Document kDmyGmqx6k7j8ZoeGk7EN947q

I1 -- I Petrochemical guide--20 Vinyl chloride: how, where, who--future 9 Here is how manufacturing methods, markets, buyers and seders and economics affect the future of vinyl chloride ** Keone, Robert B. Stobough and Phillip L Harvard University Graduate School of Busi- i ^ ' V:ministration, Boston, Mass. * it * Reader Service -Card 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 hillion pounds in 1970 and 1971. This increase has been accompanied by a steady fall in average F.OJ3. 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 - 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 iygp in piping wogjjjn construc tion and packaging, glass paper in 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.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 axychlorination 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 cf 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 a. r. Goddnch are tne largest producers 'and nave 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 fUl trend toward concentration of large VCM plants among St feedstock producers to continue through the next several Ijfj plants. . ?? The PVC business has also grown.at a rapid rate-sise*--> i where in the world. Because qfoiffictrlty^nd expense of shipping, export of VCM has usUHly"constituted a limited !I 1I t i i ;! i RSV0033549 VINYL CHLORIDE _ D. market for U.S. producers; with exports during the 1960s accounting for only a few percent of U.S. production. In 1970 and 1971, however a lack of adequate European capacity 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-day vinyl chloride monomer (VCM) capacity relies on the so-called balanced oxychlorination 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 commercialization- There are instances where the first two steps of this process-- ^Vination of ethylene to EDC and cracking of EDC to "yield VCM plus hydrochloric acid--have been applied without an acetylene unit. Ethyl Corp. has applied this technique, with byproduct HCl used to pm. duce`ethyl chloride tor manipactnre of tetraethyl lead antiknock compounds. Most producers, however, cannot justify sufficient end uses of the HCl byproduct. The result was the balanced ethylene/acetylene complex (as employed by Union Carbide and Monsanto at Texas City, Texas). Plants were sized so that the acetylenebased production consumed most excess hydrochloric acid fom EDC cracking to produce VCM directly. This process reduces by half the dependence upon acetylene as a feedstock, but no new examples have been con structed in the United States in the past few years. 1. Catalytic addition of hydrochloric add to acetylene 3. Balanced oxychlorination process Activated carbon HC CH + HCl + HgCla Acetylene Hydrochloric add CHi = CHC1 VCM The earliest plants of this sort employed carbidederived acetylene and hydrochloric add 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* ample and 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 add were gradually replaced with less expensive petroleum-derived acetylene and byproduct hydrochloric acid (which also coincided with major relocations to the UJS. Gulf Coast), but raw material costs remained high relative to newer processes. Some VCM is still produced with this process, but these surviving plants are very tightly integrated with other acetylene-related units and have been gradually disappearing. 2. Balanced ethylene/acetylene VCM production CH* = CH* + Cl*-------- CH* a - CH*CI Ethylene Chlorine Ethylene dichloride (EDC) ch* a - ch* a 900-950F * CH* = CH Cl -f H Cl EDC VCM Hydrochloric acid HC b CH + H CH ---------- * CH* = CHCI Acetylene Hydrochloric acid VCM Direct chlorination CH* = CH* + Cl*------- -* CH*Q - CH*C1 Ethylene Chlorine EDC Oxychl orinadon CH* = CH* + HCl + 0* CH*C1 - CH*C1 + H*Q Ethylene i EDC Water Cracking W* CH*G1--CH*C1 9P~95F * CH* = CHCI + HCl EDC VCM The difference between these processes and the earlier uses of EDC cracking is the second reaction above to (1) prevent exporting a large HCH 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. 2 HQ -f$0*- -> d* + h*o 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 thr chlorine in situ to form EDC. The combined EDC stream* are then cracked and the resultant HCl recycled to close the loop. As mentioned above, most presently employed processes--including Gooc^Ich, Staler and PPG-- use some variation of balanced oxychlorination. c. i riHfML. _ CHLORINE^ AIR ^ TRANSCAT SYSTEM VINYL CHLORIDE SEPARATION ii t HCl RECYCLE DICHL0R0ETHANE RECYCLE CHLORINATED COMPOUNDS a TARS RECYCLE , 1--Vinyl chloride monomer process via ethane as offered by Lummus/Armstrong. VCM PRODUCT 100 February 1973 Hydrocarbon Process'* RSV0033550 i )i ii i ! S Fig. 6-2--'Vinyl chloride by oxychlorination by 8.F. Goodrich. earlx1 to {! cliir. ion < on\ 4. Single-step chlorination and cracking of ethane iTRANSGAT process) CHa--CHs md^D salt Ethane CH2 = CHi Ethylene tl a?.o\r S L' rri:; i c:.