Document MJ5boydyJn8bBN2rVwyJ6N8oa

CH-2 j .M' E- I. d u Po n t d e Ne mo u r s & Co mp a n y IHCQMPQRAVtO Wil min g t o n , De l aw a r e 10898 CHEMICALS, DYES AND PIGMENTS DEPARTMENT FOR DU PONT USE ONLY cc: 0. H. Baird J, M. Lipton J. B1ackwel1 L. H. Papineau J. E. Kramer* R. F. Mablberg R. N. Selby S. F. West R. P. Rogers R. U. Tobar R. Buck!and - DUCAN, Toronto K. L. Neynaber - DISA, Gva (4) R. H. Akins - Newark (3) R. Z. Fortney - Newport (3) E. E. Jaffe - Chambers Wks. (3) E. W. Stewart - Chestnut Run (3) R. J. Fahl December 12, 1979 CD&P DEPARTMENT DISTRICT MANAGERS ASSISTANT DISTRICT MANAGERS SALES REPRESENTATIVES (BY DIRECT MAIL) COLORED PIGMENT PRODUCTS DIVISION DECEMBER NEWSLETTER__________ Early In November American Cyanamld announced their Intention to withdraw from the chrome-containing inorganics segment of their colors business, effective 1/15/80. We estimate that their chrome yellow and moly orange business Is approximately 10MM Ibs./yr. and we have forecast that we can obtain about 1/2 of this business. Our production people are gearing up to produce additional pounds of both chrome yellows and moly oranges and our immediate sales job is to identify and try to pick up as much of American Cyanami d Vs business as possible at list price. ' ' ' ...... "" The January chromate price increases will require a real selling job by field sales. These increases are important and as Jeff Lipton pointed out in his talk at the recent NPCA meeting, we believe that our customers must learn to understand the Importance of a healthy domestic pigment color industry. This price increase is necessary to maintain the viability of the chromate pigment business. We provided background information with the chromate price 1ncrease announcement which when combined with this newsletter and Jeff's NPCA talk should give you the tools for sel1ing this increase. Lead chromate seminars have been given in several areas of the country over the past year and have been well attended by many customers. American Cyanamid's withdrawal should create renewed customer interest in Du Pont* s position regarding lead chromate pigments and this may be a good time to conduct more of these seminars. Call Dick Repetto or Don Hoppenjans if you want to arrange for one of these seminars. This is one of the best opportunities we have ever had for increasing sales and Improving the profitability of our lead chromate pigments. We have attached detailed information on this subject to help your sales effort. Let us know if we can provide any further assistance. Atts. JST: k DUP050070953 FOR DU PONT USE ONLY COLORED PIGMENT PRODUCTS DIVISION DECEMBER NEWSLETTER On November 7, American Cyanamid announced their intention to withdraw from manufacture of lead chromate, i.e. , chrome yellow and molybdate orange pigments, effective 1/15/80 (their announcements are attached). We estimate Cyanamid's annual capacity at 15MM lbs. and sales volume at 10MM lbs. (chrome yellow was about 70% of their sales). A list of Cyanamid codes and our counterparts have already been provided but a duplicate is attached. Our codes, YE-721-D and YE-637-D, are not listed. YE-721-D is redder than any Cyanamid product, and YE-421-D is generally a better match to Cyanamid codes than is YE-637-D. Du Pont Plan Contrary to what Cyanamid have told some of their customers, we believe the impact of their withdrawal will be significant. The major elements of our plan are as follows: For the present we will accept all new list price business. We have a large part of the industries' available incre mental capacity, and we don't want to discourage customers initially while they evaluate alternatives to Cyanamid's products. DUP050070954 N42127.01  Shortages will probably not occur until Cyanamid stops producing, in January. Also, economic activity should be at a minimum during the early part of 1980. Refer attractive below list opportunities, including renewal of 1979 inorganic contracts, to the business center. We welcome contracts when useful in establishing a growing commitment between Du Pont and your customers. However, we expect supply to be tight. U.S. lead chromate production is now at 94% of its all time 1Q4MM lb. peak. By 1980, there