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Conoco TECHNICAL INFORMATION The Economics of Pound Volume Comparisons HnJqmmn Conoco Chemicals Company A Division of Conoco Inc. 15990 N, Barken Landing Road P.O. Box 19029 Houston. TX 77224 (713) 531-3200 TELEX 794557 TWX 910-881-7329 Domestic Sala Offices Eastern Region Put 80 Pla/a East Saddle Brook. NJ 07662 (201)845-3800 TWX 710990-5123 Midwestern Region Suite No. 120 2222 Camden Court Oak Brook. IL 60521 (312) 655-7070 TWX 910 651-0210 Southwestern Region Texas Bank & Trust Building 6161 Savov. Regency .Square P.O. Box 2197 Houston. TX 77252 (713) 965-5117 TELEX 775347 Western Region Smokcirre Plata 1450 North Tustin. Suite 100 Santa Ana. CA 92701 (714) 541-8449 International Sales Offices Conoco Chemicals Latin America S.A. IS990 N. Barken Landing Road P.O. Box 19029 Houston. TX 77224 (713) 531-3200 TELEX 794557 Conoco Chemicals Europe. S.A. Conoco Incorporated Rue Joseph Stevens 7 Brussels 1000. Belgium Telephone; (32-2) 513-7490 TELEX: 24727 Cable: CONOCHEM. Brussels Conoco Chemicals Far East. Incorporated P.O. Box 110 Kasumrgaseki Building (25th Floor) Tokvo. Japan 100 Tel: (81-3) 593-0611 TELEX. J2936K Cable: CONOCHEM Tokvo TM 00li999a conoco) Conoco Chemicals k-- y Conoco TECHNICAL INFORMATION The Economics of Pound Volume Comparisons When comparing the economics of compounds or formulations against competitive materials, the various components (raw materials) and their relative cost per unit are of major importance. The most common cost per unit form encountered is that calculated on a weight basis, such as dollars or cents per pound. However, most PVC end uses actually involve volume cost considerations. While PVC compounds are bought by fabricators by the pound, the end products are usually sold by volume. For instance. PVC shoe soles will require a certain volume of PVC compound to nil the fabricating mold. Hence, costs based on volume become important when comparing the economics of compounds and formulations. Cost per volume values can be determined by easy conversions of cost per pound values. These types of conversions give rise to what is termed pound volume costs. A pound volume, put simply, is the volume occupied by a pound of material. To calculate the pound volume of a certain material, one needs to know the specific gravity of the material in question. Specific gravity is the ratio of the density of a material to that of water. The density of water, by definition, is equal to one. Hence, a materials specific gravity is a measure of its weight volume relationship relative to water. Calculation of pound volume costs can be derived from the following equation: Pound volume cost (S/volume) = Weight Cost (S/pound) * Specific Gravity For example, PVC Compound A having a specific gravity of US and costing 65 cents per pound has a pound volume cost of: 0.6S S/pound IJ5: 0.88 S/volume while PVC Compound B having a specific gravity of 1.30 and costing 67 cents per pound has a pound volume cost of: 0.67 S/pound * U0 = 0.87 S/volume. One can see that although Compound B costs more per pound, with a lower specific gravity Com pound B would produce a finished product, sold by volume, at a lower cost When comparing different formulations for pound volume costs, the specific gravity for the formula tion can be calculated so that pound volume costs can be compared. The calculation is carried out as follows: Compound specific gravity = Total Weight of Ingredients Weight No. 1 Weight No. 2 Specific Gravity No. I Specific Gravity No. 2 Weight No. 3 ... Specific Gravity No.3 An example of this type of calculation along with weight cost and pound volume cost is shown below (please refer to Table 1 on the back page for the specific gravity of the individual ingredients): Ingredient Weight, !b. * Cost S/lb. PVC Resin DOP Plasticizer Ba/Cd Stabilizer A CaCOj Filler Stearic Acid 100.0 40.0 3.0 20.0 0.5 0.30 0.40 1.00 0.10 0.24 163.5 Specific gravity =163.5/122.6-5=1.33 Compound cost = 51.12/163.5 = 0.3127 S/lb. Pound volume cost = 0.3127 * 1.33 = 0.4158 S/volume Overall = Cost, S 30.00 16.00 3.00 2.00 0.12 51.12 Specific0' Gravity 1.40 0.99 1.03 2.71 0.94 Weight Specific Gravity 71.43 40.40 2.91 7.38 0.53 122.65 3 It is common practice to substitute a more efficient additive for a less efficient one to reduce the per pound cost. The following example illustrates that in many instances a real cost reduction, based on pound volume cost, is not achieved: Example B Ingredient PVC Resin DOP Plasticizer Ba/Cd Stabilizer