*' CH. *= CHj + Cls--------------- CH* Cl--CH2 Cl Ethylene Chlorine EDC CH. a--CHa a -- salt EDC . CHa--CHG1 + HQ VCM Hydrochloric acid >rt; 2 HQ + \ Qa m-ten Ch + HaO The recently anwnnncc.il TRAHSCAT process involves d.e dc\-elopment to a pilot stage of an ethane-based route *hich foregoes the separate purification of ethylene (see f>r 6-1). Ethane, chlorine., air and excess hydrochloric )T ":d (if desired) are fed to a molten salt bath with an ^irrmely short residence time and a high temperature, here all of the above reactions apparendy occur simultanrtjvisly. The potential licensors (Lummus/Armstrong Cik) claim above 95 percent VCM yield on chlorine *r-d 80 percent VCM yield on ethane fed. Even more cmically revolutionary is the claim that chlorinated 'Mte* which are produced may be partially recycled to ti-r reactor to result in additional VCM. The indicated *<or.nmic advantage (see "Economics") of ethane as a krditock 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. 1. B. F. Goodrich oxychlorination (Badger). This process was the first successful oxychlorination process (1965), with the initial 400-million-pound/year unit in stalled at Goodrich's plant in Calvert City, K.y. 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 may exceed 95 percent) on both primary feedstocks. The yield losses involve production of light and heavy ends which boil above and below EDC. These byproducts consist primarily of Gi and C* chlorinated organics, some of which are suitable as feedstocks for production of chlorinated solvents (carbon tetrachloride, perchloroethylene), while the balance require disposal. The first of three segments of the process is direct RSV0033551 I VINYL CHLORIDE ~c* brf r& tf*. I by Ethyl) whirivproduces HCl as a byproduct. The third r section of the _ JF. Goodrich and other oxychlorination _ addition of chlorine to ethylene to produce ethylew , processes involves conversion of this excess HCl to EDC. dichloride (EDC). This reaction is essentially stoichio metric in both reactants, -with chlorine usually maintained in a slight excess. The reaction is liquid phase, with a Air, ethylene and HCl are charged to a fluidized catalyst bed at a moderately high fpmneratnre and somewhat elevated -pn-renp-- The reaction to produce EDC (given dissolved catalyst and mildly exothermic Reacted tem perature and pressure are controlled by coolingWater above) yields water byproduct, which is rejected as the product vapor is condensed. The first step of condensa heat removal- Following the reactor, the EDC product is fed to-aT^-step^girification train to remove lightWid tion produces a crude EDC product, while the gases (primarily diluent nitrogen) must be fed to a secondary leavyiBftfl's |the same train processes two other EDC absorber ip recover a second stream of EDC bv absdrp- streams). \ tiem/striupiiig. The tail gases are vented, while crude The second major operation consists of cracking EDC EDC is fed to the common EDC finishing train. to produce vinyl chloride and anhydrous hydrochloric1 The oxidation erf HCl to Cl2 is highly exothermic and add. The cracking occurs at 900-1,000 F in a direct- the subsequent addition of Clg to ethylene is mildly exo fired furnace which is packed with a catalyst (pumice thermic. As a result,'the oxychloririation reactor, is has been a traditional choice). Conversion of EDC is cooled^by generating steam, which brings the whole typically in the 50-60 percent range to optimize the process closer to self-sufficiency on steam supply. costs between coking cyde, utilities cost and yield. The The net effect of this crucial section is thus the con hot product gases are quenched by direct contact with a version of HCl, ethylene and air to a VCM precursor. condensed recycle_stream or ine same composition, prior While the process is depicted as balanced, design and rto tractionation. In tne tiui column, anhydrous Util is removed overhead for use in the oxychlorination unitThe VCM column produces VCM as an overhead prod- operating changes allow any individual plant to produce or accept either HCl or EDC as local conditions warrant. t i uct meeting finished product spedfications, and produces 2. Tqyo Soda oxychlorination (see Fig. 6-3). A pro a recyde EDC stream of unconverted EDC. This stream cess very similar to that of B. F. Goodrich has been is purified in the common BDC cnlumns prior to recycl- employed in several Japanese plants. The essential de \r^*ing to the cracking furnaces, The purification step is sign differences appear to be: (1) the use of a fixed bed M required to prevent fouling of reaction surfaces in the ( ^ -- cracking furnace, reactor for oxychlorination, as opposed to the B. F. Good rich fluid bed; (2) use of a hot oil reactor coolant and ii These two previous process sections offer relatively external steam generation, and (3) incorporation of a ' little advantage over older processes--they constitute an specific EDC dehydrator column not shown in the B. F. unbalanced EDC cracking operation (such as practiced Goodrich publications. JNone of these differences are CWjORINATOR . ABSORBER STRIPPER HEAVES COLUMN CRACKER QUENCHER HQ COLUMN Clj c iHi. t'-1*1 sr lair iF~ HCl CBUB EDC rr H--r-Sl =9LUP^ jsoumS. NoOH SOLUTION >J a" rl RECOVERED EDC A VINYL CHLORIDE (KYCHLORINgGR QUENCHER NEUTRALIZER DEHYDRATOR UCHTS COLUMN RECOVERY COLUMN V C COLUMN Fig. 6-3--Toyo Soda's oxychlorinaflon vinyl chloride process. 