Second, in February 2022, the National Development and Reform Commission issued the “Implementation Guidelines for Energy Conservation and Carbon Reduction Transformation and Upgrading in Key Fields of High Energy-consuming Industries (2022 Edition)”, which put forward clear goals for the energy saving and carbon reduction transformation and upgrading of the calcium carbide industry. The document pointed out: “The benchmark level of calcium carbide energy efficiency is 805 kg of standard coal/ton, and the benchmark level is 940
kg standard coal/ton. By the end of 2020, about 3% of the production capacity in China’s calcium carbide industry with energy efficiency better than the benchmark level, and about 25% of the production capacity with energy efficiency lower than the benchmark level. until 2025
In 2018, the proportion of production capacity above the energy efficiency benchmark level in the calcium carbide field reached
30%, the production capacity below the energy efficiency benchmark level is basically cleared, the industry energy saving and carbon reduction effect is remarkable, and the green and low-carbon development capacity is greatly enhanced.” It can be seen from this document that there are still many backward production capacity in China’s calcium carbide industry, and there is room for elimination and upgrading in the future. Still relatively large. On the whole, the step of eliminating backward production capacity in the calcium carbide industry has not ended.

Third, the newly added production capacity is basically self-supporting. As far as I know, there are a total of 27 calcium carbide devices that are ready for production, with a production capacity of 2.34 million tons.

Fourth, the elimination is still in progress. In recent years, while the outdated production capacity has been eliminated, the calcium carbide industry still has a small amount of new production capacity put into production or the resumption of production of long-stop plants. However, with the continuous increase of policies, especially after the central government officially proposed carbon neutrality in 2020, it has become increasingly difficult to put new calcium carbide production capacity into production. Judging from our current statistics, the calcium carbide production capacity that is expected to be put into production in the future is mainly due to the corresponding downstream supporting production capacity. Especially BDO, taking advantage of the east wind of degradable plastics, the expansion plan is very huge. At present, some projects are planned to launch some calcium carbide production capacity. Without the corresponding production capacity of calcium carbide, it is almost impossible to put into production. This means that although the total production capacity of the calcium carbide industry may increase in the future, it will be difficult for the commodity calcium carbide available for export to have new production capacity. On the contrary, the output of commodity calcium carbide will decrease accordingly.

Fifth, the downstream production will drive the consumption of calcium carbide, which will be tightened in the future. If the downstream PVC production is halved, BDO will only consider projects outside Xinjiang that have expanded production capacity on existing BDO and projects announced by listed companies (the calcium carbide market in Xinjiang is basically self-sufficient due to transportation problems). At the same time, all projects are only considered for the first phase of production, and the second phase is not considered. Under this circumstance, we estimate that the supply gap of commodity calcium carbide will reach 3 million tons by 2024. Therefore, the prosperity of the calcium carbide industry may continue to remain at a high level in the next two years, which means that for PVC, its cost support will be more stable.