will have been a net decline in U.S. capacity of almost 2QMM lbs. Imports have declined, and given higher raw material and pigment prices overseas, this is not expected to reverse. i We have already begun to increase production and, versus the last 12 months, expect a 28% increase in product for domestic sales. We have initiated an export allocation program and will prepare a standby domestic allocation program. We are not restricting sales of "Kraior" or zinc yellow, and do not pi an to do so. These and other topics are discussed more fully as follows: Capacity Utilization We estimate 1980 U.S, lead chromate capacity utilization will exceed 95%. We expect U.S. demand, net of imports, to be 89MM lbs. vs. a capacity of 91+3MM lbs. DUP050070955 -3- Capacity Our generous estimate of 1980 U.S, lead chromate capacity is 91MM lbs. as shown in Table I. The total given for Du Pont is what we expect to produce next year. U.S. lead chromate production peaked at 1Q4MM lbs. in 1973-74 (93% of the then estimated 112MM lbs. U.S. capacity). Demand exceeded supply during the period and sales were allocated. U.S. production in the last 12 months totaled 98MM lbs. By 1980, we estimate a 2QMM lbs. net decline in U.S. capacity including: Withdrawals by Mineral Pigments (1978) and Cyanamid (1980). Some transfer from zinc yellow to lead chromate production. Recent start-up of Kikuchi's plant in New Jersey. (However, Kikuchi expects to produce chrome yellow for traffic paint, a market in which Cyanamid had no large participation.) Demand We estimate that 1980 U.S. lead chromate demand will be 92MM lbs. including 3MM lbs. of imports. This is off 9.55o versus the 102MM lbs. reported during the 12 month period ending 8/31/79, The forecast decline is due to two factors: U.S. industrial production will be lower next year Lead chromate usage rate will continue to decline To date the decline in lead chromate usage, and particularly the impact of this decline on U.S. production, has been overstated. Total demand, defined as the sum of U.S. production and imports, is plotted versus U.S. production in Figure 1, DUP050070956 -4- U.S. demand is still 86% of the peak, probably inflated by inventory building, established in 1973-74. Moly orange demand currently exceeds that peak, so the modest decline has been in chrome yellow and mostly in the ink industry. e Imports, the difference between the two curves in Figure 1, have declined from over 16MM lbs. to 3.7MM at present. Con sequently, U.S. production is still 94% of peak (allocation) levels while capacity is rower. Currently, raw material costs in Europe and the Far East exceed U.S. costs. This and the fact that Kikuchi, formerly a large exporter to the U.S.-, now manufactures domestically makes an increase in imports unlikely. Figure 1 was constructed from data published by the Bureau of the Census. A copy of their monthly and annual reports is attached. Figure 1 and these government reports may be useful in discussions with customers. Production Plan We have begun to scale up production and expect to support a 4.1MM lbs., or 28% increase, in 1980 domestic sales of chrome yellow and moly orange vs. the 12 month ending 10/30/79. Total S&T in the last 12 months vs. our 1980 plan are as follow: MM Lbs. 12 Months Isscr 10/31/79 Plan Total S&T "Krolor" Zinc Yellow Lead Chromate Export S&T Domestic Transfers Domestic Sales 29.8 6.6 23.2 2.2 21.0 1.9 19.1 2.4 16.7 34.7 7.2 TTTT 2.4 237T Chrome yellow & moly orange 1.9 23.2 2.4 zO DUP050070957  1980 "Krolor", zinc yellow and domestic transfers are No. 1 1980 forecast but will not be restricted. 