Ethylene PVC production companies usher in a turning point

In comparison to the same period last year, this year’s overall performance of the plant has seen a significant improvement, primarily driven by the profitability of the PVC plant, according to Liu Aidong, director of the publicity department at Qilu Petrochemical Plastic Factory. This positive trend is not limited to just one company—Shanghai Chlor-Alkali Chemical Co., Ltd. also experienced a remarkable turnaround. In the first half of the year, the company reported a net profit of 20.258 million yuan, representing a 176.23% increase year-on-year. Among its key products, PVC contributed significantly, with sales revenue reaching 960.5875 million yuan and a profit of 11.1426 million yuan, accounting for 55.49% of the company's total net profit. Just a year ago, the PVC plant was still a major loss-maker. These two companies are leading players in China’s ethylene-based PVC industry. Other notable manufacturers, such as Tianjin Union Chemicals, Tianjin Daxie Chemical Co., Ltd., and Formosa Plastics (Ningbo) Co., Ltd., have also improved their performance from January to August this year. For the first time since 2005, they achieved profitability in the third quarter of this year. Last year, the PVC industry faced challenges due to low prices of calcium carbide-based PVC, which led to widespread losses across the sector. However, this year’s improved profitability can be attributed to the country’s macroeconomic control measures. According to Liu Aidong, the rising costs of calcium carbide technology have played a key role in this shift. Since 2005, the Chinese government has implemented policies aimed at protecting the environment and improving resource efficiency. These policies have targeted high-energy-consuming and polluting industries, including calcium carbide and chlor-alkali enterprises. Measures such as raising industry entry barriers, eliminating outdated production capacity, implementing differential electricity pricing, restricting bank loans, and requiring environmental protection facilities have significantly increased production costs for calcium carbide producers. As a result, the ex-factory price of calcium carbide has risen sharply, with regional prices exceeding 2,700 yuan per ton in August, up more than 700 yuan year-on-year. Given that it takes approximately 1.4 to 1.5 tons of calcium carbide to produce one ton of PVC, the cost increase for calcium carbide-based PVC producers has been substantial. Combined with higher electricity and transportation costs, the overall cost structure has changed dramatically. This rise in calcium carbide-based PVC prices has narrowed the price gap between ethylene-based and calcium carbide-based PVC, allowing ethylene-based PVC companies to maintain profitability. Despite the relatively small price difference, the strong price competitiveness of calcium carbide-based PVC remains a challenge. However, many large companies have managed to stay profitable through environmental upgrades and operational improvements. Xinjiang Tianye News, a major calcium carbide-based PVC producer in China, highlights the potential of the calcium carbide process. The company, which currently has an annual production capacity of 300,000 tons, has managed to offset rising raw material costs by operating its own power plant, reducing electricity expenses by nearly half. Additionally, through technological innovation, the company has developed new methods for recycling calcium carbide slag into cement and treating waste gas and wastewater. These efforts have not only reduced pollution but also generated millions in circular economy benefits annually. With increasing environmental regulations and higher sewage charges, these initiatives will further enhance the company’s long-term profitability. As national macro-control policies continue to tighten, and environmental standards become stricter, the cost advantages of calcium carbide-based PVC are gradually diminishing. Experts suggest that ethylene-based PVC companies should take this opportunity to focus on high-end and specialized products, avoiding direct competition with calcium carbide-based PVC in the lower-end market. By doing so, they can secure a more sustainable and profitable future in the evolving industry landscape.

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