102 February 1973 Hydrocarbon Processing RSV0033552 1 a St It :n re a>es try rpide ind xo- is ioIe xmsor. and luce ant. probeen . debed (ood: and s are VINYL iloride major; the processes should be roughly competitive based upon published data.8 3. Stauffer Chemical oxychlorination. This is again very similar to the earlier oxychlorination processes. Minor changes in the routing of streams, small differences in catalyst performance, and features of the mechanical design are all that differentiate between the published information for this process and the previous two. It is noteworthy that Stauffer published an estimate of 3.7 hiilion pounds/year of vinyl chloride capacity* in' ' 1? plantsutilizing this process-* 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 (Lunnrns) balanced acetylene/ ethylene process. No recent examples of this process have been constructed in the United States, but a Union Car bide venture using a Wulff process acetylene/ethylene 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 HC1 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 HCI to EDC, the balanced process then involves the older acetylene route. The reaction is a vapor phase reaction over HgClj/carbon catalyst with a slight HC2 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 and HCI, but the reaction yields are 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 tins process less than competitive with balanced oxychlorination (see "Economics"). 7. Others. Pechiney-Saint-Gohain 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 1970 to produce about 120,000 metric tons/year c 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 complexes.7 The process op 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. j Feedstock availability. The importance of feedstock ' cost to VCM producers has resulted in the entry to die ! VCM market of large, integrated chlorine and ethylene i producers (see "Individual Companies" and "Econom- | ics"). Future manufacturing efforts will be largely influ- Flg. $-4--Author's Interpretation of the balanced VCM process as announced by Union Carbide (Lummus). TABU 6-1--Properties of VCM* Mol* wL........................... ................... Specific gravity................................. Melting point........................... BoHing point....................................... Flash point..................................... .. Maximum allowable concentration tppm by Toiame}........................ Explosive limits % by volume In ait. 62J50 09834 -153.8 C - 13L83* C -108*F 00 Lower 4 Upper 22 2OV20 C (--344.6 F) (U TO enced 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 SO. 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 shin large distances than*either vinyl chloride" or chloripe, a tendency to locate vinyl ctuonde proHuSSSn near ethylene plants sxiould continue. *"' * *' Chlorine is the other major feedstock, with VCM accounting for about 15 percent of U.S. chlorine product tion in recent years, largely as a result of slumping Vum. ~ 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, tire 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 low- cost power. While nuclear fuel and coal are in the running as long-term suppliers of low cost power, petroleum and natural gas piTMssapL until at least 1960 There fore, availability of petroleum and natural gas fuels will help determine chlorine plant locations until at least 1975. RSV0033553 VINYL CHLORIDE D These trends indicate that manufacturing locations for VCM are likely to he heavily influenced by availability of inexpensive hydrocarbon feedstocks and fuels, with relative labor and construction costs, water and transpor tation facilities acting as less important constraints. Physical properties- See Table 6-1. MARKETS U.S. consumption afVCSTwas about 3.3 billion pounds in 1970, with 664- million pounds being exported. Con- Fig. 6-6--End use markets for PVC." sumption of VL'aM is almost entirely for production of polyvinyl chloi - J resins and copolymer resins (propylene, ethylene and vinyl acetate are commonly copolymerized with VCM). Domestic consumption is projected to grow about^lOjgercent annually from the 1970 level of 3.3 billion pounds to 5.3 billion pounds in"l975. 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 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. Pig. 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 are 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 1965, 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. proha hlv belongs tn PyC siding and window frarnpywhich 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 HOI released when packaging is incinerated, but such restrictions will act to slew this growth area before 1375, not t5 reverse the trendTPSiCEagblg COhsuinption oi FVC grew at above25jggrcgjit_annually in the last five years, and should grow at 15-20 percent for the ncxtJme-years.