such as Guangzhou), the price difference of B electricity has even inverted.
This is mainly because there are many ethylene based PVC powder plants put into operation in 2023. In 2022, most new PVC powder plants were officially put into operation and postponed until 2023. In 2023, new plants with a production capacity of 1.3 million tons were officially put into operation, with an ethylene based production capacity of 800000 tons. The market's supply of ethylene based plants has increased, and this portion of ethylene based plants are all located in South China.
From March to April 2023, a total of 800000 tons of ethylene based PVC powder plants from Guangxi Huayi and Fujian Wanhua were successively put into the market. The Guangzhou market has a relatively abundant supply of ethylene based PVC powder, coupled with poor overall demand. In order to open up surrounding markets and achieve sales growth, new products are priced relatively low. The concession sales of ethylene method PVC enterprises have significantly reduced the price difference between ethylene method and calcium carbide method in Guangzhou. During some time periods, there has been a situation where the prices of ethylene method and calcium carbide method are inverted. When the inversion is maximum, the actual price of ethylene method PVC powder is 45 yuan/ton lower than that of calcium carbide method. The price advantage of calcium carbide PVC powder is gradually disappearing, making the sales pressure of some calcium carbide PVC powder sources increasingly apparent.
Future: There are still many ethylene expansion projects, and market competition intensifies
At present, it is understood that there are still 2 million tons of ethylene based PVC powder production capacity planned to be put into operation in the future, while there are relatively few plans for new production of calcium carbide based PVC powder. It is expected that the proportion of ethylene based PVC powder process in China will further increase in the future. In the current situation where the supply of PVC powder is gradually easing, if there is no significant improvement in downstream demand for domestic PVC powder in the future, the competition in the PVC powder market will gradually intensify. The price difference between ethylene method and calcium carbide method may remain relatively small for a long time, and calcium carbide PVC powder enterprises may face more sales and cost pressures in the future.
Against the backdrop of a gradual oversupply in the market, the supply side of the PVC powder market may experience spontaneous adjustments, and the export market may become a way for production enterprises to digest their supply. In addition, it is expected that PVC products will also shift towards diversification and high added value.
