Document n9zX62OgEeyEKpzyb6JgMmEVR

"> < 3 19821 M. G. SKELSEY VICE PRESIDENT UNION CARBIDE EASTERN, INC. (INCORPORATED IN U.S.A.) NEW WORLD TOWER. 3TH FLOOR. 16-19. QUEEN'S ROAD. CENTRAL. HONG KONG. TELEPHONE; 3-JS2211 cable address: unicarbioe G. . O. BOX 8 1 8 Mr. Robert E. Byrne, Jr., UCC, Metals Division., P.O. Box 579 Niagara Falls, N.Y. 14302 Dear Bob, John Goudey and his staff have now completed a market overview for CALIDRIA Asbestos in the Eastern Area excluding Japan. This meets the timing that we agreed during your recent visit to Hong Kong. There appears to be a good potential for the CALIDRIA product range without Japan in the order of 3200 MTA, equivalent to US$1.4 million FOB USA. Also a high degree of dedication is required to achieve anything like this potential. Our recommendation is that Tomoe Engineering Co. Ltd. should be appointed to extend their area of distribution from Japan to include all Eastern Area countries. There is overlap between our present sales/marketing coverage and the potential markets for CALIDRIA Asbestos products. Balancing the dedication requirement against the present on-going effort for other UCC strategic products, mostly from the C&P Divisions, we cannot offer the priority support, at the present time. All of our selling affiliates will, of course, assist Tomoe should you appoint them. Finally, as we may have more capacity to support the sales development of CALIDRIA Asbestos in the future, we would be interested in any further developments. Please do not hesitate to contact myself or John Goudey if you have any questions. Sincerely, MGS/bw UCC 004723 cc: M/s . J. B . LawAV G . Farrell/J . F . Goudey 4& RECEIVED NtP 7 1982 UCC -CALIDRIA n. y; To c. c. From Date Subject : M.G. Skelsey H. Ayers / E. Wong : J.F. Goudey : August 25, 1982 "CALIDRIA" ASBESTOS REGIONAL MARKET OVERVIEW Dear Mike, In response to your request of June 22, 1982, Edmund Wong has completed an overview study on the Eastern Area markets for asbestos shorts. A copy of his report is transmitted with this memorandum. The survey indicates the current total potential for the "Calidria" product range of 3200 MTA or US$1.4 million, FOB basis, excluding Japan. UCC had token gross sales, estimated at US$250,000 in 1981 or roughly 10% of the estimated 1982 potential. Two major external detractors to expand the market were identified. These are the increasing awareness of and concern for asbestosis in the Eastern Area countries, and the decreasing cost competitiveness of "Calidria" compared with available substitutes. Internally UCEI is at a disadvantage without adequate product expertise and industry coverage. In consideration of the foregoing and the time factor, the recommended course of action at this stage is to expand Tomoe's distributorship outside Japan, assuming their capabilities meet UCC standards. If Tomoe is authorized, a follow up investigation is recommended to reassess the market and their performance early in 1984. Although no further action is planned, some time could be allocated during the HEC study to follow up any enduse applications if necessary. The total cost of this survey was US$4000 excluding supervision and the affiliates time. UCC 004724 CONTENTS INTRODUCTION & BACKGROUND METHODOLOGY CONCLUSIONS AND RECOMMENDATIONS MARKET DATA SUMMARY MARKET OVERVIEW COMPETITIVE PRODUCTS Page 2 4 5 7 9 17 APPENDIXES I CHINA ASBESTOS INDUSTRY II CALL REPORT ON TOMOE ENGINEERING COMPANY LTD. UCC 004725 Past sales to other countries in this Area including Hong Kong, Thailand and Korea et al are insignificantly small. No major marketing efforts have yet been initiated in these countries. In consideration of the foregoing, UCC/UCEI management requested a preliminary market overview to determine the potential of this business in Asia, excluding Japan. The objective is to decide, based on the survey, how to handle the marketing of these products in the Eastern area. -3UCC 004726 Conclusions And Recommendations The objective of this preliminary market survey is to have a general understanding of the short-fiber (Grade 7) asbestos market in Asia, excluding Japan, so as to determine how to handle the marketing of these products in the Eastern Area. Conclusions and recommendations based on the survey are as follows : Conclusions Total market potential for "Calidria" Asbestos in Asia, excluding Japan is estimated at 3200 MTA representing a turnover of about US$1.4 million at FOB prices in 