-- ~After lyVb^however, lookfor growth to slow considerably , as effective control of HC3 emissions causes other materials j 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. AJD. Little has projected a 1975 consumption of 1 billion pounds or nlastlc piping, with. PVU representing a large share.11 The PVC in this application is oiten 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 reaps Among the more mature PVC markets, use of PVC in transportation equipment should continue 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 RSV0033554 of ne' ted l ow IS ort t uc- l TABU 6-2--Processing method* for PVC* Extrusion (wire, film, sheet and general extrusion)................. Cotenderfng (film. Sheet and coating)................................ ........... Molding (blow, injection, into, compression)...................... Coating (dip, knife, roll, spray, lamination)..................... Other.......................................................................... Share ot market, % 40 35 20 20 5 iet> i of ides ling Fig. $-7--PVC production by type according to the U.S. Tariff Commission. ipid lted covers, headliners and dashboards have all been heavily aon- penetrated. As a result, this end use will grow at about ngle the rate automobile production grows. While other trans con- Tiese the iture iarelj rans. An ce of pries u 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 posable 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 waH sfc howames, ooden should ct five of PVC resin is the diversity of polymerization methods employed and another' is the large number of PVC producers, each with a slightly different product line. While 65 percent of VCM was polymerized caprivelv in I960. this percentage declined rapidly as older acetylene-based plants were replaced with larger ethylene-based plants. Today companies such a^Dow^h^ShelT^are .exclusively merchant seller^ nf VCM?while PVt? producers such as owing nental ecause t such 11975, f PVC years, t years, ferably atmals Monsanto and Union Carbide have discontinued VCM manufacture. As a result, only about 40 percent of VCM was captively consumed in 1970, and the percentage wilf nrohahiv'K* r-loser to 30 percent in 1975. The 21 com panies currently producing PVC are listed, in Tabfe 6-3, together with capacity by region, Of these 21 companies, 7 also produce VCM (see Table 6-5). ' 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, 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 1 piping, ' World markets. During the 1960s, exports of VCM 'in this | averaged less than 5 percent of domestic production, VCM tthylene must be shipped and stored either under pressure or in a -styrene refrigerated tank The relative difficulty of shipping, low sins will wiling prira in relation to freight cost, and ready avail- of this ability ''f vr!M t*ichnftfo[y hss created a Strang tendency a rate if to pmd,.v. VP.M locally rather than import for an ex $ r " *. tended period. In 1969 1970 and 1971. however, rapid of . J a rela- he autojoce seat expansion of European VCM demand and lagging pro duction capacity led to abnormally large imports from the U.S. Exports accounted for a high of 16 percent of domestic VCM production in 1970. As added capacity TABU 6-3--PVC producers In the United States" Jan. 1, 1971 Northeast Borden,......... Diamond-* Shamrock.......... Firestone ... .. B. F. Goodrich Chemical........... Goodyear Tire & Great American Plastics ..... Hooker........ Monsanto ,,,,, Olin............... .. Pantasote,...... Scarifier........ Teaneco............... Southeast Air Products . .. Continental OH .. Firestone.................. Pantasote. .... Union Carbide... Midwest Air Products..... Allied Chemical... Borden. ...... General Tire, .., B, F. Goodrich Chemical...... Uniroyal. .... .. Southwest Diamond- Shamrock...... Ethyl.................. Goodyear Tire & Rubber.............. Union Carbide... Far West American Chemical ... . B. F. Goodrich Chemical....,, Keysor................ .. Leomioister, Mass. Delaware City. Del Pottstown, Pa. Pediidctomt N. J. Niagara Falls, K, Y. Fitchburg. Maas. Burlington, N. j. Springfield. Mass. Assonet, Maas. Passaic, N. J. Delaware City, Del. Burlington. N. J. Fkmingtoo, N. J. Pensacola, Fla. Aberdeen. Miss. Petryville. Md. Point Pleasant, W. V*. 5. Charleston. W. Va. Calvert City. Ky. PainesviUe, Ohio Uliopolls, ID, Ashtabula, Ohio Henry, Jli. Avon Lake. Ohio Louisville, Ky. PainesvCle, Ohio Deer Park, Texas Baton Rouge, La. Ptaqueraiae, La. Texas City, Texas Long Beach, Calif. Long Beach. Calif. Saugus. Calif 22 companies 13 plants 2,300 MM lbs, capacity 5 companies 5 plains 450 MM lbs. capacity 6 companies 8 plants 1*000 MM Ihs. capacity 4 companies 4 plants 600 MM lbs. capacity 3 companies 3 ptunfa 200 MM lbs. capacity 21 total companies 33 total plants 3,550 MM lbs. total capacity TABLE 6 d..-Western European FVC consumption (thousands of metric tens) Year- .. .... ................. 1972 .. 1963................................... . 1964..................................... 1966................................ 1966..................................... 1967..................................... 1968..................................... 1969..................................... 