A recent report from Xinhua News Agency has drawn significant attention within the industry. It highlights that since China imposed anti-dumping duties on polyvinyl chloride (PVC) imports from the U.S., South Korea, Japan, Russia, and Taiwan in 2003, the domestic PVC production sector has experienced rapid growth, with an average annual increase in production capacity of 50%. Exports have also risen steadily. However, this growth hasn’t translated into higher export volumes or prices. In fact, as exports increased, prices began to decline.
According to customs data cited in the report, in the first half of this year, Tianjin Port exported 5,944 tons of PVC—an impressive 26.7-fold increase compared to the same period last year. The export value reached $4.57 million, up 21.5 times from the previous year, but the average export price dropped to $769 per ton, a decrease of 18.7%.
Some experts argue that anti-dumping measures are a double-edged sword, and this perspective is clearly reflected in the domestic PVC market. Over the past few years, despite high prices for dumped PVC products and strong demand, it has been difficult to curb the expansion of domestic production capacity. Almost all major chlor-alkali companies have either planned or are implementing expansions. These expansions often rely on small-scale calcium carbide methods, which require less investment, energy, and produce more pollution.
Business leaders believe that the current market is the best time for sales, and as long as they act quickly, they can capture profits. This mindset led to a surge in PVC production. By 2004, China’s PVC production capacity reached 6.6 million tons, an increase of 2.2 million tons from the previous year. In the first half of this year alone, production capacity rose by 25% compared to the same period last year. It is estimated that annual PVC production capacity could reach 9.8 million tons, with many more projects still under construction.
Over 60% of this capacity uses the calcium carbide process, with nearly half coming from small enterprises producing less than 100,000 tons annually. This development contradicts the goals outlined in the "Tenth Five-Year Plan" for the chlor-alkali industry, which aimed to adjust PVC raw material routes and limit calcium carbide-based production. The plan explicitly stated that no new calcium carbide-based PVC units should be built in principle. However, over the years, actual output far exceeded the original target of 3.4 million tons, and the "principle" was not effectively enforced.
The reason behind this deviation lies in the cost difference between the calcium carbide method and the ethylene method. Although the latter produces higher-quality products with lower energy consumption and pollution, rising crude oil prices have made it significantly more expensive—costing at least 600 yuan to 1,000 yuan more per ton. As environmental and safety regulations remain relatively low, the calcium carbide method continues to dominate.
But is it truly beneficial for small calcium carbide producers to take advantage of this situation? The recent export data from Tianjin Port suggests otherwise. While PVC production and exports have surged, this growth comes at the expense of the environment and energy resources. With global emphasis on safety and sustainability, how long can China's "price advantage" based on low costs be maintained?
Looking ahead, if international crude oil prices drop or new alternative energy sources emerge, the market for calcium carbide-based PVC may shrink. What will happen to these companies that rushed to seize the opportunity? This raises serious questions about the long-term viability of such production models.
For a long time, the industry has focused on investment and output figures while neglecting the implementation of structural adjustments outlined in official plans. The lack of price and volume growth in PVC exports has exposed flaws in the restructuring efforts of China’s PVC industry. This indicates that the completion of the "Tenth Five-Year Plan" in this sector has been unsatisfactory.
But how can responsibility be placed solely on companies? Why weren’t implementation strategies developed alongside the planning process, so that policies would not remain just on paper? This calls for a more comprehensive and enforceable approach to industrial planning.
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