Document 3mrqeX0RXQo6GM2eMb0QxE23

i S'/ r <s Petrochemical guide--20 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. We 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.3 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 f account for over 80 percent of U.S. capacity, and the ? same process should continue to be employed in expan I 1 sions through 1975. Recent announcement of an ethane- i based process (TRANSCAT) has raised the yet-un- Here is how manufacturing methods, proved possibility of bypassing ethylene cracking entirely, but even a viable TRANSCAT cannot greatly influence markets, buyers and sellers and the pre-1975 VCM business. economics affect the future of This process switch has also resulted in large changes in the cast of players. In general, some users of VCM vinyl chloride 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 David P. Keane, Robert B. Stobaugh and Phillip L. Townsend, Harvard University Graduate School of Businc Administration, Boston, Mass. 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 t plants. Tt> PVG hucinf> has also orown at a raoid rate else where in the world. Because of difficulty and expense of shipping, export of VCM has usually constituted a limited 95 ori Rc3(jer Service Card 99 21067001 VINYL CHLORIDE market for U.S. producers, with exports dining tin- L H(,LV, account ill" for only a lew percent ol U..S. production. In 1970 .'Hid 1971, however a lark o/ adequate Hu i oj '.m capacitv caused U.S. VCM exports to increase to some 15 percent of domestic VCM production. This proportion will probably return to less than 6 percent by 1975. MANUFACTURE Most present-dav vinyl chloride monomer (VCM) capacity relics on the so-called balanced oxychloriiution process to convert chlorine and ethylene to VCM. There are, nonetheless, several older process routes which are discussed below in the approximate order of their com mercialization. There aie instances where the Inst two steps of this pi ocess--chlorination of ethylene to EDC. and cracking of EDC to yield VCM plus hydrochloric, acid--have been applied without an acetylene unit. Elhyi Cot]), has applied this technique, with byproduct HCl used to pro duce ethyl chloride for manufacture of tetraethyl lead antiknock compounds. Most producers, however, cannot | justify sufficient end uses of the IICI byproduct. The i result was the balanced clhylenc/acctylenc complex (as employed by Union Carbide and Monsanto at Texas Citv, Texas). Plants were sized so that the acetylenc- 1 cased production consumed most excess hydrochloric acid fom EDC cracking to produce VCM directly. This j process reduces by' half the dependence upon acetylene j as a feedstock, but no new examples have been con- ; structcd in the United States in the past few years. i 77 1. Cataly tic addition of hydrochloric acid to acetylene 3. Balanced oxychlorination process | HC - CH + HC! ---> CH, = CHC! _r * *d'-**- Acetylene Hydrochloric acid \'CM The earliest plants of this sort cmplovcd carbidederived acetylene and hydrochloric acid derived by com busting hydrogen with chlorine. The catalyst for this addition is mercuric chloride absorbed on a carrier such as activated carbon. The reaction is simple 2nd of high yield when compared to subsequent VCM processes, thereby allowing simple product purification, no sizable waste disposal problem, and low capital and operating costs. Carbide acetylene and purposely produced hydro chloric acid were gradually replaced with less expensive petroleum-derived acetylene and byproduct .hydrochloric acid (which also coincided with major relocations to the U.S. Gulf Coast), but raw material costs remained high relative to newer processes. Some VCM is still produced with this process, but these surviving plants arc very tightly integrated with other acetylene-related units and have been gradually disappearing. Direct chjorination CH; - Cl I; + Cl;----------------- > CH;C1 - CH;C1 Ethvlene Chlorine EDC Oxychlorination CH; = CH; + HCl + -JO; -* CH;C1 - CH;C1 + H;0 Ethvlene EDC Water Cracking 900-950F CH;C1--CH;C1 > CH; = CHC1 + HCl EDC VCM J The difference between these processes and the earlier i uses of EDC cracking is the second reaction above to (1) j present exporting a large IICI byproduct and (2) elimi nate the need for acetylene-feedstock. This reaction is essentially a variant of the Deacon process to convert HCl to more valuable chlorine. A CH?-- Ethar 2. Balanced cthylene/acctylene V'CM production CH; = CH; + Cl;----------------- > CH; Cl - CH;C1 Ethylene Chlorine Ethylene dichloride (EDC) Q00-950F CH; Cl - CH; C.1 CH; = CH Cl + H Cl EDC VCM Hydrochloric acid HC s CH + H Cl----------------- > CH; = CHC1 Acetylene Hydrochloric acid VCM 2 HCl + J O; ------------- Cl; + H;0 While the Deacon process has not been a commercial success because of technical problems with corrosion and product purification expense, oxychlorination has over come these problems by immediately capturing the chlorine in situ to form EDC. The combined EDC streams are then cracked and the resultant HCl recycled to close the loop. As mentioned above, most presently employed processes--including Goodrich, Dow, Stauffer and PPG-- use some variation of balanced oxychlorination. ETHANE T CHLORINE. AIR TRANSCAT SYSTEM VINYL CHLORIDE SEPARATION 1t L HCl RECYCLE DICHLOROETHANE RECYCLE CHLORINATED COMPOUNDS 8 TARS RECYCLE Fig. 1--Vinyl chloride monomer process via ethane as offered by Lummus/Armstrong. VCM PRODUCT K O C; o c: CH; = Ethyl CH; t I 2 HC Tm the dc which Fi"o. C acid extre; where tanco Cork and f chem waste the r> econc feeds. inn February 1973 