1970*................................... Growth rate (1962-1970).................... 1975 Consumption*.......... Projected growth Rate (to 1975)*............. EEC 610 769 843 930 1.061 1.227 2.505 1,598 15% 2,575 10% EPTA 227 255 308 339 359 401 472 525 567 12% 820 8% Spain 17 26 29 S3 46 59 71 91 97 24% 220 18% Other 52 72 56 55 141 166 140 148 18% 285 14% Total Western Europe 943 1.178 urn 1.410 2.661 1325 2261 2,400 15% 3.900* 10% Source: European Chemical News and OIL, Faint and Drug Reporter, Oct. 26. 197Q, plus authors* estimates.* 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. UE. exports of PVC resin are also minimal; in 1969 and 1970, about 5.5 percent and 6 percent of the UE, PVC sold was exported. Two reasons for this are die RSV0033555 VINYL CHLORIDE y TABU 6*5--U.S. producers of VCM y rapidly expanding domestic markets for PVG and tHe high relative freight costs. Furthermore, tariff hamp are high--20 percent or more--between European coun tries,"as well as between Europe and the United States,12 A Despite this, the specific properties required by resin users ji Tfrnain the most rtiflir-ult barrier to a large world trade /</ jfcESU In'T recent report of the Standard Research Institute13 projections of the world output of FVC for 1970 and 1980 are compared. The percentages accounted for by each producing area are as follows: North America Western Europe Japan Others 1970 O 26.5% 41.3 16.5 15.7 1980 26.5% 39.7 17.9 15.9 100.0% 100.0% Producer Location Allied................ Baton Rouse. La< Z American Chemical.... Watson. Calif. (ARCO-StaoSer) 2 Monochem.., Geisciar, Lau (Borden* Uniroyal) 4 Conoco.... Lake Charles. La. 5 Dow........ . Plaquemlne. La. Freeport Texas Oyster Creek, Texas Ethyl , Baton Route, La. ? Goodrich Houston Calvert City. Ky, $ PPG. ^ Shell. ft Tenaeco. Lake Charles. La Puerto Rico Houston Norco, La, Houston Nameplate (McMalpbaac,/iStyrr.) 7300)^ Ptooem Oxychlonnation Stauffer oxycUorination Acetylene Stauffer oxychlorl nation Dow oxycbJorinalloa Dow Dooxwychlorination oxychlorination Ethyleue/EDC rracVing Ethykne/EDC cracking Goodrich oxycblorinatfon (multiple train) Oxychlorination Oxycblorination Stauffer oxychlorinatioa Stauffer axychlotinalion 256 Acetylene While special purpose resins sales to developing markets will continue to be an attractive market, PVG resin ex ports will remain a small market at 5 percent or less of production. The European PVC market is considerably larger than 1972 Total 6JB65 Sources Many published estimates as interpreted by the authors. Note that effective capacity probably does not equal nameplate capacity. A reasonable capacity figurewould probably be 90% of the above rates, 02, Paint and 2>rug Reporter. Oct^ll^lSHt has the most complete Hating. **---------------- the U.S. market (see Table b-4), based upon Europe's lanre -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 3fwith fully half of the 1965 capacity beSSfsbtrt-dawn 'in the same period. Eighty percent of 1971 capacity is"/ SL. fk?lf| p yparr: j.lr3_ ---------- -------- ^ Among individual companies, Dow has about 19 per- upon cracking heavier feedstocks and higher chlorine f*t cent f VCM edacity, and about 23 percent of oxy- costs from more expensive electric power, exporting to chlorination capacity. Dow's position as a capacity leader the European VCM market should cease to be attractive among ethylene, chlorine and chlorinated solvents pro to UJS. producers.14 ducers leaves no doubt of Dow's long-term position as a TagangsJ'VC producers also represent a sizable market for VCM, but domestic Japanese production is ample to VCM producer. Raw materials costs are crucial to VGM economics, being roughly equally ftpjii TytwpgTi chlorine provide the estimated 2j4billion pounds which will be and emviene (see "Economics" 1 - Tn addition, byproduct required in ^1972^ Estimated" VCM capacity is in the chlorinated hydrocarbons from oxychlorination are rou neighborhood of3t^yiJulIIon pounds/year (see Table tinely absorbed into Dow's production of perchloro- 6-6), indicating Stner sizable exports or low operating ethylene and carbon tetrachloride. At the present time, rates for Japanese VCM producers. this VCM is largely sold in the merchant market. While 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 Dow has extensive experience in production of bulk poly' mers, Dow has chosen to remain a merchant supplier and has discontinued production of FVC. consumption of VCM is even higher in Europe than in The second largest VCM capacity belongs to B. F. the United States and trends toward oxychlorination are Goodrich at Calvert City, Ky. Two or three trains at this evident rite employ Goodrich's oxychlonnation process (see""Mahufacture"), and are notable in being the only sizeable INDIVIDUAL COMPANIES pEats^cated In the northern or eastern United States. Table 6-5 lists U.S. producers of VCM as of 1972. GoodgebJ has captive use for most or all of this VCM. Of the total capacity showm^^^Mment is based on acetylene and ^jjgrcent on ethylene witftqm oxvchlorina- DufnaSjdswde no recent move to expand beyond then existing*! 