1982. The prospective market areas identified are polyester resins, epoxy resins and drilling mud. Countries with major market potentials are Indonesia, Thailand, South Korea and Taiwan accounting for 70% of the total. Asbestos toxicity is the major trade deterrent for the total business, and especially for markets including vinyl asbestos tile, paint and paper. "Calidria" Asbestos product characteristics for most applications are not specialized. Substitute products are available at competitive prices, e.g. calcium carbonate, Bentones, Aerosil et al. At present, UCE has limited marketing personnel with indepth training on "Calidria" Asbestos product appli cations, and adequate interface with industries including unsaturated polyester resin, epoxy resin and vinyl asbestos tile. - 5- UCC 004727 Market Data Summary Table II below shows the total estimated market potential for asbestos by enduse in 1982. Included also is the estimated sales turnover based on 1982 FOB prices. TABLE 11 Total Eastern Area Market Potential By Enduse 1982 Application 1982 Estimated Market Potential (MTA) Vinyl Asbestos Tile (floor it Ceiling) Viscosifier for Drilling Mud Thixotrope for Polyester Resins Thixotrope for Epoxy Resins Thixotrope for Phenolic Resins Thickener for Paints 1400 1400 200 20 10 200 Total 3230 asss Turnover (US$000) 200 , 360 640 15 32 155 1402 -7UCC 004728 Market Overview Vinyl Asbestos Tile In Asia, excluding Japan, vinyl floor tile producing countries investigated were: Taiwan, Thailand, South Korea, the PRC, Philippines and Australia. For the past twenty years, this industry has been one of the major outlets for asbestos shorts. However, with the pressing concern for the carcinogenic nature of these products, some of the developed countries have already imposed a total asbestos ban.In this area, Australia and Japan are the two countries with the strictest health regulations on the use of these products. In the rest of Asia, despite the concern, no known legal actions have been taken yet to control the applications of calidria t3?pe products. In the vinyl floor tile market, although there is a trend towards asbestos-free products, the forementioned countries except Australia make tiles with asbestos at a mixing rate of 10 -15% range by weight. Table IV on the following page shows the 1981 outputs of vinyl asbestos tile (VAT) in the key producing countries in Asia, and their estimated asbestos consumptions. Although the PRC is thought to be the largest VAT producer in Asia, with an estimated annual output of 27,000 MT per year, no imports of asbestos shorts was reported. In 1981, more than 10 million square feet of VAT were exported via Hong Kong to countries in the Southeast Asia. In general, various grades of asbestos fibers are readily available in the PRC, however, there are indications that the government is currently importing a significant volume of grade 3 spinning fibre for asbestos textile products. Refer Appendix I for general information of the industry. NOTE Grade 3 - long asbestos fibre -9- UCC 004729 DRILLING MUD Functioning as a viscosifier, "Calidria" fiber products are currently applied to drilling mud for oil drillings and geothermal excavations in Japan. Estimated annual consumption is over 200MT for 1982. Major drilling activities outside Japan can be found in countries including Indonesia and the PRC. In March of this year, 17 tons of dust-free "Calidria" asbestos products were shipped to Zhanjiang Oil Support Base, China, for offshore drilling. With a total of about 60 oil rigs currently drilling both offshore and onshore in this country, the market potential is estimated at 300MTA for 1982. The prospect is bright with China's accelerated offshore oil development. Indonesia, a member of OPEC since 1962, is the largest oil producing country in Asia. In 1980, about 200 exploration wells were completed. Total active rig count for 1982 was about 130, excluding those for well servicing or under repair. Assuming 5 MTA of asbestos per rig, the market potential for "Calidria" to this industry in Indonesia is estimated at 640 MTA. Accounting for only 34% of total number of active rigs in this region,oil drilling activities in the rest of Asia are comparatively less significant. Table V on the following page shows the breakdown of the estimated regional asbestos potentials for 1982. - 11 - UCC 004730 POLYESTER RESIN SYSTEM "Calidria" Resin-Grade 244 Asbestos is used as thickener and thixotrope