Hydrocarbon Processing IIydi  cps of t!ii; d crackin', acid--havr Corp. Jia< ~scd to pro.' aetliyl lcac| ' vc annot oci The complex (aj at Tcxaj acetylene-' di ochloric -ectly. This .. acetylene been conears. air v-.iy f. ETHYLENE Ls -Cl ('' :CL REACTOR PRIVMIY 11 lCOVE RY CECl, SECONDARY RECOVERY VENT CAS X T WASTE WATER CRUOE EDC COCLING WATER 2 LIGHTS A X X VINYL CHlORlOE - + H,0 Water - HC1 OiRECT CHLCRiN&TiQN REACTOR HEAVIES EDC PURIFICATION RECYCLE EDC CRACKING FURNACE HCI COLUMN Fig. 6-2--Vinyl chloride by oxychlorination by B.F. Goodrich. vet COLUMN the --rlicr 3v (i) | (2) climi-i reaction is -o convert 4. Single-step chlorination and craching of ethane (TRANSCAT process) CH3--ch3 molten salt Ethane CHc = CH5 Ethylene cmmercial _osion and ' nas over- ' t-tring the C streams - d to close . employed ; --.d PPG- CH2 = CH2 + Cl2-------------- CH-; Cl--CHa Cl Ethylene Chlorine EDC CH2 Cl--CHj Cl salt EDC CH:--CHC1 + HCI VCM Hydrochloric acid molten salt 2 HCI + 1Q: Cl-> + H-O The recently announced TRANSCAT process involves the development to a pilot stacc of an ethane-based route which foregoes the separate purification of cthvlcnc (sec Fig. 6-1). Ethane, chlorine, air and excess hydrochloric acid (if desired) are fed to a molten salt bath with an extremely short residence time and a high temperature, where all of the above reactions apparently occur simul taneously. The potential licensors , Lumnws/Armstrong Cork) claim above 95 percent VCM yield on chlorine and 80 percent VCM yield on ethane fed. Even more chemically revolutionary is the claim that chlorinated wastes which are produced may be martially recycled to the reactor to result in additional VCM. The indicated economic au\au c;hu..c U feedstock might make this the VCM process of the future, should the process prove to be commercially viable. Popular VCM processes. While oxychlorination has been the process route chosen for all recent VCM plants in the United States and most of the rest of the world, this has not decreased the competition among different processes and licensors. There are several competing processes which have demonstrated their commercial feasibility. The fol lowing three oxychlorination processes--on which signifi cant information has been published--are representative of most manufacturing facilities. I. B. F. Goodrich oxychlorination (Badger). This process was the first successful oxychlorination process (1965), with the initial 400-million-pound/ycar unit in stalled at Goodrich's plant in Calvert City, Ky. There are about 8 plants which utilize this process, having an aggregate capacity of about 4 billion pounds/year.2 As is true of all balanced oxychlorination processes, the over-all material balance involves feeding ethylene and chlorine and production of vinyl chloride (see Fig. 6-2). Yields are certainly in the 90 percent range (and u may exceed 95 percent) on both primary feedstocks. The b- Oyield losses involve production of light and heavy ends which boil above and below EDC. These byproducts consist primarily of C, and C; chlorinated organics, sonic of which are suitable as feedstocks for production o! chlorinated solvents (carbon tetrachloride, perchlorowhile the balance. rrnuirc disDOSal. The first of .three segments of the process is direct jCKSSING Hydrocarbon Procks February 1973 101 VINYL CHLORIDE addition of chlorine to ethylene to pioducc ethylene dichloridc (EDC). This reaction is essentially stoichio- jnOiic m hotl'i reactants, will. .....GiiiiC ni-*....mLC in a slight excess. The reaction is liquid phase with a dissolved catalyst and mildly exothermic. Reactor tein- neraturc and pressure arc controlled by cooling water neat removal. Following the reactor, the EDG product is fed to a two-step purification train to remove light and heavy ends (the same train processes two other EDO streams). The second major operation consists of cracking EDC to produce vinyl chloride and anhydrous hydrochloric acid. The cracking occurs at 900-1,000 F in a direct- fired furnace which is packed with a catalyst (pumice has been a traditional choice). Conversion of EDC is typically in the 50-G0 percent range to optimize the costs between coking cycle, utilities cost and yield. The hot product gases are quenched by direct contact with condensed recycle stream of the same composition, p;m: to fractionation. In the HC1 column, anhydrous HCi k- removed overhead for use in the oxychiorination unit. The VCM column produces VCM as an overhead prod uct meeting finished product specifications, and produce. a recycle EDC stream of unconverted EDC. This stream is purified in the common EDC columns prior to recycl ing to the cracking furnaces. The purification step is required to prevent fouling of reaction surfaces in the cracking furnace. These two previous process sections offer relatively little advantage over older processes--they constitute an unbalanced EDC cracking operation (such as practiced by Ethyl) which produces 11CI as a byproduct. The third section of the IFF. Goodrich anti other oxychiorination processes involves conversion of this excess 1101 to EDC. Air, ethylene and IIG1 arc charged to a fluidized catalyst oou .it a model aicty m^n .mu suiumtjjii. elevated pressure. The reaction to produce EDC (given above) yields water byproduct, which is rejected as the product vapor is condensed. The first step of condensa tion produces a crude EDC product, while the gases (primarily diluent nitrogen) must be fed to a secondary absorber to recover a second stream of EDC by nbsorption/stripping. The tail gases are vented, while crude EDC is fed to the common EDC finishing train. The oxidation of HCI to CD is highly exothermic and the subsequent addition of Cl2 to ethylene is mildly exo thermic. As a result, the oxychiorination reactor, is cooled by generating steam, which brings the whole piorcss closer to self-sufficiency on steam supply. The net effect of this crucial section is thus the con version of IIC1, ethylene and air to a VCM precursor. While the process is depicted as balanced, design and operating changes allow any individual plant to produce or accept either HCI or EDC as local conditions -warrant. 