B CaCO, Filler Stearic Acid Weight, lb. 100.0 40.0 2.0 20.0 0.5 162.5 Cost S/tb. 0.30 0.40 1.20 0.10 0.24 Specific gravity = 162.5/121.68 = 1.34 Compound cost = 50.52/162.5 =0.3109 S/lb. Pound volume cost = 0.3109 * 1.34 = 0.4166 S/volume Overall = Cost, S 30.00 16.00 2.40 2.00 0.12 50.52 Specific*1* Gravity 1.40 0.99 1.03 2.71 0.94 Weight Specific Gravity 71.43 40.40 1.94 7.38 0.53 121.68 Comparison of Examples A and B shows that on a cost per pound basis, substitution of a more efficient stabilizer lowers costs. But on a cost per volume basis the costs have actually increased. DTH 000119999 ` The following example illustrates a typical end product volume calculation and cost comparison based on pound volume costs: Example C A wire fabricator produces a PVC insulated type T wire'21 using a 14 AWG conductor with an average PVC insulation thickness of 0.76 mm. Calculations of the volume of 1.000 feet of this PVC insulation are as follows: PVC insulation cross sectional area = (Area of radius 2) - (Area of Radius I). For 14 AWG, >| = 0.81 mm iry(2 = 2.08 mm1 >2 = 7i + 0.76 mm = 1.57 mm "Ti2 = 7.74 mm:. Cross sectional area of PVC insulation = 7.74 mm2 - 2.08 mm2 - 5.66 mm2 PVC volume of 1.000 feet of wire = 304.800 mm x 5.66 mm2 = 1,725.168 mm2 or 1.725.168 cm-V Compound A = S0.65 x I Ib.x L35g,-,) x 1725.168 cm' = S3.334/1.000 ft. lb. 454 g cm' 1.000 ft. Compound B = S0.67 x 1 lb. x 1.30 g<'> x 1725.168 cm' = S3.310/1.000 ft. lb. 454 g cm' 1.000 ft. If these values are extended for three eight-hour shifts per day averaging 2.000 ft/min. 300 days a year, the difference in compound costs between Compound A and Compound B comes to S20.736. even though Compound B costs two cents per pound more. Sometimes it is necessary to calculate a competitive price based on pound volume consideration. The example belpw illustrates what Compound A must cost in S/lb to equal the S/volume cost of Compound W. Example D Compound A ($/lb) * Specific Gravity = Compound B (S/lb) * Specific Gravity A (S/lb) x 1.35 = S0.67/lb. x 1.30 A (S/lb) = (S0.67 lb. x 1.30) = S0.645/lb. 1.35 to Table I on the back page lists the specific gravity of the most commonly used raw materials in PVC compounds. (2i UL 83 Thermoplastic insulated wires and cables. (3) When density of water equals I. specific gravity approximates density, with units of g, cm'. DTH 000120000 Table I Specific Gravities of Various PVC Compound Ingredients Resins General Purpose PVC Dispersion Grade PVC Plasticizers Dihexyl Phthalate (DHP) Di-2-ethylhexyl Phthalate (DOP) Diisooctyl Phthalate (DIOP) Diisononyi Phthalate (DINP) Diisodecyl Phthalate (DIDP) Ditridecyl Phthalate (DTDP) N-CCgC,0 Phthalate (610P) N/i-Cj-Cj-Cu Phthalate (71 IP) N-CrC,0 Phthalate (810P) N/i-C,, Phthalate (DUP) Di-2-ethylhcxyl Adipate (DOA) Diisononyi Adipate (DINA) Diisodecyl Adipate (DIDA) N-C^-Cg-Cjo Adipate (610A) N-Cg-C|o Adipate (810A) Tri-2-ethylhexyi Trimellitate (TOTM) Triisooctyl Trimellitate (TIOTM) Triisononyl Trimellitate (TINTM) N-Cg-Cl0 Trimellitate (NODTM) Expoxidized Soybean Oil Octyl Epoxytallate Typical Polymeries (Polyesters) Chlorinated Paraffin (52 percent Cl) Cresyl Diphenyl Phosphate Triciesyl Phosphate Stabilizers Typical BaCdZn (liquid) Typical BaCd (liquid) Typical BaCd (solid) Dibasic Lead Phthalate Modified Dibasic Lead Phthalate Modified Basic Lead Silicate Sulfate Modified Lead Chlorosilicate Complex Tribasic Lead Sulfate (Hydrous) Modified Tribasic Lead Sulfate Fillers, Pigments Calcium Carbonate Clay Antimony Oxide Fumed Silica Titanium Dioxide (rutile) Carbon Black Lubricants Stearic Acid Mineral Oil 1 1.40 1.40 1.007 0.986 0.985 0.972 0.968 0.953 0.976 0.972 0.971 0.956 0.927 0.921 0.918 0.922 0.919 0.991 0.991 0.977 0.977 0.966 0.922 1.03-1.15 1.250 1208 1.166 D 0.94-1.02 0.98-1.02 1.18-1.42 4.5 3.5 3.9 3.3 6.4 4.6 3 2.71 2.68 5.6 2.2 4.2 2.6 0.94 0.88 conoco, Conoco Chemicals 000120001 dth pwe dan eie based on teiu end eucrienee which Conoco Inc. bdima ictteble and an supplied for informational purposes only. Conoco Inc. dtsckimt any liability lor dama^ or injury which results from the use of the abort data, and nothing contained therein shat constitute* guarantee, warmmy. or tcptnemaiion I including freedom from pnicnt kebibty) by Conoco Inc. with respect to the data, the product described, or Ihnr use for any specific purposes, even if that purpose is known to Conoco lac. For detailed information regarding these products, phase refer to the respective Conoco Chemicals Company Material Safety Data Sheet W02B-CH JW4ISJ-IM