The calcium carbide company finally got its spring breeze

The ex-factory price of calcium carbide has recently reached 3,500 yuan per ton, with supply struggling to meet demand. As Manager Zhu from Hubei Xianning Hengyu Material Trading Co., Ltd. shared with reporters, newly produced calcium carbide was quickly taken by customers waiting in line. Since the restoration of power and transportation at the end of February, production has remained steady without any downtime. Strong downstream demand has led many companies to run out of inventory, creating a rare seller's market that has brought relief to the industry after years of challenges. Meanwhile, General Manager Gao Baoqing of Shaanxi Fugu Xinlong Chemical Co., Ltd. noted that since March, the return of normal electricity and transport in southern regions has helped northern companies clear their existing stock. Prices have steadily climbed, with the ex-factory price in Yulin Prefecture rising from 2,400 yuan per ton in mid-February to 2,800 yuan today. Sales are smooth, and Gao predicts that prices may soon surpass 3,000 yuan per ton, with gross profit reaching 500 to 600 yuan per ton. This prediction has already come true at Inner Mongolia Baiyan Lake Chemical Co., Ltd. Deputy General Manager Yuan Xiu confirmed that the company’s ex-factory price has increased from 2,800 yuan per ton in early March to 3,100 yuan now. With a local electricity rate of 0.34 yuan per kWh and a power consumption of 3,400 kWh per ton, the energy cost alone is about 2,100 yuan per ton. Adding labor, safety, environmental protection, and operational costs, the pre-tax cost per ton is approximately 2,500 yuan, resulting in a gross profit of around 600 yuan. After deducting 17% VAT and corporate income tax, net profit can reach 200 to 300 yuan per ton. Yuan Xiu credits the current favorable conditions to national macro-control policies and growing downstream demand. Since 2004, the government has implemented differential electricity pricing and tightened access standards for the calcium carbide industry, eliminating outdated production capacity and curbing overcapacity. In 2007, the National Development and Reform Commission listed two batches of “allowed” companies and eliminated 700,000 tons of outdated capacity. Regional governments have also taken action, such as reducing output in Inner Mongolia and phasing out backward capacity in Shanxi, which has significantly raised industry entry barriers and controlled overall production. On the demand side, the rapid expansion of the polyvinyl chloride (PVC) industry has kept calcium carbide demand above 20% growth. These combined factors have led to a balanced supply-demand situation, allowing companies to enjoy better profitability. However, Yuan Xiu warns against excessive optimism. Rising international oil prices could push up production costs, and the PVC industry may follow a similar path of overexpansion, leading to fierce competition and reduced margins. Additionally, increasing coal prices are putting pressure on electricity rates. Even a small rise in electricity costs would have a significant negative impact on calcium carbide producers, who rely heavily on power—accounting for more than 70% of total costs. To sustain the current positive momentum, Yuan urges continued government efforts to close outdated facilities and strictly enforce industry access rules. Preventing the resurgence of unregulated or non-compliant companies is crucial. Otherwise, the good times for the calcium carbide sector may not last long.

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