2. Toyo Soda oxychiorination (see Fig. 6-3). A pro cess very similar to that of B. F. Goodrich has been employed in several Japanese plants. The essential de sign differences appear to be: (1) the use of a fixed bed reactor for oxychiorination, as opposed to the B. I'. Good rich fluid bed; (2) use of a hot oil reactor coolant and external steam generation, and (3) incorporation of a specific EDC dehydrator column not shown in the B. F. Goodrich publications. None of these differences are chlorinator A8S0RBER STRIPPER HEAVIES COLUMN CRACKER QUENCHER HCI COLUMN sto c id 3 Fig. 6-3--Toyo Soda's oxychiorination vinyl chloride process. i 102 February 1973 Hydrocarbon Processing major; ihc processes should he roughly competitive based upon published data.3 3. Stauffer Chemical oxychlorination. This is again very similar to the earlier oxychlorination precedes. Minor changes in the routing of streams, small differences in catalyst performance, and features of the mechanical design arc all that dillerentiatc between the published information for this process and the previous two. It is noteworthy that Stauffer published an estimate of 3.7 hill ion pounds/year of vinyl chloride capacity in 17 plants utilizing this process.4 4. Monsanto oxychlorination. There are several licen sees for this similar process.5 5. Dow oxychlorination. Only 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. 6. Union Carbide (Liimnms) balanced acetylene/ i ethylene process. No recent examples of this process have | been constructed in the United States, but a Union Car bide venture using a WullF process acctylcnc/ethylenc plant in Brazil is employing this process to consume part of the production. Complete startup of this plant is planned for 1972. The basic flow scheme is shown in Fig. 6-4. Ethylene and chlorine produce EDC, which is cracked to yield J-IC1 and VCM; the process is very similar in this area to the above processes. However, instead of using oxygen and ethylene to convert the byproduct PICl to EDC, the balanced process then involves the older acetylene route. The reaction is a vapor phase reaction over HgCE/carbon catalyst with a slight IIC1 excess. A circulating coolant removes reaction heat to control the reaction temperature to about 400 E. Conversion is less than complete in some plants, requiring recycle of acetylene and 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 tire use of acetylene at current or projected U.S. prices makes this process less than competitive with balanced oxychlorination (see `''Economics"). 7. Others. Pechincy-Saint-Gobain offers combined production of chlorinated solvents and vinyl chloride in flexible proportions. A single plant a;. Saint Auban, France, has operated since the spring of 1970 to produce about 120,000 metric tons/ycar of VCM with this pro cess.6 Diamond Shamroek/deNora offer "Dianor," a process to produce and crack EDC which is aimed at developing countries with no ethylene complexes.1 The process op crates on ethylene as low as 60 percent concentration and produces FIC1 byproduct, which would leave the process uncompetitive under any but the special circum stances of small, developing chemical markets with tariff protection. Feedstock availability. The importance of feedstock cost to VCM producers has resulted in the entry to the VCM market of large, integrated chlorate and ethylene producers (see "individual companies' ana Econom ics"). Future manufacturing elloris will be largely influ- .j; J C*LCRI?{&7P *AST HYDPCo-TN CHfO'hDE L Fig. 6-4--Author's interpretation of the balanced VCM process as announced by Union Carbide (Lummus). TABLE 6-1--Properties of VCM* Mol. wt.................................................................... Specific gravity.................................................... Melting point........................................................ Boiling point......................................................... ... Flash point............................................................ ... Maximum allowable concentration (ppm by volume)............................................ Explosive limits % by volume in air.......... 0.9S31 - 13.81" C --103 K Upper 22 20V20 C (-24*1.0 CJ (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.3 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 either 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 tire 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 arc in the running as long-term suppliers of low cost power, petroleum and natural gas remain necessary until at least 19S0. Thcrelore, availability ot petroleum and natural gas fuels will help determine chlorine plant locations until at least 1975. Hr o & J C: 1 I YPROCtAKIiON PrOGIISSING February 1973 103 i- VINVL CHLORIDE Tli esc trends indicate that manufacturing locations for VCM arc likely to Lie heavily influenced by availability ui inexpensive nyuioeaioun itainiA.ns unu tuns, null relative labor and construction costs, water and transpor tation facilities acting as less important constraints. nysica! 