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/ "/ c- , (A / // r Petrochemical guide--20 Here is how manufacturing methods, markets, buyers and sellers and economics affect the future of vinyl chloride P. Keane, Robert B. Stobaogh and Phillip L. end. Harvard University Graduate School of Busidministration, Boston, Mass. Vinyl chloride has a single important end use as monomer in production of polyvinyl chloride (PVC) and vinyl copolymers. The U.S. production of vinyl chloride expanded at an annual rate of 14 percent during the 1960s, reaching a level of 4 billion pounds in 1970 and 1971. This increase has been accompanied by a steady fall in average F.O.B. selling price from 10 cents/pound to about 4.5 cents per pound in 1970 and 1971. As a result, the imputed value of production has expanded for the decade at a 6 percent rate to $180 million in 1970. Polyvinyl chloride and other vinyl copolymers are being substituted for older materials on several fronts. Through, replacement of steel and iron in piping, wood in construc tion and packaging, glass and paper in packaging, and leather in clothing, polyvinyl chloride consumption will continue to expand at a rate of about 10 percent through 1975 and beyond. YVe expect 1975 to see U.S. production of 5.6 billion pounds of vinyl chloride (VCM). This monomer will be sold at an average price of 4.5 cents/pound, and production will therefore be valued at about $280 million (1971 dollars). Production of PVC in Europe is even larger, with 1970 production approxi mating 5.3 billion pounds. European growth rates have also been somewhat higher, with one enthusiastic source predicting a 1975 PVC production of 9.5 billion pounds.1 In all likelihood, European PVC consumption will grow less rapidly than in the United States because of the higher per capita consumption prevalent in some major markets in Europe, which makes growth more difficult. Manufacturing processes for VCM have changed rapidly since 1965. Several new ethylene oxychlorination processes have been employed to shut down older acety lene-based production. These large, new processes now account for over 80 percent of U.S. capacity, and the same process should continue to be employed in expan sions through 1975. Recent announcement of an ethanebased process (TRANSCAT) has raised the yet-unproved possibility of bypassing ethylene cracking entirely, but even a viable TRANSCAT cannot greatly influence the pre-1975 VCM business. This process switch has also resulted in large changes in the cast of players. In general, some users of VCM have ceased to produce their own monomer, with pro duction undertaken by large, integrated producers of ethylene and chlorine. Dow and B. F. Goodrich are the largest producers and have produced VCM for quite a few years. However, PPG, Shell and Conoco have become the third, fourth and fifth largest VCM producers despite not having been in the business in 1965. We expect this trend toward concentration of large VCM plants among feedstock producers to continue through the next several plants. pvn hucinf> h.ic nlcn crown at a ranid rate else where in the world. Because of difficulty and expense of shipping, export of VCM has usually constituted a limited 5 on Reader Service Card BFG09092 99 21067001 *iiul :ion DC. ..lyst hat veil the ns ns .ary arp-ude and rxo- nole major; (he processes should lie roughly competitive based upon published data/' 3. Stauffer Chemical oxyclilorinatfon. This is again very similar to the earlier uxychloimation processes. Minor changes in the routing of streams, small differences in catalyst performance,"and features of the mechanical design are all that dillercntiatc between the published information for this process and the previous two. It is noteworthy that Stauffer published an estimate of 3.7 billion pouncls/year of vinyl chloride capacity in 17 plants utilizing this process.4 4. Monsanto oxvchlorination. There are several licen sees for this similar process.5 5. Dow o.vychlorinndon. Onlv Dow and foreign sub sidiaries have used the Dow VCM process, and no indi cation of a willingness by Dow to license to others has been published. con- 6. Union Carbide (Lumnius) balanced acetylene/ sor. i ethylene process. Xo recent examples of tins process have and | been constructed in the United States, but a Union Car - JCC i bide venture using a WullF process acetylenc/ethylene ant. plant in Brazil is employing this process to consume part of the production. Complete startup of this plant is aro- planned for 1972. een The basic flow scheme is shown in Fig. 6-4. Ethylene de and chlorine produce EDO, which is cracked to yield bed HC1 and