in polyester spray-up and hand lay-up laminates, and gel coats. Major markets outside Japan in Asia are Taiwan, Australia and Thailand. With an estimated output of unsaturated polyester resin of 45,000 MT in 1982, the market potential for "Calidria" resin grade asbestos in Taiwan is estimated at over 100 MTA. This represents more than 50% of the estimated total potential for this area. Refer Table VI for breakdown. EPOXY RESIN SYSTEM "Calidria" Resin-Grade 144 Asbestos is used as low-cost & thickening agent and thixotrope for liquid epoxy resin systems. Specific applications are in epoxy adhesives, sealants and coatings. Total epoxy resin market in Asia, excluding Japan, is guesstimated at around 2000 MTA. Based on an average mixing ratio of 1% of "Calidria" Asbestos, the market potential for this application could amount to 20 MTA. PAINT Mainly used as a thickening agent for solvent-based paints, "Calidria" Resin Grade asbestos has not been widely applied in the paint industry in Asia. Total estimated potential consumption for coatings is around 200 MT. Table VII shows the breakdown. - 13 - UCC 004731 TABLE VII ESTIMATED ASBESTOS POTENTIAL FOR PAINT MARKETS IN ASIA 1982 Country Taiwan Hong Kong Australia Korea Thailand India Philippines Indonesia Malaysia Asbestos Potential Consumption (MTA) i4a) 10<2> 50(3) 25<1> 50<3> 12<2> 20<1> 20(1) 12(1) Total 213 NOTES (1) Best guesstimate. (2) Currently use Bentone. (3) RG144/244 and Bentone. - 15 UCC 004732 Competitive Products Major competitive products identified in this survey are highlighted as in the following table : TABLE VIII Major Competitive Products for "Calidria" Asbestos "Calidria" Asbestos Standard Grade SG 100 ) SG 130 ) Resin Grade RG - 144 RG - 244 High Purity Grade HPO ) HPP ) Competitive Products Application J - M Carey Vinyl Asbestos Tile Bentone Aerosil Paint, Epoxy resin -= Polyester resin Talc, Clays Calcium Carbonate Paper - Note : Time did not permit an indepth analysis of the competitive products for individual applications. - 17 UCC 004733 APPENDIX I CHINA'S ASBESTOS INDUSTRY Deposits & Mines Deposits are mainly chrysotile. Large deposits have been found in Provinces of Sichuan, Qinghai, Liaoning and Anhuai, and in Auto nomous Regions of Ningxia and Inner Mongolia. The production of raw fibers was 130,000 MT in 1980. Substantial increase was reported in the first half of 1982. Major mines in operation are as follows: PRC Major Asbestos Mines Name Sichuan Provincial Asbestos Mine Sichuan Xin Kan Asbestos Mine Qinghai Mahgai Asbestos Mine Dalian Jinzhou Asbestos Mine Employee No. 6,400 N.A. N.A. 1,640 Asbestos Products ...... .. y 12 factories are listed in an official publication with employees totalled at 18,840. 6 major factories (with employees over 1,000) are as follows: PRC Major Asbestos Factories Name Employee Qingdao General Asbestos Factory Beijing Asbestos Factory Tienjin Asbestos Factory Shangyang Asbestos Factory Xian Asbestos Factory Jilin Changchum Asbestos Factory 2,450 1,370 1,880 1,500 1,300 1,390 Product Lines ABCDE FG XXXX X X XXX XXX { X XX X XX X XXX X X Legends: A = Asbestos-cement B = Textile C = Frictional materials D = Vinyl rubber tile & jointing E = Paper F = Metallic fiber joint with steel wire insertion G = Others UCC 004734 A.Ku. r MMAC(R-AfBC5T09 UCAH'79 UNTON CAR0IOC PRODUCTS Of^ANTMfNT J Uit UV.UIIAJ1A* TOMOE ENGINEERING COMPANY. LTD, 5HIN-SHIN KAIKAN SUILOTNO 14 T. NIHONSASM1 1-CHOMC CHUO-KU. TOKYO. f03 JAPAN TtC. TOKYO 103) 27 4*04)1 TOMOE ENGINEERING COMPANY, LTD. Present for UCEI : UCJKK: S. Ranny E, Wong N. Enoraoto Date August 3, 1982 Purpose: To familiarize with major applications and usage patterns of "Calidria" asbestos products in Japan so as to form basis for market potential estimation for these products in Asia, excluding Japan. Meeting Highlights Introduction Two meetings were held with representatives from Tomoe Engineering Company, Limited on the 29th and 30th of July in UCJKX. At the beginning of the first meeting, our purpose of this investigation was queried. Obviously, they have already been briefed by R.E. Byrne about the question of supply in Asia outside Japan. After we explained our position, they seemed to be more at ease and cooperative. Mr. Fukuma, sales manager of asbestos products, indica ted that they are currently investigating the market potential in Korea, Taiwan and Thailand, but no conclu sion can be drawn yet. He also showed interest to work with us in this