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. 6-5--Per capita consumption of polyvinyl chloride." APPAREL CONSTRUCTION 9 5 FLOORING 17 HOVE FURMSHSNGS 16 PACKAGING PIPE 8 FITTINGS RECORDS TRANSPORTATION A 5 5 9 ................. ......... -*' 6 12 15 ----- - ... 8 12 7 WIRE B CASlf 12 13 .............~ 5 10 9 12 11 14 6 10 ALL OTHER 18 17 20 1965 1970 1975 Fig. 6-6--End use markets for PVC." sumption of VCM is almost entirely for production of polyvinyl chloride resins and copolymer resins (propylene, ethylene and vinyl acetate are commonly copolymcri/cd with VCM). Domestic consumption is projected to grow uouui 10 pcieem annually iium the 19/b 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 the more usual level of 5-6 percent of production, or 300 million pounds, by 1975. End uses of PVC are characterized by more variety than most other commodity resins. Physical propcrdcs 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 lias resulted from tiiis 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. I 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 last 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 IIC1 emissions causes other materials to replace PVC in some applications. Use of PVC pipe and fittings has benentted 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 stvrene-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. O !C^- Among die more mature PVC markets, use of PVC in transportation equipment should continue at a relalively high growth rate. Further penetration of the automobile market is not a major hope for PVC, since seat "V2 ** ' 104 February 1973 Hydrocarbon Processing on of - ylenc, 1965 1970 prized grow r,' 3 -t roduc- of 5-6 1975. ariety fries of Lrieties 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 e conThese of the nature opnrel, transgs. An _are of ;egories on, 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 are mature segments. Growth of these seg ments should keep pace with real GNP 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. Tabic 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-r 'S j ducers. each with a slightly different product line. While -> * * j 65 percent of VCM was polymerized captively in 1960, frames, ! this percentage declined rapidly as older acetylene-based -vooden j plants were replaced with larger ethylene-based plants, should j Today companies such as Dow and Shell are exclusively ext five merchant sellers of VCM, while PVC producers such as Monsanto and Union Carbide have discontinued VCM -rowing manufacture. As a result, only about 40 percent of VCM mental : was captively consumed in 1970, and the percentage will oecause probably be closer to 30 percent in 1975. The 21 com- ut such i panies currently producing PVC are listed in Table 6-3, e 1975, , together with capacity by region. Of these 21 companies, A PVC i 7 also produce VCM (see Table 6-5). - years, ! A final characterization of PVC production is the type e years, > of polymerization employed. Suspension homopolymer derably .atcrials : resins have been an increasing fraction of PVC production I in recent years, mostly at the expense of copolymer resins, ! while dispersion resins have maintained a relatively con am the stant share. Fig. 6-7 presents a breakdown of PVC by plastic method of polymerization. ected a piping, in this ethylene -styrene -ins will of tliis ; rate if World markets. During the 1960s, exports of VCM averaged less than 5 percent of domestic production. VCM must be shipped and stored cither 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 lias created a strong tendency to produce VCM locally rather than import lor an ex tended period. In 1969, 1970 and 1971, however, rapid of i vC expansion of European VCM demand and fagging pro- a rr!r- d'.H'tm:' ccoTr-t I,, 1,.,1 to n Itnnrrnn 1] v Firm- imnnits from c nuto- tlie U.S. Exports accounted for a high of 1G percent of occ scat domestic VCM production in 1970. As added capacity TAELS 6-2--Processing motfiods for PVC1* Share of marker, % Extrusion (wire, film, sheet and general extrusion).................... Colendering (film, sheet and coating)................................................... Molding (blow, injection. roto. compression)................ Coating (dip, knife, roll, spray, laminatton).............................. Other........................................................................................................... 40 35 10 10 5 TABLE 6-3--PVC producers In the United States," Jan. 1, 19-71 Northeast Borden....................... Leominster, Mass. Diamond* Shamrock............. Delaware City. Del. Firestone................... PottsccwR. Pa. B. F. Goodrich Chemical.............. FedrxutcTre. N. J. Goodyear Tire & Rubber.................. , Niagara Fa!;?, N. V. Great American Plastics................. Hooker....................... . Eurlir.vvrn. X. I. Monsanto................. | Snrira:.. . t. Mas*. Olin............................. Paritasote................. - Pas-aic. N. U Stauffer..................... j^eiaware C:t\\ Del. Tenncco................... 3uriitwt~n, N. J. 12 companies 13 plants 1.300 MM lbs. capacity Southeast Air Products............ Continental Oil___ Firestone................... Pantasote................. Union Carbide. . . . Midwest Air Products............ Allied Chemical.... Borden....................... General Tire............ B. F. Goodrich Chemical.............. Uniroyal................. Southwest Diamond* Shamrock............. Ethyl......................... Goodyear Tire & Per.racala. Fh. Aberdeen. M:*. P.rrw"-' V--' Point ?:e.`.