1980 export total is a 100K allocation based on last 12 months sales. If domestic sales exceed a 20.8MM lb. rate, a domestic alloca tion plan will be implemented. Effective 1/1/80, prices will increase as shown in Table II, Although improving, our pretax margins on lead chromates are still modest. These increases are necessary to improve profitability to a point commensurate with an ongoing business that requires invest ment for maintenance and to comply with new and more strinaent environ mental regulations. Du Pont has been making that commitment and still faces substantial expenditures to remain a viable lead chromate producer. To our knowledge, Cyanamid had not (no doubt, in part, due to the unacceptable margins mentioned in their announcement s), These prices were last increased effective 7/15/79. Since then, inflation has continued at a rapid rate and raw material prices have remained volatile. Lead increased from 59 to 68^/lb. but has declined recently to July levels where it is forecast to stabilize. A year ago it sold for 31/5/lb. Lead chromates are 61& lead. Molybdic oxide increased from $6.20 to $9.50/lb. and is forecast to continue to increase to $11.00. On a molybdenum basis, this is an increase of $6.00/lb. , and moly orange pigments are about 3% molybdenum. DUP050070958 -6- The price of molybdic oxide in most areas outside the U.S. is as much as twice as high, and this is reflected in much higher pigment prices. Should a domestic pigment shortage arise, we can expect little relief from an increase in net imports. Beyond price, there is a worldwide shortage of molybdenum. This is not expected to impact on our production plan but may affect competi tion. : "Krolor" products are silica-coated chrome yellows and moly oranges and, consequently, subject to the same cost pressures. However, we do not plan to increase "Krolor" prices until we have updated our estimates of value-in-use vs. cadmiums and other products. Contracts Customers should be concerned about their source of lead chromates and will probably seek contracts guaranteeing supply. We are interested in contracts that reflect a growing mutual commitment between Du Pont and our customers (guidelines are attached). A sample contract is in preparation. We have contracts with the following customers that cover 1979 chromate pigment sales and provide substantial discounts ys. list; Inmont, Ampacet, Mobile, Sherwin Williams, Ameron and Valspar. These expire 12/31/79, just as our new list prices become effective. Renewal terms should be reviewed with the Business Center in order to avoid extreme, one shot increases. Toxicity The toxicology of chromate pigments has been the source of much concern and the justification behind much new and proposed regulations. DUP050070959 - 7- The following is an attempt to provide a capsule summary of the current situation. Molybdate orange, chrome yellow and zinc yellow pigments are classified as materials of low acute toxicity by the oral route and by inhalation./ There is no conclusive link between human lung cancer and chromate pigments. However, in our July 27, 1976, letter to customers we reported on the results of an epidemiological study (Du Pont was a major supporter) of U.S. lead chromate plants as follows. "... findings are consistent with the hypothesis that lead chromate is a respiratory carcinogen but do not justify any further conclusions." This and other related studies all contain evidence that dust concentrations during the exposure years (of the individuals in cluded' in the studies) far exceeded present day levels in the U.S. '. industry and current OSHA standards for chromium. Although lead chromates are very insoluble, they are subject also to regulations aimed at preventing lead poisoning. U.S. Regulation OSHA establishes regulations governing the workplace environment. Effective 3/1/79, they issued a new lead standard which lowers allowable exposure to lead from 200 to 50 ug(as Pb)/M^ air, 8 hour time weighted average (8 hr. TWA). Portions of this standard were stayed pending resolution in court which is now expected by early 1980. OSHA regulates exposure to chromium to 52 ug(as Cr)/M^ air, 8 hr. TWA. Since the ratio of lead to chromium in lead chromate is 4 or 5 to 1, customers meeting the lead standard are controlling chromium at the 10-12 ug level, assuming no other materials containing Cr are DUP050070960 -8- are used. In this case, lowering the Cr standard will have no incremental effect unless it is lowered to less than 10 ug, which we believe is unwarranted and unlikely. In any case, OSHA recently announced that no change is planned before 1981. Both HUD and the Consumer Product Safety Commission prohibit the use of paint containing above 0.5 to 0.6% lead as a % of the total non-volatile paint content. This eliminated lead chromates from