Calcium carbide: Five challenges test the future of the industry
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Access policy guides industry development The National Development and Reform Commission released in October last year the “conditions for access to the calcium carbide industry (revised in 2007)†to require domestic calcium carbide enterprises to develop in a large-scale and group-oriented manner and to completely eliminate the blind investment and construction of low-level calcium carbide projects. The revised access conditions clearly stipulate that the total capacity of the new calcium carbide plant should not be less than 200,000 tons/year, the single furnace capacity should not be less than 50,000 tons/year, and the requirements for the production process should also be more stringent.
At the same time that the "Entry Requirements" was announced, the National Development and Reform Commission also announced the list of the first companies in the calcium carbide industry to eliminate backward production capacity. This move means that China is building a production capacity withdrawal mechanism that is in line with the actual conditions of the industry in eliminating backward production capacity, which is of great significance for the healthy and orderly development of the calcium carbide industry in China.
Differential pricing adjustment of industrial structure China's differential tariff policy has played a positive role in curbing the blind development of high-energy-consuming and high-pollution industries, promoting industrial restructuring, optimizing technological upgrading, and saving energy and reducing emissions. However, in the past three years, the progress of implementation of differential tariffs has been unbalanced. There are also problems such as delays in implementation, lack of in-depth knowledge of high-energy-consuming enterprises, and not all cancellations of electricity price concessions for some high-energy-consuming enterprises.
Since October 20 last year, the preferential electricity prices for the calcium carbide industry have been abolished nationwide, with far-reaching implications for the future development of China's calcium carbide industry. The cost of electricity accounts for nearly 70% of calcium carbide production costs. A small group of small calcium carbide companies with small scale, poor technology, and high pollutant emissions will find it difficult to establish a foothold in the fierce market competition due to rising electricity prices. In the future, China's calcium carbide industry will gradually get rid of the difficulties of low-level, small-scale repeated development and embark on a high-level, large-scale scientific development.
Grading Charges Regulates Calcium Carbide Logistics Calcium carbide products are dangerous chemicals in China. In the course of their production, storage, and transportation, if they are not standardized, they can easily cause serious accidents. In October 2005, the Ministry of Communications issued the "Circular on Printing and Distributing Toll Routes on Guidelines for Toll-by-weight Measures" to regulate and guide the work on the toll-by-weight basis.
With weight-based tolling work being carried out nationwide, how to promote logistics in the new situation has become an issue that cannot be avoided by calcium carbide companies. Today, the main calcium-producing areas in Inner Mongolia, Shanxi, Shaanxi, and Ningxia, etc., have all begun to implement a toll-by-weight standard on highways in China. Under the new transportation conditions, calcium carbide manufacturers need to adjust the product transportation strategy in a timely manner.
Fuel Shortage Compresses Corporate Profits In the fourth quarter of last year, Ningxia, Shanxi, Shaanxi, Inner Mongolia, and other regions all experienced varying degrees of fuel shortages, which led to a significant increase in the cost of calcium carbide products; at the same time, the price of calcium carbide as a raw material for calcium carbide was also due to transportation. The problem was raised dramatically. For a time, the profits of calcium carbide manufacturers have rapidly shrunk under the dual pressure of production costs and transportation costs.
In mid-December of last year, with the joint efforts of the state and two major state-owned oil companies, the domestic refined oil market returned to normal. However, at this time, calcium carbide products have gradually entered the off-season period of consumption, and manufacturers have to lower the transaction price of products under the mild conditions of downstream demand. The profits of enterprises are further compressed.
Excessive production capacity affects the industry trend. Calcium carbide belongs to basic industrial products and its added value is relatively low. Since 2003, the development of China's PVC industry began to increase. The calcium carbide industry experienced a period of expansion from 2003 to 2004 and a period of shock from 2005 to 2006. The overcapacity situation has been curbed to some extent. However, relying too heavily on the PVC market has made the development of the calcium carbide industry a lot of restrictions, and the issue of overcapacity is still severe.
At the same time, more and more calcium carbide PVC companies began to plan to build their own calcium carbide production equipment. Although the development of domestic calcium carbide process PVC will be accelerated in the future, the market reserved for calcium carbide companies will be relatively reduced, which is undoubtedly a challenge to the development of the industry.
Looking ahead, the market conditions faced by the calcium carbide industry will become more severe, but high-level, large-scale is undoubtedly the future direction of development. At present, although China's calcium carbide industry has achieved certain achievements, the exploration of the development path of the calcium carbide industry with Chinese characteristics still needs to continue.
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