VCM; the process is very similar in this area od- to the above processes. However, instead of using oxygen and and ethylene to convert the byproduct HCI to EDC, the f a balanced process then involves the older acetylene route. . F. The reaction is a vapor phase reaction over HgCU/carbon are catalyst with a slight IIC1 excess. A circulating coolant removes reaction heat to control the reaction temperature to about 400 F. Conversion is less than complete in some plants, requiring recycle of acetylene ar.d PICl, but the reaction yields arc 95 percent or greater. Therefore, the removal of light and heavy byproducts is simple. This results in low capital and operating costs for the process, but the use of acetylene at current or projected U.S. prices makes this process less than competitive with balanced oxychlorination (see `''Economics"). 7. Others. Pcchincy-Saint-Gobain offers combined production of chlorinated solvents and vinyl chloride in flexible proportions. A single plant at..Saint Auban, France, has operated since the spring of 1070 to produce about 120,000 metric tons/year of VCM with this pro cess.5 Diamond Shamrock/deNora offer "Dianor," a process to produce and crack EDC which is aimed at developing countries with no ethylene Comdexes.7 The process op v erates on ethylene as low as 60 percent concentration and produces HCI byproduct, which would leave the process uncompetitive under any but the special circum stances of small, developing chemical markets with tariff protection. Feedstock ovoilobilify. The i.mportance of feedstock cost to VCM producers has resulted in the entry to the VCM market of large, integrated chlorine and ethylene producers (see ``individual Lmmpanics ' ana Econom ics"). Future manufacturing efforts will be largely influ- vcv Fig. 6-4--Author's interpretation of the balanced VCM process as announced by Union Carbide (Lumnius). TABLE 6-1--Properties of VCM4 Mol. ivt........................................................ Specific gravity......................................... Melting point............................................ Boiling Point.............................................. Flash point................................................ Maximum allowable concentration (ppm by volume)................................ Explosive limits % by volume in air, G2..50 O.0S34 -153.S* C -- 101S38.8V1 C 500 Lower 4 Upper 22 20V20 C (-- 244.G F) (7.1 F) enred by trends in both of these related fields. A brief review of trends follows: Ethylene production in the United States has been drifting away from the traditional patterns. Until recently more than 80 percent has been manufactured from ethane and propane cracking and about the same proportion located in the U.S. Gulf Coast.8 Some recent plants have involved movement toward the north and Puerto Rico and cracking of heavy feedstocks. With developing short ages of natural gas, a continuing erosion of the competi tive advantage of cracking Gulf Coast ethane and propane is likely, and cracking of heavier feedstocks will probably result in higher ethylene prices. With ethylene much more difficult to ship large distances than cither vinyl chloride or chlorine, a tendency to locate vinyl chloride production near ethylene plants should continue. Chlorine is the other major feedstock, with VCM accounting for about 15 percent of U.S. chlorine produc tion in recent years. Largely as a result of slumping VCM demand (which declined silghtly in the first half of 1971), chlorine demand has been slack in the 1969-1971 period. However, as various chlorinated products resume their growth trends between 1971 and 1975, chlorine demand should once again require expanded capacity. Given the considerable economies of scale in chlorine/caustic pro duction, the largest and most integrated producers will retain their competitive advantage in VCM. Very substantial electrical energy requirements for chlorine production will force locations to sources of lowcost power. While nuclear fuel and coal are in tiie running as long-term suppliers of low cost power, petroleum and natural gas remain necessary until at least 1980. Tiicretore, nvaiinomty ot petroleum and natural gas tucis will help determine chlorine plant locations until at least 1975. N Hr* O cr> ! N G 1 lYUUOCAKr.ON Frockssing February 1973 BFG09096 103 YINVL CHLORIDE These trends indirnte that manufacturing locations for VCM arc likely to be heavily influenced by availability ui inexpensive ayeiuCiUlMjit u;aiauA.hs ciuu luua, vvitJi relative labor and construction costs, water and transpor tation facilities acting as less important constraints. Physiccl properties. See Table 6-1. MARKETS U.S. consumption of VCM was about 3.3 billion pounds in 1970, with 664 million pounds being exported. Con- Fig. $-5--Per capita consumption of polyvinyl chloride.1" APPAREL CONSTRUCTION FLOORING HOME FURNISHINGS PACKAGING PIPE B FITTINGS RECORDS TRANSPORTATION WIRE 8 CABLE 65 6 10 12 9 15 12 6 (1 12 14 .... 