--ar.:. W. Va. S. Charleston. \Y. Va. Calvert C;tv. Ky. Pair.esvdie. Ohio Lhopeh*. Jlj. Ashtabula, Ohio lier.rv. III. Avon Lake. Ohio Louisville. Kv. Pasnesviile, Ohio Deer Park. Texas Baton Rouse. La. Union Carbide.... Far West American Chemical.............. B. F. Goodrich Chemical.............. Kevsor....................... iexas City, Texas Long Beach. Calif. Long Beach. Calif. Saugus, Cain 5 companies o 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 209 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) F.F.C 1972.......................................... 1963.......................................... 1004.......................................... 1005.......................................... I960.......................................... 1007.......................................... 1948. . 1069.......................................... 1970*........................................ Growth rate (1962-1970)....................... Projected growth Rate (to 1975)*.............. 610 760 813 950 1.061 1 227 1.598 15% 2.373 10% EFTA 227 3US 339 359 *101 12% 820 s% Spain 17 26 29 33 46 71 91 97 24% 220 18% 40 52 72 56 141 140 148 18% 285 n% Total Western Europe 943 1.178 1.271 1.4U) 1,6-51 1.925 .24l 2.400 15% 3.900* 10% Source: European Chemical News and Oil, Paint and Drug Reporter, Oct. 26, 1970, plus authors' estimate.*.* comes onstream in Western Europe and developing coun tries rush to build VCM plants, U.S. exports of VCM will decrease again to 5-6 percent of production or lower. U.S. cxnorts of PVC rosin arc also minimal; in 1969 and 1970, about 5.5 percent and 6 percent of the U.S. PVC sold was exported. Two reasons for this are the iIl i !'> o c o`i o si T.KSSINC 1 honor, \niiox 1'iiocr.ssiNr, Fobruarv 1973 105 VINYL CMI.OMIDE T/tf Lt -5--U.S. producers of VC.'.l mpidly expanding domestic markets for PVC and the uigii iciduve ireigiu costs, b uruiennore, lann barriers 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 1930 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 (sec 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.11 Japanese PVC producers also represent a sizable market or 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 oxychlorina tion 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 -'ounds/year in 1965 to about 6 billion pounds/year by 71 was at an annual rate of 18 percent. The actual rate -of new capacity construction has been even more 106 P-Imc- !.or.it lor Allied..................... American Chemical......... (AUC< >-Stnu(7er) hem.......... (Uoi den- Uniioyal) Conoco................. Baton Rouge, La. Watson. Calif. Ceisinar. La. Lake Charles. La. Dow....................... Plaqucrnine. La. Freeport Texas Oyster Creek, Texas Ethyl..................... Baton Rouge. La. Houston Goodrich.............. Calvert City, Ky. PPG....................... Lake Charles, La. Puerto Kico Shell....................... Houston Norco. La. Tenncco................ Houston 1972 Total Nameplate c:i p:cl t y "w /*- ' 300 170 300 Oxychlorination Stauffer oxychlorination Acetylene G00 340 180 700 270 150 1.000 300 500 800 (Expanding) SOO (1974) 255 5.SG5 Stauficr oxychlorination Dow oxychlorination Dow ox ychlorination Dow uxychlorii'.'ition Ethylcne/EDC cracking Ethylvne/F.DC cracking Goodrich oxychlorination (multiple tivtin) Oxvchlorin jtion Oxvchlorinafion Staui.cr oxychlorination Stauficr oxychlorination Acetylene Source: Many published estimates as interpreted by the authors. Note that effective capacity probably docs not equal nameplate capacity. A reasonable capacity figure would probably be 90% of the above rates. Oil, Paint end Drug RcyctUr. Oct. 11, 3971, lias the most complete listing. i j i r f i i rapid, with fully half of the 1965 capacity being shut down in tiie same period. Eighty percent of 1971 capacity is less than 6 years old. Among individual companies, Dow has about 19 per cent of VCM capacity, and about 23 percent of oxy chlorination capacity. Dow's position as a capacity leader among ethylene, chlorine and chlorinated solvents pro ducers leaves no doubt of Dow's long-term position as a VCM producer. Raw materials costs are crucial to VCM economics, being roughly equally split between chlorine and ethylene (see "Economics"). In addition, byproduct chlorinated hydrocarbons from oxychlorination are rou tinely absorbed into Dow's production of perchloro- ? 3 \t j i t S ( ethylene and carbon tetrachloride. At the present time, this VCM is' largely sold in the merchant market. While Dow has extensive experience in production of bulk poly mers. Dow has chosen to remain a merchant supplier and has discontinued production of PVC. The second largest VCM capacity belongs to B. F. Goodrich at Calvert City, Ky. Two or three trains at this site employ Goodrich's oxychlorination process (see "Man ufacture"), and are notable in being the only sizeable plants located in the northern or eastern United States. 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 I i I i ? I I i * i * l >i chlorine for this plant are produced by Goodrich at Cal vert City. PPG has moved into second place with a 14 percent 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 arc 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 bi * cs d I s * February 1973 Hydrocarbon Processing t TAn.'.f; 6-6--Foreign VCA1 producers Country Company City Annual capacity (thousand metric* tons ) .* Process/completion r.rnoi'F. Belgium:................................................... CzechoMornLI.n ................................. Finland:................................................. BASE Snlvic I.imburr.se Vinyl 7 eelmiK-xporl Pckema Oy DAUFAC l'echiney-Saint-Gobian Roivay Italy:........................................................ Netherlands:........................................ Rumania:......................... .................... Spain:...................................................... Sweden:.................................................. U. K.:....................................................... USSR:...................................................... LATIN AMERICA Argentina:............................................ Braill:...................................................... Chile:....................................................... Mexico:................................................... Venezuela:......... ...................... AFRICA/MIDDLE EAST Lcypr:..................................................... Turkey:................................................... AN 1C Montedison Rumianca AK7.0 Industrial Impart Monsanto Iberica Otycroa Viniclnr Kemanord B. P. C hemicals British Geon ICI Techmashimport BASF ChemWcrke Huels llocchst Knap'acl: AG Wackcr Ci.wm.e Electroclor SAIC Industrias-Do'.v Con?orcio-Pau!i;ca Union Carbide Empreesa Xationale rfe Petroleo Petroouirp.ica-DowPEN1KX B. K. Goodrich/IVP/others Genera) Organization for Industry Pctkim Petrokimya ASIA/PACIFIC Australia:.............................................. Japan:..................................................... Korea:..................................................... Taiwan:.................................................. Thailand:.............................................. Goodrich As-ahi-Penn Chemical Central Chem. Chiba VCM Chisso Petro-chem-.cal Japanese Geon Kanccafuchi Kaaei Mizushima Kureha Mitsubishi-Monsanto Mitsui Mitsui Toatsu Nihon VCM Senpoku Pctro-chenr.cals Toyo Soda Korean Pacific Chemical Chinese Petroleum. Taiwan \ CM Thai Plastic Antwerp JctnepfN' Tc'-'-'Mulerloo Novak y Porvoo LaVcrn Tavaux Ravrmi t Porto Marghera Caeti.iri BotPk I`r: n Kimtu.'o Vilcea Tairti u^r.a P'jrrt ; ~o \lcrtnrrb 8 r,- , 'ini] Bitkin Pay. Wales H.'n -e Pi nr t:j Marl l> r 1-jr r1 j':*cn ( ar .r, Permudex l- - ca F -* N. A. C mff pcion Cn:,r- pc .on P,r ,r tor.l 7 .-bNro AP-irdria 17 nn t Al.e-a Varimca Altona Goi Kawasaki Chiba Minamata Ocaka Misushima Vokkaichi Nopoya Nihon Osaka Tokovama Yokkaichi Kaohstung Toufen Banckok 120 200 2<X) 50 53 90 120 120 200 25 250 250 180 lf)0 (expanded) 300 75 30 50 80 (planned) 55 75 200 HO N. A. N. A. 30 33 300 305 (expanded) 60 (planned) 100 N. A. 50 (planned) 50 (planned) 100 100 85 15 (plan) 15 (plan) 70 50 43 (planned) 30 95 (planned) 27 (planned expansion) N. A. 145 (EDC) 90 (EDC) 160 55 130 120 50 120 CO N. A. SO 120 310 100 60 64 60 (planned) 40 Stauffer Solvay--1CI Goodrich Coodt i<*h/Uoechst Solv~.< y/I C l Ethylene (expanding) Own (1072) Ethylene-based (1072) balanced acetylenc/etiiylcne Ethyl KDC cracking Stauftcr (completion)? Goodrich (1971) PPG (1072) Good rich /Stau fifer in. t\. Mon^nnto/Ethylene Goodrich Solvay/JCI (1072) Ethyl< nc Goodrich Acetylene Oxycldorination OxycMorinntion P-S-G (10V2?) Stauffer (1973?) Balanced Huls (1072) Goodrich/11 ocehst Goodric]i/1 loechst Acetylene (1971) ICI (1073) Dow (1974) Eth yl /So1 v a y/1CI Solvay/ICI Balanced ethylene-acetylene (1972) N. A. Dow Scientific Derf^n B. F. Goodrich (1973) N. A. Solva v/ICI 1974 1972 Goodrich PPG Toyo Soda Stauffer Toyo Soda (1972) Balanced, Goodrich Stauffer Monsanto/Scientific Design Balanced Mitsui Scientific Design Stauffer Mitsui Toyo Soda Toyo Soda Dow Monsanto/Tokoyama Union Carbide (1972) Dynamit Nobel Source: Authors* estimate based on many published sources. This 11st is not intended to be comprehensive, but to list most major producers. l I capacity at Houston. Ethylene comes from a gas oil cracker with 1 billion pounds/year capacity, but required chlorine is purchased externally. Snell produces chlorine and other chlorinated organics beside VCM, but has apparently chosen not to expand chlorine capacity for use in VCM. With recent announcement of a similar scale VCM unit in Norco. La.. Shell will become the largest VCM producer by 1975. Conoco has 10 percent of in dustry capacity at Lake Charles, with ethylene provided by ethanc/propane cracking and chlorine requirements purchased. It is reasonable to watch major ethylene and chlorine producers for the next VCM units. HISTORICAL DATA . Table 6-7 presents data based on U.S. Tariff Commis sion reports for 1958 through 1969 and the authors' estimates for 1975. These data show a steady rise in the Juctier. c-5 VCM. --r-pt;"~ '!,'rTir' tr> iQqy. when the industry was particularly plagued with overcapacity. Pro duction has grown at over 17 percent per year for the TABIE 6-7--0.5. historical data: VCM, 1559 to 1975 Year Number of producers 1959____ 1900____ 1961.... 1902____ 1903____ 1904____ 1905____ 1900____ 1907____ 1908____ 1909____ 1970____ 1975____ 10 12 12 12 13 13 13 13 13 12 11 9 10* Production MM lb./yr. 978 1.037 1.044 1.311 1.435 1.614 2.000 2.500 2.424 2.909 3,730 4.000 5.600* Sales MM lb./yr. Average price, f/lb. Total value of prod'n* 5 MM 329 352 424 516 501 598 OSS 836 952 1.403 2.350 2.520* 4.200* 11 10 S.l 7.5 7.0 6.3 6.1 5.9 5.3 4.6 4.4 4.5* 4.5* 10$ 204 85 9S 100 102 122 14S 128 130 164 ISO* 252* Source: U.S. Tariff Commission Author's estimates, with price projection in 1971 dollars. past five years. Average sales price has continually dropped because oxychlorination of ethylene, which is accounting for an ever-increasing proportion of VCM production, is considerably cheaper than the acetylene route, anu be cause of economies of scale. Because of these offsetting W H* O *a T o o Hyiikoc.akuon Processing February 1973 107 VINYL CIUOSiDE Fig. 6-8--VCM production in tiie United States, U.S. Tariff Commissicn and authors' c-stimates. 