Different production processes are the key to determining the differentiated development of China's chemical industry and the main driving force for chemical upgrading. Production enterprises can improve their own competitiveness level through the differences in different production processes, thereby achieving all-round competition.
This article will mainly analyze the competitive situation in the history of different production processes for PVC.
According to data, there are currently two production processes for PVC, namely ethylene method and calcium carbide method. The ethylene method involves producing dichloroethylene from ethylene and chlorine gas, which is then polymerized to produce PVC. The calcium carbide method refers to the production of acetylene using calcium carbide, followed by the polymerization of vinyl chloride into PVC. In addition, there is also the process of by-product chlorine gas from salt chemical industry to PVC. Due to the relatively small market size of this part, this article will not make a comparison.
According to the price trend calculation from 2009 to mid 2023, there have been the following patterns of profit fluctuations in China's ethylene based PVC production over the past 14 years:
Firstly, in the past 14 years, ethylene based PVC has been in a profitable state for most of the time, with a few times experiencing losses, with a maximum loss of 1001 yuan/ton and a maximum profit level of 3149 yuan/ton. In the past 14 years, the average profit margin of ethylene based PVC has been 655 yuan/ton.
Secondly, the profit margin was the highest in 2021, reaching 3149 yuan/ton, and the largest loss occurred in 2015. The significant increase in crude oil prices from 2021 to 2022 has driven up the prices of chemical products, thus achieving the highest profitability of the ethylene process.
Thirdly, the prices of ethylene and PVC have shown consistent trends over the past 14 years, but their data fit is not high. Among them, the fluctuation of ethylene prices is forward-looking, and the fluctuation of ethylene prices has a trend impact on the profit fluctuations of PVC and ethylene methods.
According to the price trend calculation from 2009 to mid 2023, there have been the following patterns in the profit fluctuations of PVC production using calcium carbide method in China over the past 14 years:
Firstly, the profit of PVC produced by calcium carbide method has been in a profitable state for most of the past 14 years, and the profit space is relatively stable, mostly concentrated around 700 yuan/ton. In the past 14 years, the average profit level of PVC produced by calcium carbide method has been 545 yuan/ton.
Secondly, the price of calcium carbide reached a historical high in 2021, which also led to a loss in the profits of calcium carbide PVC in 2021, resulting in a significant loss in the production of calcium carbide PVC in 2022.
Thirdly, there is consistency in the price fluctuations of calcium carbide and PVC over the past few years, with a data fit of 90% or more. Among them, there is a certain trend in the price fluctuations of calcium carbide, and PVC price fluctuations are more likely to follow the price fluctuations of calcium carbide.
From the perspective of profit fluctuations in the past 14 years, there is a general consistency in profit fluctuations between China's ethylene method and carbide method PVC, but there is a significant deviation in the impact of raw materials on profits. Based on the proportion of the impact of main raw materials on costs over the past 14 years, the following patterns can be observed:
Firstly, in the ethylene process PVC, the cost proportion of ethylene to ethylene process PVC has been 60% or above in the past 14 years, with an average value of 64.1%, which is the factor with the greatest weight on cost. It can be seen that ethylene has a significant impact on the cost of PVC, and the fluctuations in ethylene prices directly determine the fluctuations in PVC costs. Ethylene, as a variable that affects the cost of ethylene, is subject to fluctuations in the CFR Northeast Asian ethylene price, and the Chinese market has a weak voice.
Secondly, the impact of chlorine gas on ethylene based PVC is gradually weakening, with an average proportion of around 4% over the past 14 years, almost having no impact on the cost of ethylene based PVC. Moreover, if chlorine gas is a byproduct of the predecessor chlor-alkali plant, its cost can be ignored, and changes in the price of chlorine gas will not have any impact on ethylene based PVC.
From the perspective of variable factors affecting the cost of PVC using calcium carbide method, the largest cost is calcium carbide. According to the proportion of carbide cost to PVC cost in the past 14 years, the average value has reached 75.5%, which is the largest cost proportion factor and also the most influential factor. The fluctuation of calcium carbide price directly affects the cost of PVC produced by calcium carbide method, thus having a direct impact on the market price of PVC.
If the enterprise supports its own calcium carbide, the cost can be further reduced. If the enterprise purchases calcium carbide externally, then the fluctuation of calcium carbide price is the most important consideration factor for the enterprise. In addition, the price of calcium carbide is mainly influenced by national energy control and market supply and demand relations, and Chinese enterprises have the right to have independent pricing discourse.
Finally, Brother Pingtou would like to say that in the future, the PVC project is planned to be under construction with a scale of over 2.2 million tons per year, and will be put into operation gradually from 2024 to 2025. In the proposed under construction project, half of the pre planned calcium carbide method has a total production capacity of 1.1 million tons/year, while the ethylene method also has a planned under construction capacity of 1.1 million tons/year. According to incomplete statistics, the proportion of PVC production capacity using calcium carbide method in the future is still not significant, accounting for about 75% or more of the total PVC production capacity. Therefore, future fluctuations in calcium carbide prices will directly affect the cost of PVC, thereby transmitting changes in PVC prices under different process routes.
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