7 Jaej cent capacity share. Both ethylene and tion capability. These plants must be considered .vulner able to continued construction of large oxychlorination chlorine iorthis plant are produced by Goodrich at Cal---------------------------------------------------------- ~7*7'\ facilities. The remaining 5 billion pounds (82 percent) consists of modem, apparently competitive oxychlorina CPPG Has moved into second place with(a, 14 percent capacity share. Plants in Lake Charles, Lanark! Puerto tion plants. Also noteworthy is the concentration of over Rico benefit from large internal chlorine sources and r70_ pe_r_c_e_n_t of VCM ca_pacity. on the UJS. Gulf Coast. chlorinated solvents business to absorb byproducts, but With the exception of^CTs Puerto Rican plant,ethylene is purchased in both cases. As is the case with recent capacity addihonsnave `been in Texas and Louis- most recent expansions, the majority of VCM produced iana. moves in the merchant market. e expansion of VCM capacity from 2.4 billion The fourth and fifth largest producers are oil com ( Pp'ounds/year in 1965 to about 6 billion pounds/year b7> Ni1S9t7L1 was at* of now, an annual rate of 18 capagty--constructinn.. percent. has-besn- The Tnore panies with large ethylene -capacity but insufficient chlorine for VCM Madtretww. Shell has rp.nentln-r.oinpleted and started ip 12-14 -percent of UE. industry 106 February 1973 Hydrocarbon Processing RSV0033556 Ole 6-6--Foreign VCM producers 0 Country Company City Annual capacity (thousand metric tons) Prooess/completien _Bcigjuigr lOulilT* AulVflP dW-* rrr.. ^->y FFlnraJn8c^e........................ >oo i Jr Greece*........ c ] Italy*- urn j wti ` KetharSan^B: Jf* Rumania: ... c | Spawns f jni ** xs:~K.r:.:::;:: Kiomn t*> ; USSR:................ don Wont Geconny; LATIN AMERICA Chat ^ AfUwitfw ... maUe ft*/ Brazil; , GhSei. own * Mexico;......................,.... ty is Yeuezuelei .*................ AFRICA/MIDDLE BAST per- oxyader Twwmfi ................ ASIA/PACIFIC Australia:........... Japans................ a&r . wwotab. .. PCtlUlu*,JOjllHGobfen -e,*V~...................... Ctu> a.NIT. rOTvUCT LgPcia--- Pwjur AJKOSWtL Jnriijfttontal Tmrrn, y-fta--a--wtaJteon. Oxytns XGU TecluadfanfioitMe. Boticfc Bimiu<Vifcef PuertoDuo cmmujfcmiij -- Baglmi-Dar. Wales 4HHm ofcjiigatH 48fcew>Ifudj grnuprarfc Air WmW Chonria . Ami nil BA1Q i Conn Union. Carbide Eroptuaa. Nationals de Petroleo Pelrouuwka-Doff-BNAP PEMKX B. F.Goadrich/TVT/othane ijPeildiad OlaHfe; lifmilniurtny Goodrich Aeahi P-- NSapiimeDei muQa?" -ISklw--- --SaoPaolo-- K. A. Conoepdon ConevpcfoQ Paiarltov El TabUr aeudrs^ AJags Yaifeica AltOOB of1 Kuwuirid -6S0* tod) 5-- ~36--- 80 (plattgftd) JP ............... 440JUm JEMa. -88- ftfK fmnwnrjfiip BHphiiMd)' kVa,40*(plonued $40085 15 (pUc) 15 (pUa) 70 60 (folwmcdVH 05 (pUnnod.) 27 (planned ccpaasinii) N. A. 545-eSBC) fiwvfrfchtfJnrriiffr jolrny/Wl S-l^lpa^mTaasiiE&i Ethylene-based (1072) Br>1nnnd nnerylw>jfa.rKy1^n* -JBfcfryMiBC'greelncg 6ittffep^conip]dMD}? -cam. C e odweb/Btaaiep. JMMoBS.MitiyTT/frytefTf 4GSoeokdarifc^h<?r.(I07?) Bthytewe 'nonrlrfrh Acetslcue- i-->TitaufTi ii~i ftfl7i)T) Baianoed /VA-*"}iiP,,i*rt1** 3sSSSSa jomca. 4Bti>yl/gelvoy/I01 -SotBay^Ou' Balanced ethjrlane-acetyJene 0972) ,, N. A, Dow Scientific Design B. F. Goodrich 0973) mOLJk. -asr*83-- 1972 pGgoondrich ToyoSode, f(jjv orine jduct rouilorotime, (Vhile * poly-* r and --C5""nft -so-- Tu-ro>Soda 42(72>) Balanced, Goodrich s Design --hCtwu nfJnrrtiifiirfjlFfifln . Korea:.. Taiwan:. Thailand:. *BopnSoda- ihicilhiilw Che Chinr.i vTVrwfnnl-nrri TfioU Ifluuu w-KtewofhesBnm" g -66-- 64 -6&4pfoun& .40- 2itMnU Poll* M"uu' amritRP/rTtodhHoi9P7m2id)i Jto WSWhel Source: Authors' estimate based on many pnftftiied sonme; This list Is sot intended to be comprehensive, but to list most major producers* fesfi pnfobhf hf-fyo d B. P. it this capacity at Houston. Ethylene ^comes from a gas oil TABLE 6-7--tLS. historical data. VCM, 1959 to 1973 Manteable States. /CM, their and Cal- cracker with 1 billion pounds/year capacity, hat required chlorine is purchased extemaHy.l Shell produces chlorine an3' fllhfir cnlonnated organics beside VCM, but has apparently chosen not to expand chlorine capacity for use in VCM. With recent announcement erf a similar scale VCM unit in Norco, La., She^ will VCMDm^cgJjj^225. Conoco has 10 p^xent3in35^^capaaty at L.ate" Charles, with ethylene provided rcent ediane/propaae cracking' and chlorine requirements *uerto purchased. It is reasonable to watch major ethylene and and < chlorine producers for the next VCM units. Year Number of producers 1959 ... I960___ 1961____ 1962____ 1963____ 1964____ 1965 ... 1966____ 1967. .. 