43 76 -- 10 U ALL OTHER 17 20 1965 1970 1975 Fig. 6-5--End use markets for PVC.U sumption of VCM is almost entirely for production of polyvinvl chloride resins and i ouo!y;oer resins (propylene, ethylene and vinyl acetate arc commonly copolymcrizcd with VCM). Domestic consumption is projected to grow .unlitL 10 peiceilr annually ueuii die 13/0 level of 3.3 billion pounds to 5.3 billion pounds in 1975. Export markets will decline from the 16 percent of U.S. produc tion experienced in 1970 to tlic more usual level of 5-6 percent of production, or 300 million pounds, by 1975. End uses of PVC arc characterized by more variety than most other commodity resins. Physical properties of PVC vary from the soft and flexible plasticized varieties used in dolls to the strong and rigid PVC pipe invading the construction markets. Fig. 6-5 demonstrates the rapid growth in per capita consumption which has resulted from this variety of properties.10 As a result, PVC con sumption is also less vulnerable to the loss of any single end use market. The more rapidly growing markets for PVC are con struction products, packaging, pipe and fittings. These areas should exceed the 10 percent growth rate of the overall PVC market. Segments which arc more mature and will grow at less than 10 percent include apparel, flooring, home furnishings, phonograph records, trans portation equipment, and wire and cable coatings. An estimate of the 1S65, 1970 and 1975 market share of each category is given in Fig. 6-6. While some categories will have declined relative to all PVC consumption, ac tual volume sold in 1975 is projected to increase in all categories.10 Construction uses for PVC include vinyl-coated wall coverings, and strips of PVC sheet to serve as water stops in walls and weatherstripping. The largest potential, how ever, probably belongs to PVC siding and window frames, which are rapidly growing competitors of older wooden and aluminum products. The construction market should grow in excess of 20 percent annually for the next five years. The packaging application of PVC has been growing very rapidly in recent years. There are environmental pressures to restrict PVC content of packaging because of HC1 released when packaging is incinerated, but such restrictions will act to slow this growth area before 1975, not to reverse the trend. Packaging consumption of PVC grew at above 25 percent annually in the fast five years, and should grow at 15-20 percent for the next five years. After 1975, however, look for growth to slow considerably as effective control of FIC1 emissions causes other materials to replace PVC in some applications. Use of PVC pipe and fittings has benefitted from the accelerating change of U.S. building codes to allow plastic drain, waste and vent piping. A.D. Little has projected a 1975 consumption of 1 billion pounds of plastic piping, with PVC representing a large share.11 The PVC in this application is often blended with chlorinated polyethylene resin. Competition with acrylonitrile-butadiene-styrene (ABS) resins and styrene-acrylonitrile (SAN) resins will be important in determining the actual growth of this PVC application, but 15 percent is a likely growth rate if PVC prices remain below those of ABS and SAN resins. Among the more mature PVC markets, use of PVC in transportation equipment should condnue at a rela tively high growth rate. Further penetration of the auto mobile market is not a major hope for PVC, since seat 104 February' 1973 Hydrocarbon Processing 900A90TZ r c rr ? a 5 P T z: o: e* r 6 tr T y w r" O' V V $: V A' tv n i )\ BFG09097 ;>n of -vlene, 1965 1970 erizcd r-row .3 ^A^iort roduc- A 5-6 1975. -ariety Fries of irieties ading Fig. 6-7--PVC production by type according to the U.S. Tariff Commission. rapid suited 3 con- single covers, headliners and dashboards have all been heavily penetrated. As a result, this end use will grow at about the rate automobile production grows. While other trans "S conThese M the nature oparel, transgs. An _are of :egorics r>n, ac- portation uses will increase, look for this segment to grow at 8-9 percent over-all. Uses of PVC in apparel, flooring, home furnishings and wire coating arc mature segments. Growth of these seg ments should keep pace with real GN'P growth at about 5 percent annually through 1975. Another possible categorization of PVC uses is by the processing methods being used to meet the above markets. Table 6-2 presents a breakdown by processing methods, again reflecting the diversity of PVC markets. in all Polymer producers. One reason for the varied properties of PVC resin is the diversity of polymerization methods ;d wall ; employed and another is the large number of PVC pro- ''ops j ducers. each with a slightly different product line. While JU'- frames, I ! 