consumer paint and in paint used for federally assisted residential structures. The EPA establishes national standards for plant discharges into the air or navigable water. Individual states have compliance responsi bility and must file plans with EPA. The National Air Standard for Lead is 1.5 uq(as Pb)/M'5 air, calendar quarter average. There is no National Air Standard for Cr. There are no National Water Standards for either Pb or Cr; however, most states use the drinking water standard in issuing NPDES permits that limit emissions to 0.05 ppm (as Pb or Cr) . Lead chromate is not regulated as a hazardous material by the U.S. Department of Transportation. There are no federal laws regulating disposal of lead chromate shipping containers. The proposed RCRA, Resource Conservation Recovery Act, regulations expected in April, 1980, will not change this, i.e., RCRA will continue to allow disposal in sanitary landfills as presently proposed. DUP050070961  -9- Local regulations may be more stringent. Encourage your customers to review with their city, county and state authorities. Impact Of Regulation On Use Patterns The regulatory atmosphere about lead chromates is affecting use pattern. Many customers are switching to products treated to reduce the tendency to dust. Our low dust "Krolor" pigments are an example. We continue research aimed at providing our standard lead chromates in low dust form. Some ink customers have expressed interests in aqueous lead chromate presscake as a way of reducing dust. Apparently, Ciba-Geigy (Hercules) have made some shipments. We believe these products will enjoy only selective interest and do not plan to follow Ciba-Geigy's lead. s Other customers are switching to lead chromates that are already dispersed in liquids and plast ics . This w.i 11 m ak e dispers ion houses more important in th e d istrib utio n chain This is a healthy trend that should he IP to preserv e the market. It concen trates pigment handl ing in fewer lo catio better equipped to do the job safely. At present, Du Pont has no plans to introduce dispersions o f lead chrom at es. Some pi astics customers would like to rec eive pigme nt in plastic , compoundable bags. The total opportunity fo r thi product isn't well defined and ycjur in put will be c r i t ic al forming our plans. UP050070962 * 10 We have authorized funds to install equipment at Newark to evaluate the use of "Air Pallets" in a joint test with the P&F Department. We will keep you posted regarding the results of this test program. Some customers will switch to non-lead pigments. If this is the case, the various industry groups at Chestnut Run are prepared to discuss alternatives. Customer Assistance ii i. Mi. M M-..m: ,ii i i liw^.'ii 11. ,ii mi ii .'i. Given the complexity of the toxilogical situations and associated regulations, customers need assistance to cope. Chestnut Run's Engineering and Product Safety Group, Carl Muendel, Supervisor, have prime responsibility in this area. Updated Material Safety Data Sheets, one of this group's function, were issued recently. In addition, we have sponsored 6 customer seminars on the new Lead Standard in 4 districts. Pat Gilby, a certified industrial hygienist from CD&P's Environmental & Regulatory Affairs Group presides. Pat provides related advisory services to CD&P's plants. Engineers from Newark's Environmental Group have visited some customers to provide on site consolation. We've received many compliments on our booklet "Lead Chromates, Compliance Program". We are about to issue a second addendum and, as previously noted, only those customers who have returned receipts well receive future mailings. Please use these services and let us know of other needs. D. W. HOPPENOANS DUP050070963 Public Adairs Division Wayne. NJ 07470 Tel (201) 831-1234 contact j, e . White, Plant Manager Willow island, W. Va. Tel. (304) $65-2422 FOR RELEASE: 12:45 p.m. KPT, Nov. 7, 197 9 CYANAMID TO DISCONTINUE LEAD PIGMENTS OPERATIONS AT WILLOW ISLAND, W. VA., PLANT American Cyanamid Company will discontinue operations of the lead pigments department at its willow island, W. Va., plant effective January 15, 1980, the company announced today. Approximately 60 employees, out of a total