Material Insights · Understanding the Material World

PVC and Thermal coal

Most Chinese PVC is made from coal through calcium carbide and acetylene, an electricity-hungry, mercury-dependent route, so Chinese coal and power costs shape the price of much of the PVC that India imports.

PVC (chemical) and Thermal coal (energy): 5 relationships.

How they are linked

1. Carbide route feedstock

Physical flow · Strong · Thermal coal to PVC

In the carbide route coal is turned into coke, coke and lime are fused into calcium carbide in electric furnaces, water turns the carbide into acetylene, and acetylene reacts with hydrogen chloride to make vinyl chloride, the monomer of PVC.

  • about 77% of China's PVC capacity on the carbide route, 2022
  • 81.5% of China's vinyl chloride output from coal-based routes, 2019

The mercury-catalysed acetylene step is now largely limited to China and one plant in India, so nearly all PVC elsewhere is made from ethylene. China, the largest producer, built the carbide route on cheap coal.

Sources: China Chemical Reporter (China Calcium Carbide Industry Association); ICIS; Minamata Convention on Mercury, UNEP

2. Electricity-hungry carbide furnaces

Physical flow · Strong · Coal power drives carbide cost

Calcium carbide is made in electric furnaces, so electricity, mostly coal-fired in China, is a major cost on top of the coke and coal feedstock.

  • about 39 Mt China's calcium carbide capacity, 2022
  • about 29 Mt China's calcium carbide output, 2022

Carbide is the core input of the route, so curbs on industrial power or coal use in China's carbide-producing regions feed straight into resin costs.

Sources: China Chemical Reporter (China Calcium Carbide Industry Association)

3. Price link: alternative route

Cost and price · Medium · Both ways

Chinese carbide-route PVC sets the price of much of the marginal Asian tonne, and its cost rises and falls with coal and coal power.

  • 0.20 monthly change correlation
  • 0.67 12-month change correlation
  • 1 month lag at which the link is strongest

Yearly price changes correlate at 0.67, monthly ones at only 0.20, with PVC lagging coal by about a month. The proxies are Australian coal and a resin price index, so the low elasticity (0.23) may understate the link inside China, where carbide producers' costs follow local coal.

Sources: Material Insights (World Bank, FRED, IMF data)

4. Carbide route versus ethylene route

Substitution · Medium · Coal-based PVC competes with ethylene-based

Both routes make identical resin, so their costs compete: carbide plants win when coal and power are cheap, ethylene plants when oil or ethane is cheap.

Carbide plants have the edge when coal and power are cheap and crude is high. In 2020, when oil and ethylene prices fell, ICIS judged Chinese coal-based PVC to be losing competitiveness because its costs barely moved. India buys from both: its imports come from carbide-route China and from ethylene-route suppliers such as Japan, Taiwan, South Korea, Thailand and the US. India's government did not impose the anti-dumping duties DGTR recommended on these imports in August 2025, and in 2026 set an import price threshold of USD 0.766 a kg instead.

Sources: ICIS; Minamata Convention on Mercury, UNEP; Polymerupdate; BasisPoint Insight (Ajay Srivastava, GTRI)

5. Mercury catalyst rules

Policy · Rising · Mercury rules raise the cost of coal-based PVC

Making vinyl chloride from acetylene needs a mercury catalyst, a use the Minamata Convention requires parties to reduce, so mercury rules bear on the carbide route alone.

  • 670 to 790 t mercury used each year in vinyl chloride production, 2019 to 2020
  • about 70% of China's vinyl chloride output that needs mercury

Vinyl chloride production accounts for roughly a quarter of world mercury consumption. China has worked to halve mercury use per unit of output; a full move to mercury-free catalysts could raise carbide-route costs.

Sources: Minamata Convention on Mercury, UNEP

For investors

Key learnings

  1. Chinese PVC is mostly a coal and power product, so Chinese coal and power costs, not only ethylene, shape Asian PVC prices.
  2. The carbide route's cost edge depends on oil: it widens when crude is high and shrinks when ethylene is cheap, as in 2020.
  3. A faster mercury phase-out in China would raise the cost of most Chinese PVC, which would lift import prices in India.

What to track

  • China calcium carbide price and output: Higher carbide costs push up the Chinese PVC floor (Weekly · Chinese industry data (SunSirs, CCR))
  • PVC CFR India: Shows how Chinese and US supply costs reach Indian buyers (Weekly · trade press (Polymerupdate, ICIS))
  • China industrial power curbs in Xinjiang, Inner Mongolia and Ningxia: Curbs cut carbide output and can spike PVC prices (As announced · provincial governments)

For policymakers

Key learnings

  1. India uses about 4.1 Mt of PVC a year but has only 1.6 to 1.8 Mt of capacity (2025), so it imports the rest, much of it carbide-route resin from China.
  2. DGTR recommended anti-dumping duties on PVC suspension resin from seven economies including China in August 2025, but the Ministry of Finance did not impose them; in 2026 DGFT instead restricted imports priced at or below USD 0.766 a kg for six months, trading cheaper resin for pipe makers against support for domestic producers.
  3. The carbide route depends on mercury catalysts, so the pace of Minamata Convention rules on vinyl chloride is a supply risk for an importer like India, which also hosts one mercury-based plant.

What to track

  • India PVC imports by origin: Share from China shows exposure to coal-based resin (Monthly · DGCIS)
  • Trade measures on PVC resin (DGTR findings, DGFT import price threshold): Duties or price floors raise resin costs for pipe makers and support domestic producers (As notified · DGTR, DGFT)
  • Minamata Convention decisions on mercury in vinyl chloride: A phase-out date would raise carbide-route costs (Every two years · Minamata COP)

India

India imports more than half of the PVC it uses, about 4.1 Mt of demand against 1.6 to 1.8 Mt of capacity in 2025, much of it from China's carbide route; the government did not impose DGTR's 2025 anti-dumping recommendation and in 2026 set an import price threshold instead.

Sources

  1. China's calcium carbide industry review, China Chemical Reporter (China Calcium Carbide Industry Association) (2023)
  2. ICIS webinar: Chinese coal-based PVC, MEG losing competitiveness to ethylene-based routes, ICIS (2020)
  3. Information on mercury use in vinyl chloride monomer production (UNEP/MC/COP.6/INF/9), Minamata Convention on Mercury, UNEP (2025)
  4. India recommends anti-dumping duty on PVC suspension resins to boost domestic industry, Polymerupdate (2025)
  5. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  6. DGFT's restriction on import of PVC resin will raise cost, BasisPoint Insight (Ajay Srivastava, GTRI) (2026)