65 percent of VCM was polymerized captively in 1960, this percentage declined rapidly as older acetylene-based wooden I plants were replaced with larger ethylene-based plants, should j Today companies such as Dow and Shell are exclusively :xt five merchant sellers of VCM, while PVC producers such as Monsanto and Union Carbide have discontinued VCM rowing manufacture. As a resuit, only about 40 percent of VCM mental was captively consumed in 1970, and the percentage will Decause probably be closer to 30 percent in 1975. The 21 com jt such panies currently producing PVC arc listed in Table 6-3, 2 1975, together with capacity by region. Of these 21 companies, A PVC 7 also produce VCM (see Table 6-5). 2 years, 2 years, derably .atcrials j A final characterization of PVC production is the type of polymerization employed. Suspension homopolymer resins have been an increasing fraction of PVC production in recent years, mostly at the expense of copolymer resins, -arri the plastic ected a while dispersion resins have maintained a relatively con stant share. Fig. 6-7 presents a breakdown of PVC by method of polymerization. piping, in this ethylene -styrene rins will of this : rate if sins. PVC a rrb- World markets. During the 1960s, exports of VCM averaged less than 5 percent of domestic production. VCM must be shipped and stored either under pressure or in a refrigerated tank. The relative difficulty of shipping, low selling price in relation to freight cost, and ready avail ability of VCM technology has created a strong tendency to produce VCM locally rather than import for an ex tended period, in 1969, 1970 and 1971, however, rapid expansion of European VCM demand and lagging pro duction can?e'*., lwl fr. iKnnrnnllv hirrro ininorts | rotn c auto- the U.S. Exports accounted for a high of 16 percent of :ice seat domestic VCM pioduction in 1970. As added capacity TABLE 6-2--Proteuin'] methods for PVCTM Share ot market, % Extrusion (wire. film, sheet and general extrusion). . ............... Colendering (film, sheet and coating).................................. .............. Molding (blow, injection, roto. compres-sion)............ ...------ Coating (dip, knife, roll, spray. lamination)............. .............. Other........................................................................... ............................ 40 35 10 10 5 TABLE 6-3--PVC producers In th United States,TM Jan. 1, 1771 Northeast Borden....................... Leorr.iniiier. Mass. DiamondShamrock............. Firestone.................. B. F. Goodrich Delaware City. Del. PottstcVh Pa. Chemical.............. Pedrick-.cTTC. N\ J. Goodyear Tire 5c Rubber................. Xisjan Fills. N. V. Great American ; Plastics................. , Fitchb:::^. Mass. Hooker...................... - Suriir.-.-.cn. X. I. Monsanto................. Ot; Paritasote................. Paw.-;. N. T. Stauffer..................... Delauare C::v. Del. Tenneco.................. 3jtl:iv--.n. N. J. 12 companies 13 plants 1.300 MM lbs. capacity Southeast Air Products........... Continental Oil___ Firestone.................. Pantasoce................. Union Carbide.... Midwest Air Products........... Allied Chemical.... ?p.saca!a. F!a. Atcrcrr-.. Ml??. x>\',J Point W. Va. S. Charleston, W. Va. Calvert Citv. Ky. Pair.f Ohio General Tire............ B. F. Goodrich Chemical.............. Uniroyal................. Southwest Diamond- Shamrock. ...... Ethyl......................... Goodyear Tire k Rubber................. Union Carbide. . .. Far West American Chemical.............. B. F. Goodrich Chemical....... Keysor...................... Ashtabula. Ohio Henry. III. Avon Lake. Ohio Louisville. Ky. Pair.esviile, Ohio Deer Pork. Texas Baton Rouge. La. Plaquetr.inc. La. Texas City, Texas Long Beach, Calif. Long Beach. Calif. Saugus. Calif 5 companies 5 plants 450 MM lbs. capacity 6 companies S plants 1.000 MM lbs. capacity 4 companies 4 plants 600 MM lbs. capacity 3 companies 3 plants 200 MM lb3. capacity 21 total companies 33 total plants 3,550 MM lbs. total capacity TABLE 6-4--Western European PVC consumption {thousands of metric tons) Year........................................ F.F.C 1972.......................................... 