plant work force of 880, will be laid off and Cyanamid will cease production of lead chromate pigments, according to Gerard A. Forlenza, president of Cyanamid's Organic Chemicals Division which ' operates the plant. Work force reductions will be made in accordance with applicable provisions of the existing collective bargains m; agreement with Local 3-499 of the Oil, Chemical and Atomic Workers Union (OCAW) . Cyanamid said its profits from lead chromate pigments operations have been unsatisfactory in recent years. Total -- more -- DUP050070964 N42127.02 Willow Island -- p. ,2; market volume has been declining, largely because of increased government regulation which has resulted in decreased use of lead chromates. The projected continuing market decline is expected to adversely affect profitability even further and has led to , the decision to discontinue this operation. #?I * DUP050070965 American Cyanamld Company Pigments Department Wayne. NJ 07470 (201)831-1234 9 lV 0 fiiotn: November 7, 1979 To Our Customers; For some time now,, we have been dissatisfied with the overall performance of our lead pigments business. Unfortunately future projections are even more unfavorable and therefore, we have made the decision to discontinue this business segment as soon as possible. Becognizing the many uncer tainties associated with this decision, we have set a target date of January 15, 1980, for completion of this withdrawal. In terminating our supply position on these products, we are anxious to be of whatever help possible to you in assisting the transfer of your lead pigment requirements to one or more of the other companies producing these products. As an initial aid in,this, a list of sug gested competitive offerings (as developed in our own technical testing) is enclosed for your reference. In eases where we have not done extensive competitive evaluations by product type, I am sure that the particular company involved can provide recommendations. As I am sure you appreciate, an important part of our decision to discontinue the lead pigment segment of our business is our desire to concentrate our various resources in our other pigment businesses -- i.e., azo, phthalocyanines and iron blue pigments where we believe our future contributions will be of greater value to you. On behalf of the Company let me thank you for the support of both our people and our products over these past many years. Thank you again. gjll ^>0TP1V M. Ai Taylor Manager MAT:jan Enclosures:' Suggested Competitive Offerings Domestic lead Chromate Producers DUP050070966 N42127.03 tjllQ0) u to to 43 Sr e -h JX to cop Jt'O hR M CH: 3 P -P H u to o #> to a c H *eH OP p0) in 4J 43 p p c C: * 3 m dp II JX 43 *o C .a.- 43. ' . ' `O H'H : t> > to C rH H G -P 0 f cH tri: to 4J <N C - >1 H -+> -P P C-H EJl fs o> Eo c 0to Ol to -p cn CO EJ> ?> c c p p c * C "t H o 3 m o to +> c 0 P H10 to 0) *> pH C 10 -H , > > 0tn *0 rH 4J G P H*n *0 SO 0 M >P> W G*iH W ) tn -h o 5-4 a) to o 4J H to tmo oto) 0) i--t to >-H <0 dP in 0> n t>o f4t) * 0) C P "OBI tr 0 f0ll0rl'H OS3' W >PP > p -p 43 to < to <#> in +> *c rH *rl (0 P ' O P P 0 pOP0 to Pp AMt . 4tO3 4<39 4tO3 4(03 to e h +> 3 dP- dP, 3 3Edp- 4j S -rl in G in G. .0, C . H H <0 to H W rl H X > to <d pP3P 0t)r 0P)1 &d) & to to Q nIr p M IP HP I 1 1 00 in fs I >* aaa mi i n i *p mop) h # *p h p iii t* t*>* oaa mi oi\ 91\ ip ip ip HP V *0* ti* i tn i >i aa ii as os so to HP "# I1 N >1 oa ii 00 00 in in p* tii XX QOQQ.QQ 1 1 111 1 H in H in H m ni tn n tn cl tn *p t> .r s* r* 1 BO 1 W m1 I M 1 H 1 u >1 >H P >1 >< S Q <CX1O\ VP xw tH O in C4 I -^r in p in in IP r-t nno nn n iii POP o m r~ ppm 'sr -sj * ' -W o1 oI o1 ** w w O r-l O pH m in w ol oi >r oP in so %r *r m CON P in rH m pH pH CO m 00 ii oo l ol 1 p "d* u p sr N* P HP m O l o HP g EH 33 aH Pi 3 s w W X i1 33 33 UO | H jasa} 3 O >3 a H SH I U a Ph 8 a wSaH DUP050070967 N42127.04 TABLE I LEAD CHROMATE DOMESTIC CAPACITY DU PONT KROLOR COMPETITIVE CIBA-GEIGY (HERCULES) HARSHAW CYANAMID REICHOLD KIKUCHI OTHER 1979 21.0 6.6 27.6 20 17 15 11 0 _5 68 103 NET 1980 CAPACITY = 89% of 1979 1980 25. T 7.2 32.3 20 17 0 11 5 _ 59 91 t DUP050070968 N42127.05 Vca) n UJ ' sal MM CHROME YELLOW MOLYBDATE ORANGE FIGURE DUP050070969