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 the United States is ex pected to show an annual growth rate of 10 percent from 1970 to 1975. The trends of VCM production, price and value are shown in Figs. 6-8, 6-9 and 6-10. ECONOMICS The price of VCM has exhibited the typical downward trend of maturing petrochemical monomers. 1 he major reasons lor this trend have been me consistently improv ing technology, the much larger scale of existing produc- ,K* iy..ii 1r..i t..'J ' i1.<.;1,L.'s j <<*.'-* *., -* .. . v., * - - -'*-- jI"'M* *-!w/-* 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 oxychlorination 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-milIion-poimd/ye.ir 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 capital cost. While two U.S. vinyl chloride producers (Tenneco and Monochcm) 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. Tiie 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 ill chlorine and the evident trend to oil company domina- TA5LE 6-8--Estimated cost of VCM production by ethylene chlorination and oxychlorination e m icso T s Basis: Lfjc? rat?' ar.d capital ecu:? arc derived from published claims. Sec especially Spits. Peter. "Vinyl Chloride Economics," Chemical Engineering Progress r.V-5t.'itiW,. .March rV>3-n.;lii..n-pvv:r.d' year Coast plant (F. O. B.) Working capital -- one n:or.:r. c: VCM sales value. Capital cost ** 10 or.-site? iukon dollars) S cn-siics .Note: !M Total 11 year taxable hie 15 year cm it", a ted useful li'e Thu u a ?:-.! y->t.r.e cMcul-ticr. for one year at 00^ of capacity: a more accurate discounted cash flow might produce a noticably different price. No byproduct cicdiu or o.t;*o?ul io*ts are included: credits for chlorinated solvents feedstocks are assumed to balance heavy and li^lit ends disposal costs. 108 February 1973 Hydrocarbon Processing v/.ru: 6-9--Sensitivity c-f VC/.', manufoefuring tost to aisumpilon* A change In thU Input j'r."/v cri'tn electricity). . Operating ci maintenance cot-ts................ (v.u'.uuit increase in ovctiieud) Cons:ruction costa......................................... By this amount 5-Vton 0.25 cent3/pound 10 % 10 % 10% Ch.Ttp'ei conr of VCM by nrununi 0.10 0.12 0.02 0.02 0.07 Source: Derived from previous estimate of F. O. B. manufacturing cost. tion of ethylene production (primarily because of byprod uct handling from heavier feedstock cracking), the vinyl chloride business is the obvious domain of both large chlorine producers (Dow, PPG, Goodrich) and large ethylene producers (Conoco, Shell, Dow and Union Car bide). This definite trend should continue for the fore seeable future. A second notable feature (to the extent that these published data are accurate) is the low profit margin on recent VCM contracts. With the average price of VCM sales (reported by the U.S. Tariff Commission) ap proaching 4J4 cents/pound, it is evident that new VCM plants must be operated very efficiently and with minimal startup difficulties to yield any reasonable return to VCM producers. The sensitivity of a VCM operation to the various manufacturing cost components is presented in Table 6-9. This indicates the probable upward pressure on VCM pricing in the event cf increasing costs for fuel, construction, and ethvlene which have been characteristic of 1970-1971. A recent development in VCM manufacture was the announcement of a process to produce VCM directly from ethane, chlorine and hydrochloric acid. The "TRANSCAT'' process, as it has been dubbed by its inventors and potential licensors at Armstrong Cork and Lummus, claims to have economics superior to the bal anced oxychlorinntior. process. Yields and raw material prices have been reported as superior to oxychlorination and capital costs seem to be comparable. This process presents a potential reduction in manufacturing cost of about 1 cent/pound if these characteristics are present in commercial-sized plants.'-4 No announcements of a commercial TRANSCAT venture have bee-n made public to date. A final, developing factor in VCM economics is the production of 3-5 percent chlorinated byproducts by most oxychlorination processes. While most of these are suit able feedstocks for chlorinated solvents manufacture, a fraction are suitable only for disposal. As environmental laws impinge on the more economic means of disposal-- atmospheric venting, deep wells and deep sea dumping-- the VCM producers will be forced to more expensive disposal means. These costs will exert an unknown, but poientiallv significant, upward pressure on VCM price. YEAR Fig. 6-9--U.S. VCM average selling price, authors' estimates and U.S. Tariff Commission. Fig. 6-10--Value of U.S. VCM production, authors' estimates and U.S. Tariff Commission. Fig. 6-11--Estimated battery limit capital cost for VCM pro cesses.1* THE FUTURE Despite production volume which indicates approach ing maturity in its life cycle, vinyl chloride continues to grow at a rapid rate. This'growth has resulted from extension of I'YC and cojjolvuicrs into new materials applications. Replacement ot older materials--such as steel and iron in pipe, glass and paper in packaging--will continue to piuweic the ni.ijui impetus to ?VC and, therefore, VCM growth. While these markets are them selves mature and growing only moderately, their very' size allows 15-20 percent annual growth of PV'C con sumed from only moderate inroads. At the same time, older PV(J markets are maturing