1063......................................... 1904......................................... 1905......................................... 1900......................................... 1907......................................... 1908......................................... 1909......................................... 1970*....................................... Growth rate 0902-1970).................. .. 1975 Consumption*........... Projected growth Kate (to 1975)*.............. 500 610 709 813 950 1.001 1.227 1,505 1.59S 13% 2.573 10% EFTA 227 255 30$ 339 359 401 472 525 oo7 12% 820 s% Spain 17 26 29 33 46 59 71 91 97 24% 220 18% Other 40 52 72 50 55 141 155 140 148 18% 285 u% Total Western Europe 9-; 3 1.178 1.271 }.4U> 1.061 1.935 2.261 2.400 15% 3,000* 10% Sourer: European Chenileu! News and Oil, l'alnt and Oru Reporter, Oct. 20, 1970. plus authors' esuni.des.* comes onstream in Western Europe and developing coun tries rush to build VCM pi.mis, U.S. exports of VCM will decrease again to 5-6 percent of production or lower. U.S. exoorts of PVC resin are also minimal; in 1969 and 1970, about 5.5 percent and 6 percent of flic U.o. PVC sold was exported. Two reasons for this arc the 1067007 mss INC JIvnitor.AunoN I'koci ssinc, February 1973 BFG09098 105 VIUYL CMLOUDE T.M-U O.S--U.S. producers of VC.M rupidly expanding domestic markets for PVC and the mgii iciauvc lrcigm costs. Fmuicnnorc, tanii harriers are high--20 percent or more--between European coun tries, as well as between Europe and the United States.12 Despite this, the specific properties required by resin users remain the most difficult barrier to a large world trade in PVC. In a recent report of the Standard Research Institute13 projections of the world output of PVC for 1970 and 1980 are compared. The percentages accounted for by each producing area are as follows: North America Western Europe Japan Others 1970 26.5 % 41.3 16.5 15.7 1920 26.5% 39.7 17.9 15.9 100.0% 100.0% While special purpose resins sales to developing markets will continue to be an attractive market, PVC resin ex ports will remain a small market at 5 percent or less of production. Tiie European PVC market is considerably larger than the U.S. market (see Table 6-4), based upon Europe's large population and greater per capita consumption. This will allow European producers to build large, com petitive VCM facilities to serve their own markets. As U.S. producers encounter higher ethylene costs based upon cracking heavier feedstocks and higher chlorine costs from more expensive electric power, exporting to the European VCM market should cease to be attractive to U.S. producers.14 Japanese PVC producers also represent a sizable market for VCM, but domestic Japanese production is ample to provide the estimated 2.4 billion pounds which will be required in 1972. Estimated VCM capacity is in the neighborhood of 3 to 3.3 billion pounds/year (see Table 6-6), indicating either sizable exports or low operating rates for Japanese VCM producers. A partial listing of foreign VCM producers is given in Table 6-6. Since this is not an exhaustive listing, total capacity figures are not available. However, the per capita consumption of VCM is even higher in Europe than in the United States and trends toward oxychlorination are evident. INDIVIDUAL COMPANIES Table 6-5 lists U.S. producers of VCM as of 1972. Of the total capacity shown, 10 percent is based on acetylene and 8 percent on ethylene without oxvciilorination capability. These plants must be considered vulner able to continued construction of large oxychlorination facilities. The remaining 5 billion pounds (82 percent) consists of modern, apparently competitive oxychlorina tion plants. Also noteworthy is the concentration of over 70 percent of VCM capacity on the U.S. Gulf Coast. With the exception of PPG's Puerto Rican plant, all recent capacity additions have been in Texas and Louis iana. The expansion of VCM capacity from 2.4 billion pounds/year in 1965 to about 6 billion pounds/year by 1971 was at an annual rate ol 18 percent. The actual rate -of new capacity construction has been even more Pr-'nc-- f.ocmfor Allied.................... American Chemical......... (AR(.