1968____ 1969____ 1970..., 1975____ 10 12 12 12 12 18 13 13 13 n12 9 10* Production MM lix/yr. 978 1.037 1,044 1^11 1.435 1.614 2.000 2^00 2424 2.969 2.736 4.000 5,600* Total value SdImb Average of prod'd! MM lb./yr. Price, i/lb. SMM 329 352 424 516 501 598 688 886 952 1.463 %3SB 2.620* 4.200* 11 10 &i is 7.0 63 6.1 &9 L3 AS 4.4 45* 4JS* 108 104 85 98 100 102 122 148 128 136 164 180* 252* but I with HISTORICAL DATA Sotirce: U.S- Tariff Commission * Author's estimates, with price projection in 1971 doQzr& duced Table 6-7 presents data based, on UJS. Tariff Commis sion reports for 1958 through 1969 and the authors' past five years. Average sales price has continually dropped com- estimates for 1975. These data show a steady rise in the because oxychlorination of ethylene, which is accounting |c: ' L production of VCM, excepting a slump in 1967, when the industry was particularly plagued with overcapacity. Pro for an ever-increasing proportion of VCM production, is considerably cheaper than the acetylene route, and-be duction has grown at over 17 percent per year for the cause of economies of scale. Because of these offsetting ji iI I ii I i> si t i |i; :l i j ! Febmarv 1973 RSV0033557 VINYL CHLORIDE 1 raft Fig. 6-8--VCM production In the United States', U.S. Tariff Commission ana 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 consumption in the United States is ex pected to snow an annual growth rate of 10 percent from 1970 to 1975. The trends of VGM production, price and value are shown in Bigs. 6-8, 6-9 and 6-10. ECONOMICS The price of VGM has exhibited the typical downward trend of maturing petrochemical monomers. The major reasons for this 'id have been the consistently improv ing technology, tin/much larger scale of existing produc tion facilities, and the considerable decrease in the price 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 ethyl- ene/acetylene 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 cents/pound, die switch in feedstocks reduces raw material cost by about 1.1 cents/pound at normal yield ratios. For a 500-million-pound/year plant, the raw material savings for balanced oxychlorination amounts to 85 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 Monochetri) 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 bruit 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 angle 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 VGM business. First, the two raw materials ceanprise two-thirds of the 8 percent profited manufacturing cost of v'GXi. With tffiTTarge economies'or- scale `in chlorine and the evident trend to oil company domina- TABLE 6-8--Estimated cost of VCM production by ethylene chlorination and oxychiorraafton Component Chlorine.......................... Ethylene...................... Caul}st Sc chemicals.. Steam (net of credit).. Fuel.............................. Cooling water........ Electricity................... 2% royalty................ Total variable costs.. Ueafterate (par lb. VGM) 0.631b. 0.47 lb. 1.5 lb. .0018 MM Btu. 31 raL oa KWH Input price OS/onlt) 2.25 3X0 ' M' 25 .003 Manufacturing cost (TiuHMaad $/jt.) S 7,650 7.600 550 460 200 660 300 500 $17,800 ft/lb. VGM) 1,42 1-41 aio 0.08 .04 .10 .06 .09 Operating labor & supervision...................................................................... (Q% of BL> capital)........... ................................ ............ ... General overhead {50% of operating & maintenance)................................ Taxes insurance and rentals (1H% of fixed capital)............ ....................... 15% capital charge to eara 8% on fixed investment................................ 8% working capital Interest..................................... ........................ .. Total fixed charges................. . .................. 8% profited manufacturing cost (F. O. B,, plant). $ 300 1,000 4o0 350 3,600 200 S 5900 $23,700 109 4.38 Baris; Usage rates and capital costs are derived from published claims. See especially Spits, Peter. "Vinyl Chloride Economics." Chemical Engineering Progress 64-3:19-26, March 1968. 600-mlttioiL-pound/year Golf Coast plant (F, O. B.) Working capital one mooth of VCM sales value* Capital cost * 16 on-sites (rmDkm. dollars) 8 off-rites 24 Total 11 year taxable bfe 15 year estimated sseful Ufe Note: This Is a needy-state calculation for one year at 00% of capacity; a more accurate discounted cash flew might produce a noacably different price. No by product credits or disposal costs are included: credits for chLonnated advents feedstocks are assntned to balance heavy and light ends disposal costs. 108 February 1973 Hydrocarbon Processing RSV0033558 ; or * *v-- LC* ce ad iyi 1C- aw gh as a lylrial van ices ices nal caw 5 tO i is l-$4 inyl >een lene cers of -the iced This it at aal1 aix, istics camjiing [e in aiaa- <0 TABLE 6-9-- Sensitivity of VCM manufoctvri Jast to ossompfions A change In this Input Ethylene price..................................... - - fTrtM-rc costs (fad. steam* electricity). Operating & maintenance costs , . ... (without increase in overhead) By this amount $5Aon io%(L25 ceau/Doend 10% 10% Changes cost of VCM by AfflOOQt (fl/Ib.) 0.16 0.12 0.02 002 0.07 Source: Derived from previous estimate of F. O. B* mawfactariag cost. tion of ethylene production (primarily because of byprod uct handling from heavier feedstock cracking), the vinyl chloride business is lhg_abyious_clMnain of both large mmm bideJT 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 4Va cents/pounds it is evident that new VCM plants 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 -probabie upward pressure - on VCM pricing in the event of 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 