FocusChina’s calcium carbide uptrend to continue in May

19 April 2011 07:02  [Source: ICIS news]

By Amanda Zhang

SHANGHAI (ICIS)--China’s calcium carbide prices are expected to continue rising through May amid higher feedstock costs, government restrictions and escalating demand, market sources said on Tuesday.

Limestone supply is tight as the government of Inner Mongolia has ordered limestone makers to shut down their plants to control the production of dynamite, industry sources said. Inner Mongolia is a major calcium carbide region in the domestic market.

“We have already lifted offers five times since the beginning of April,” a major producer in Inner Mongolia said, adding that buyers are actively making enquiries. Offers on 1 April were at CNY3,250/tonne ($498/tonne) EXW (ex-works) and were at CNY3,750/tonne EXW on 18 April, the producer added.

According to a 14 March notice from the Ministry of Industry and Information Technology, China’s government is implementing stricter controls on calcium carbide production in order to save energy and reduce emissions from 2011 to 2015.

The Chinese government has already shut down backward producers of calcium carbide, whose output totalled 3.05m tonnes from 2007 to 2010, the ministry’s notice added.

Backward producers in China refer to those in industries that pollute the environment.

Several unlicensed calcium carbide producers located at Gansu province in northwest China are expected to shut down or cease operations in the near term following the release of the notice, industry sources said.

“We have already lifted offers three times this month on good sales,” a major producer in northwest China said. Offers were at CNY3,300/tonne EXW on 1 April and were at CNY3,600/tonne EXW on 18 April, he added.

Since the beginning of April, the demand from the downstream polyvinyl chloride (PVC) sector has increased because of the active caustic soda market.

As a result, chlor-alkali producers have sought to generate more profits by increasing the operating rates of their plants.

Calcium carbide was assessed at CNY3,850-3,950/tonne DEL (delivery) in east China on 18 April, an increase of CNY230/tonne as compared with 1 April, according to data from Chemease, an ICIS service in China.

The market is not showing any signs of reversing the uptrend of calcium carbide and values should remain firm in May, industry sources said.

($1 = CNY6.53)

Additional reporting by Besty Zhou and Aquamarine Li

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By: Amanda Zhang
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