( i-Stnufler) AJuii'xhcm.......... (Louleu- Uniioyal) Conoco................. Baton Rouge, I.a. Watson. Calif. Gcismar, La. Lake Charles, I.a. Dow....................... Plaqucrnine, La. Freeport Texas Oyster Creek, Texas Etll>I.................... Baton Rouge. La. Houston Goodrich.............. Calvert City, Ky. ITG....................... Lake Charles, La. Puerto Kico Shell....................... Houston Norco. La, Tenncco............... Houston 1972 Total Nameplate capacity 300 170 300 GOO 340 180 700 270 150 1.000 300 500 800 (Expanding) SCO (1974) 255 5.SG5 Pr -vert- Oxychlorination Stauffer oxychlorination Acetylene Stauficr oxychlorination Dow oxychlorination Dow oxychlorination Dow oxychloiimtion I-:th>lene/EDC cracking Ethylcne/EDC cracking Goodrich oxychlorination (multiple train) O.wchlo: in jtion Oxychlorination Stauf.cr oxychlorination Stauficr oxychlorination Acetylene Source: Many publisV.ed estimates as Interpreted by the authors. Note that elective capacity probably docs not equal nameplate capacity. A reasonable capacity figure would probably be 90% of the above rates. Oil, Point and Drug R'i'Crter, Oct. 11. 1971. has the most complete listing. rapid, with fully half of the 1965 capacity being shut down in the same period. Eighty percent of 1971 capacity is j less than 6 years old. j Among individual companies, Dow has about 19 per- i cent of VCM capacity, and about 23 percent of oxychlorination capacity. Dow's position as a capacity leader i I among ethylene, chlorine and chlorinated solvents pro- I ducers leaves no doubt of Dow's long-term position as a | VCM producer. Raw materials costs are crucial to VCM j economics, being roughly equally split between chlorine jj and ethylene (see "Economics"). In addition, byproduct j chlorinated hydrocarbons from oxychlorination are rou- \ tinelv absorbed into Dow's production of perchloro- J ethylene and carbon tetrachloride. At the present time, i this VCM is' largely sold in the merchant market. While 5 Dow lias extensive experience in production of bulk poly- } mers, Dow has chosen to remain a merchant supplier and has discontinued production of PVC. j j The second largest VCM capacity belongs to B. F. f Goodrich at Calvert City, Ky. Two or three trains at this f site employ Goodrich's oxychlorination process (see "Man- j ufacture"), and are notable in being the only sizeable | plants located in the northern or eastern United States. J Goodrich has captive use for most or all of this VCM, | but has made no recent move to expand beyond their | existing 17 percent capacity share. Both ethylene and ? chlorine for this plant are produced by Goodrich at Cal- g vert City. 3 PPG has moved into second place with a 14 percent f capacity share. Plants in Lake Charles, La., and Puerto | Rico benefit from large internal chlorine sources and chlorinated solvents business to absorb byproducts, but ethylene is purchased in both cases. As is the case with most recent expansions, the majority of VCM produced moves in the merchant market. The fourth and fifth largest producers are oil com panies with large ethylene capacity but insufficient chlorine for VCM production. Shell has recently com pleted and started up 12-14 percent of U.S. industry o? a 03fl 106 February 1973 Hydrocarbon Processing BFG09099 Data collection I 1 A TCA, Inc. team will photograph all relevant personnel re cords at each plant. Involvement of plant personnel during the course of the study will be minimal, unless desired by local mana gement. The data collection team will require a contact person at each plant, through whom arrangements can be made and information channeled to local management. The only physical equipment requir ed at the plant is a worktable with a nearby electrical outlet. Our practice is to record data for active employees first and return the records to the files immediately, and then to examine the records for retirees, terminations and deceased employees. ; Data analysis Depending on the actual population size and the duration of follow-vip activities, it appears probable that about 800 to 1,000 ; deaths 11 occur in the study group. > The basic mortality analysis will begin with a calculation of the number of person years of observation contributed by the study group at each year of age and at each point in time during the study period, using a computer program prepared specifically for this pur pose. These data will be used together with the observed deaths at each age and each point in time to calculate mortality rates, which will be compared with the mortality to be expected in the comparable U. S. population, as obtained from national statistics. Techniques of this kind are well developed and have been used for some time in chronic disease studies. (See California Tumor Registry, Cancer Registration and Survival in California,Californuia State Department of Public Health, 1963.) > The above analysis will be repeated for specific causes of death, paying particular attention to competing ribsks, or interac tion among different causes of death. In addition, analysis of