oxychlorination 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.14 No announcements of a commercial TRANSCAT venture have 'been made public to date. A final, developing factor in VCM economics is the production of3^rercent 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 potentially significant, upward pressure on VCM price. YEAR Fig. 5-9--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* THE FUTURE yogress 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 PVC and copolymers into new materials (applications. Replacement of older materials--such as steel and iron in pipe, glass and paper in packaging--will loby- [continue to provide the major impetus to PVC 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 PVC con sumed from only moderate inroads. At the same time, older PVC markets are maturing noticeably and will exhibit growth of 5-8 percent. The upshot will be PVC consumption growth of 10 percent fmm 1969 to 1975 and ISSTNG Hydrocarbon Processing February 1973 RSV0033559 VINYL CHLORIDE 1 a lower 7 percent growth of VCM production because of a decreasing proportion of 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-m large scale contracts. Thenstore, nearbalanced oxychlorinataon 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' cendy armmmred/I R ANSGAT-pr<>cess-to--con.YEft ethane directiy-terVCSf. If preliminary information is confirmSd^ watch for TRANSCAT to be employed on a very large Location of new VCM production will be determined by availability of low-cost hydrocarbons. withTVfcM transportation by water, prpe ine 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 naPtive_SHaplies erf etthvler^ chlorine CUMULATIVE PRODUCTION EXPERIENCE, MILLION POUNDS Fig. 6-12--Experience curves for VCM price, PVC price, and value added by polymarker. Source: U.S. Tariff Commission, Boston Consulting Group, and Manufacturing Chemists Asso ciation figures are combined with the GNP deflator (1858 base y-w) and authors' estimates of future production. A 3 percent inflation projection through 1975 Is Incorporated. knowhow. Paper-thinprofit margins almost preclude entry by any producer that lacks more than one of these three advantages. Look for Dow, PPG and Shell to* I About the authors David P. Keane is a produet manage ment executive in the Pridvn. Division of the Singer Co. Tie received an MD.A., from Harvard Business School in 1970. He also holds an AJB. in economics from Georgetown University, Washing ton, D.C., and the "Certificate' from the University of Fribourg, Switzer land, in French literature. Robert B. Stqbaugh is a professor at Harvard Business School where he teaches a doctoral seminar in interna tional technology and production. He holds a BJ5. in chemical engineering from Louisiana State University and a recent doctorate from Harvard Busi ness School. He has served as a con sultant to a number of chemical and oil firms and governments and has en gineering experience with Monsanto, Caltex 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 i petro chemicals. He has held technical end managerial positions with W.E. Grace, American Oil and Shell Chemical. Mr. Townsend received a BJS. in economics and chemical engineering from MJ.T. and an MJS. in chemical engineering from, Purdue, V continue expamionf'with Union CarbI3S'and Monsanto considering eventual reentry of VCM production. Intro duction of a "successful "eSflSSKPhastsl -process, however, would cause chlorine producers to dominate future pio- rinr-fifi-n . . ' ' - 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 1975, 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 increating power and hydrocarbon costs. Fig. 6-12 presents the history of PVC and VCM pric ing, as well 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)." LITERATURE CITED 1 European Chemical Hewst Polymer Intermediates, Oct. 30, IS70, p, Su 1 Hydrocarbon Processing, November 1967. p, 230; Chesrncd Week, Avg 29, 1964. 4'foreign Aid /or Vinyl" Chemical Week, Sept. 24, 1966. * Hydrocarbon Processing, November 1969, p. 249. * Hydrocarbon Processing, November 1969, p. 246. * European Chemical Nows, April $0, 1971, and 03 estd Gas Journal, Ncv. 8, 1971. 7 Chemical Engineering, April 22, 1966, pp. 142-144. Freiiing, Huson and Stumnermlfe, "Which Feedstock for Ethylene," Hydro- carbon Processing, November 19&8. p. 249. 9 Faith, Keyes and deck. Industrial Chemicals, Wiley, 3rd edition. 1963, p 809. M "Polyvinyl Chloride: Outlook and Opportunities/' John Auditor (B. C Goodrich), Chemical Marketing Research Association, New York. May 6 1971. 23 Chemical Week, Aug. 1ft, 1971, p_ 26. * Chemical Week, May 24, 1969, p. 32. u Od, Pain: and Drug Reporter, May 5, 1969, p. 3. li The 03 and Gas Journal, March 8, 197V, p. 53, u For as explanation of the enerience carve method of price forecasting; >* the various publications of tne Boston Consulting Gttrap, including, spectivt* on Experience,** Boston, 196$. ** "Vinyl Chloride Econoinks," Peter Spitz, Chemical Engineering Progress. March 1968, p, 19*26 with appropriate escalation factors to 197V applied m author. END OF SERIES no February 1973 Hydrocarbon Processing RSV0033560