project. "Calidria" Asbestos Products . Major Products . Fiber Products . Standard grade SG-100-EX. . Standard grade SG-130-EX. 1 UCC 004735 Comments Toxicity problem and non-competitive price are the two major deterrents in marketing "Calidria" asbestos products in Japan, The market of SG-100 for vinyl asbestos tile (VAT) is shrinking because of the tightening of environmental regulations on asbestos toxicity. Asbestos content was reduced from 12% to 4% by weight to circumvent the law. . In Japan, there are 3 VAT makers. Their current sumptions per month are as below: Producer NITTOBO TAJIMA TOYO Asbestos Used SG-100 JM, NOZAWA CAREY Volume (MT) 60 100 150 . HPP/HPO usage for paper industry is also decreasing due to the same reason. In ceiling tile market, asbestos products will con tinue to be used because of the fire regulations on flame retardant properties of these tiles. Typical percentage of asbestos used is about 4% by weight. The growing markets for short fiber asbestos RG244/ RG144 are unsaturated polyester and epoxy resin product sectors. In Japan, RG244 and Aerosil are the two major thixotropic agents used in polyester resin products (mainly FRP) accounting for 14% and 86% respectively. (Total market was estimated at 840 MTA). Comparing with Aerosil, "Calidria" has the following advantages/disadvantages: Advantages . Lower price (situation is changing). . Lower percentage usage. . Better transparency. . Better dispersion. Disadvantages . Toxicity. . Boiling test (longer boiling time). . Application problem. Methods of estimation for market potential in poly ester and epoxy resin markets were suggested as below Polyester Resin Total output of unsaturated polyester resin x 50% x 0.5 - 1.0% = asbestos market potential. Epoxy Resin Total output of epoxy adhesives x 1 - 3% = asbestos market potential. UCC 004736 3 Tomoe Engineering Company. Ltd. MAIN QAIMI MAHUZCN KUILOINO *1. NIHONIAIHI KHOMI. CHUO'rtJ TOKYO, JAPAN (ANNEX OFFICE) SHIN SHIN KAIKAN BUILDING !4-, NIHONSASHI 3-CHOMg, CHUO-KU TOKYrt iaban CABLE AOOKCSS i ** COMQT ** TfLCX : 0X113)04 IOWOT J TELEPHONE: TOKYO 17*-0*tt Hay 13, 1982 Mr. Robert E. Byrne, Jr. Marketing Manager Union Carbide Corporation Metals Division P.O. Box 579 Niagara Palls, N.T. 14302 Dear Mr. Byrne, Jr.: Hi (J<2^_ Enclosed please note our Calidria Asbestos Sales Repor for the 1st quarter 1982. / Against our earlier expectations, Canadlaq and African competitors did not raise their FOB prices at all, and our Calidria was only one that came up with new price list. Users are turning in cosiplaints of it one after another, and we have failed iru the negotiations with them for their acceptance of new prices from April 1st. Some 7 class makers even reduced their prices, and thus whole pricing trends in asbestos market have put us in very, very difficult position. Regarding RG-244, the competitive aerosil has been steadily decreasing its price for past 3 years, and further compounded by the low-yen situation, it has virtually wiped out the merits RG-244 thus far enjoyed. Ve would like to discuss these circumstances in more detail upon your forthcoming visit. Very truly yours, TOMOE ENGINEERING CO., LTD H. Fukuma Inorganic Chemicals Section cc: Mr. N Enomoto Mr. M. Eanno UCC 004737 2 Despite severe recession Tokai Pulp Co. is constantly using our asbestos , but Daishowa discontinued production of the paper using T-135 due to the slump. We are currently working on Daishowa to use T-135 for some other paper. 4. HPO-EX and UNIVIS for Drilling Mud, Phenolic and Other Materials Jan. Feb. Mar. (ton Telnite Phenolic Others Total 48 24 35 17 (UNIVIS) 10 9 10 10 20 17 68 53 62 & 17 Sales are smooth for Telnite who is using HPO for geothermal power development. Their potential is considered large in^the long run as more of such geothermal development projects are expected in future. We expect a sale of average 20 tons per month for 2nd quarter. The 17 tons UNIVTS in March were for China, and in 2nd quarter we shall deliver about 50 tons Su^er Visbestos . The sales to phenolic resin maker were bit smaller than normal, which was due to lesser working days in January and February at the users. "Others" includes Suzuka Paint's usage of HPO which replaced RG-244 from January. Their consumption would amount to about 4 tons per month. 5. RG-144-EX Cemedine Co. Nippon Special Paint P3T Makers Others Total J an. 1.21 3*2 *2 8.0 13.4. 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