general and cause-specific mortality will be repeated for subgroups of the study population identified as having high, medium and low exposure. The resuilting mortality figures will be interpreted not only in light of ttheir statistical significance, but for their relevance to known and suspected mecha nisms of action of vinyl chloride, and for their implications with respect to future studies of special areas and grcups. The validity of the conclusions reached froim a study of this kind depend crucially on the competence with whicfti data are collec ted and processed, and the appropriateness of the (comparative morta lity analysis. TCA, Inc. is uniquely qualified im both areas. The -4- 21068007 BFG09100 VINYL CHLORIDE Fig. G-8--VCM production in tiio United States, U.S. Tariff Commission and authors' estimates. trends, the total value of production has increased only 6 percent per year since 1964. However, it is believed that the average sales price (real dollars) will hold steady through 1975 because of rising ethylene and chlorine costs and that the growth rate of VCM production will be closer to seven percent per year from 1970 to 1975. The future of VCM is directly tied to the future of PVC. and PVC consumption in die United States is ex pected to show an annual growth rate of 10 percent from 1970 to 1975. The trends or VCM production, price and due are shown in Figs. 6-8, 6-9 and 6-10. ECONOMICS The price of VCM has exhibited the typical downward trend ot maturing petrochemical monomers, mo majoi reasons lor this trend have been the consistently improv ing technology, the much larger scale of existing produc tion ...c t.o....uC.ue.e wcc.eaLu _.r ..-- prtc_ of major feedstocks--ethylene, acetylene, chlorine and hydrochloric acid. As with other petrochemicals such as acrylonitrile, vinyl acetate, and neoprene rubber, the 1960s saw the introduc tion of new processes which replaced acetylene as a raw material with a less expensive feedstock. Even though the new balanced oxychlorinadon processes (such as Goodrich, Stauffer and Monsanto processes) have a higher capital cost (see Fig. 6-11) than balanced cthylene/acctylenc units of the same size, the raw material advantage of ethylene has been sufficient to more than justify the added capital. At ethylene and acetylene prices of 3 and 8 ccnts/pound, the switch in feedstocks reduces raw material cost by about 1.1 ccnts/pound at normal yield ratios. For a 500-million-pound/year plant, the raw material savings for balanced oxychlorination amounts to $5 million/year (90 percent capacity). This in turn is more than enough justification for the approximate $3-$4 million increase in capitai cost. While two U.S. vinyl chloride producers (Tenneco and Monochem) have been able to continue operation of highly integrated acetylene complexes, the operation of these units can almost cer tainly only be justified with an out-of-pocket analysis of cost. No new acetylene-based plants will be built in the United States. The economics of a 600-million-pound/year balanced oxychlorination producer are shown in Table 6-8. This analysis presents a single year of the life of the plant at 90 percent of capacity, which can be justified as equally accurate with some of the component cost data. In any case, the economics indicate several notable characteristics of the VCM business. First, the two raw materials com prise two-thirds of the 8 percent profited manufacturing cost of VCM. With the large economies of scale in chlorine and the evident trend to oil company domina- TAELE 6-8--Estimated cost of VCM production by ethylene chlorination and oxychlorination Component Usage rate (per lb. VCM) 0.63 lb. 0.17 lb. 1.5 lb. .002S MM Btu. 31 sal. 0.1 KWH Input price (f/unlt) 2.25 3.00 .05 25 .f3 Manufacturing coat (Thousand U/Jb. VCM) 7.600 450 200 550 300 500 1.42 1.41 0.10 o.os .04 .10 .06 .09 S17.S00 3.29 $ 300 1,000 450 350 3,600 200 % 5.900 $23,700 1.09 4.38 Basis: L'sjs* r.ire- aru! can-.tal costs arc derived from published claims. Sec especially Spits. Peter. "Vinyl Chloride economics," Chemical Engineering Progress b-ir.'iriP-lS. March *.v $. year Ctplant (F. O. B.) VVoricn*' cnpn.ii - me nimin c: VCM sales value. Capital cost lo or. sues irr.iiiior. dollars) 5> on-sites ote: 24 Total 11 year taxable hie 15 year estimated useful lie ThGV a calciu-ticr. for one year at 0% of capacity; a more accurate discounted cash flow might produce a noticably different price. No by- product credits or are included: credits, for chlorinated solvents feedstocks are assumed to balance heavy and light ends disposal costa. 108 February 1973 Hydrocarbon Processino RpnnQini 21067019 CP H*