noticeably ana wiii exhibit growth of 5t8 percent. The upshot will be PVC consumption growl!; of 10 percent from 1969 to 1975 and oh"~ d ** i i no hn c i VINYL CHLORIDE a lower 7 percent growth of VCYl production because oi a decreasing proportion oi exports. VCM manufacturing costs have been rapidly approach ing feedstock values. VCM sells for 4.5-5 cents/pound, ethylene for 3-3*4 cents/pound, and chlorine for 2-2.5 cents/pound in large scale contracts. Therefore, nearbalanced oxychlorination is not likely to be supplanted as the major VCM process unless the change to even less expensive feedstocks is involved. Not enough information is available to assess the commercial success of the re cently announced TRANSCAT process to convert ethane directly to VCM. If preliminary information is confirmed, watch for TRANSCAT to be employed on a very large scale. Location of new VCM production will be determined by availability of low-cost hydrocarbons, with VCM transportation by water, pipe line and rail acting as a constraint. If present erosion of U.S. Gulf Coast ad vantages continues, large VCM markets will draw new producers to the North and East. The companies which build the next few VCM plants will be those with captive supplies of ethylene, chlorine or both, and those with considerable VCM operating knowhow. Paper-thin profit margins -almost preclude en try' by any producer that lacks more than one of these three advantages. Look for Dow', PPG and Shell to About the authors David P. Keane is a product manage ment executive in the Friden Division of the Singer Co. He received an M.B.A. from Harvard Business School in 1970. He also holds an A.B. in economics from Georgetown University, Washing ton, D.C., and the "Ceriificat" from the University of Fribourg, Switzer land, in French literature. Robert B. StobaeGH is a professor at Harvard Business School where he teaches a doctoral seminar in interna tional technology and production. He holds a B.S. in chemical engineering from Louisiana State University and a recent doctorate from Harvard Busi ness School, lie has served as a con sultant to a number of chemical and oil firms and govermnents and has en gineering experience with Monsanto, Callcx Oil Group and Jersey Standard affiliates. He has written numerous articles and two books. Petrochemical Manufacturing and Marketing- Guide, Volume I and II (Gulf Publishing Co.). Phillip Townsend is an industrial con sultant and working toward a doctorate. at Harvard Business School. His spe cial field is production and operations management, particularly in petro chemicals. He has held technical and managerial positions with W.B. Grace, American Oil and Shell Chemical. Mr. Townsend, received a B.S. in economics and chemical engineering from M.I.T. and an M.S. in chemical engineering from Purdue. 40 '3 4 5 6 7 8 910 20 30 40 50 60 CUMULATIVE PRODUCTION EXPERIENCE, MILLION POUNDS Fig. 6-12--Exoerience curves for VCM price, PVC price, end value added by pelymerizer. Source: U.S. Tariff Commissicn, Boston Consulting Group, and Manufacturing Chemists Asso ciation figures are combined with the GN? deflator (1953 base year) and authors' estimates of future production. A 3 percent inflation projection through 1975 is incorporated. continue expansion, with Union Carbide and Monsanto considering eventual reentry of VCM production. Intro duction of a successful ethane-based process, however, would cause chlorine producers to dominate future pro duction. Based upon these trends (see Figs. 6-4, 6-5 and 6-6) we predict that production of VCM almost exclusively from ethylene will reach 5.6 billion pounds by 1S75, with merchant sales at a price of 4.5 cents/pound (1971 dol lars). This will result in an imputed value of $252 million for 1975 production (1971 dollars). These large contracts will be written with escalation clauses to offset increasing power and hydrocarbon costs. Fig. 6-12 presents the history of PVC and VCM pric ing, as v/ell as the value added by polymerizers. Projection of the decreasing polymerization margin (using cumula tive production experience versus price) gives a further estimate that average 1975 PVC prices will approximate 11 cents/pound (in 1971 dollars).15 LITERATURE CITED 1 European Chemical Sews: Polymer Intermediates, Oct. 30, 1970, p. 5. * Hydrocarbon Processing, November 1067, p. 239; Chemical Week, Aug. 29. J904. * "Foreign Aid for Vinyl," Chemical Week, Sept. 24, 1006. * Hydrocarbon I'roccssing, November 1963, p. 249. * Hydrocarbon Processing, November 1969, p. 248. * European Chemical Near, Aprii 30, 1071, and Oil and Gas Journal, Nov. 8, 1971. 1 Chemical Engineering. April 22, 1968. pp. 142*144. * Frciling, Hur-on and Summerville, "Width Feedstock for Jvthylcne," Hydros carbon Processing, November 11*68. j>. I l9. * Faith, Keyes and Clark, Industrial Chcmiccls, Wiley, 3rd edition, 1965, p. 8U`J. 10 "Polyvinyl Chloride: Outlook anti Opportunities," John Auehter (13. G. Goourich), Chemical Marketing Research Association, New York, May C, 1971. 11 Chemical Week, Aug. 18, 1971, p. 26. ,3 Chemical P eek, Alay 24, 1969, p. 32. 13 Oil, Point and Drug DepoUer, May 5, 1909, p. 3. 11 The OU and Gas Journal, Mar, h 8, P.J/1', p. 53. 15 For an explanation of the cxpeiienrc curve method of price forecastins:, ice the various publications of the ibMon Consulting Group, including, "Per* spcctivcs on l.xprrirmr," Poston, 19(K. * "Vinyl Chloride Kronomics/' lYtrr Spit/., Chemical Engineering Progress, March lVt>8, p. 19*26 with appropriate escalation factors to 1971 applied by author. END OF SERIES no / February 1973 Hydrocarron Processino