Document qd7XZo1N2RZdGEv58k5ZknpvG

INDUSTRY S BUSINESS PVC producers see good business ahead ca If! & OU pa Optimism for polyvinyl chloride based on tight market, high plant utilization, increasing production, and firm prices 1 fir se . pi 1 ck Pr C< "Everything's tight. You can't buy monomer. You can't buy polymer. I'm afraid to answer my phone be cause I can't fill any more customer orders. And most other producers don't even have product to swap at market prices." That's how one poly vinyl chloride product manager sums up his view of the business. Although the tight supply-demand balance is bringing some operational problems, it does, nevertheless, indi cate that the 1969-70 business out look for PVC producers is shaping into the healthiest one of the past three years. Assuming continuing growth in the nation's economy, the PVC outlook runs like this: The supply-demand balance wall remain extremely tight through 1969 and moderately tight through 1970. Utilization of plant capacity will average 90% or more this year and next. Production will be up at an an nual rate of 12%, to about 2.66 billion pounds in 1969 and 3.0 billion pounds in 1970. Price structures are generally firm and producers will likely announce price increases this fall for generalpurpose resin now selling at 10.5 cents a pound in bulk. Polyvinyl chloride markets are more diverse than any other large-volume thermoplastic Market Calendering Extruded products Wire and cable Calendered flooring Film and sheet Paper and textile coating Sound records Plastisols Protective coatings and adhesives Injection and blow molding Coated flooring Other domestic uses Exports Consump tion (percent) 18% 14 12 10 6 5 5 5 4 3 2 11 5 PVC REACTOR. Firestone worker adjusts valve on 3500-gallon reactor in whid vinyl chloride monomer is polymerized at company's Pottstown, Pa., plant w tii ac la Given such good business conditions after the 1967-68 period of over capacity and price cutting, producers are optimistic, but cautiously so, about the near-term outlook. Union Car bide's Gordon P. Bigelow, product manager of vinyls, expresses what seems to be the industry's mood: "There's a little life on the horizon . . . but there are indicators that the econ omy might slide." Even if consumer demand for vinyl products is weakened for a short time, the resin outlook is still good, be cause the current shortage of mono mer is the really critical factor in to day's tight supply-demand balance. This shortage is limiting the produc tion of polymer and will continue to increase to full capacity stepwise intol Si next year. * It The monomer shortage is somewhat puzzling, though, in view of what appears to be an industry overcapac ity. A C&EN check of all monomer producers shows that their average la re ol di t! operating capacity for 1969 is 4.0 billion pounds (excluding the Do*/ m startup). At best, monomer produc-1 P tion will approach 3.0 billion pound* h. this year, of which 90%--2.7 bilh Ui pounds--will go to domestic FVC makers, and 10%-300 miDi 1 pounds--will go to currently strong tl export markets. Based on the**f tl figures, plant utilization for M would be only 75%. Monomer producers, howevrt S1 ir e limit it until mid-1970, according to all monomer producers. What will relieve this shortage about mid-1970 will be new monomer capacity, in particular Dow's 800 million pound-ayear Oyster Creek, Tex., plant, which the company began to bring on stream in June and will continue to claim that they're operating tn| plants all out. They estimate p*! utilization this year at about This means that the effective QpWrj ing capacity for 1969 must be lower from 4.0 billion pounds to 3.4 buh pounds to arrive at the 90% This is quite'a drop ' from hamep' , v n e a c t 1 18 C&EN AUG. 4. 1969 capacity, but conceivable neverthe less, as producers continue to phase out acetylene units and overstate ca pacity to discourage competition. The tight supply-demand balance monomer is supporting the market selling price of 4.5 cents a pound in tanks on long-term contracts. One downward pressure on this selling price is coming from the Federal Trade Commission's 1967 consent order which requires that Continental Oil make available for five years one third of its vinyl chloride production to nonintegrated PVC producers at the low est price offered any other customers. Another downward pressure is the forecast for lower-cost ethylene at less than 3.0 cents a pound, even though prices for chlorine, which constitutes nearly 60% of the polymer weight, have recently moved up incrementally. Slight discrepancy. While pro ducers figure that plant utilization will be about 90% for 1969, there is a slight discrepancy between nameplate capacity and estimated production for 1969. A C&EN inquiry of all 23 PVC producers shows that the indus try claims a year-end 1969 capacity ol 3.7 billion pounds and an average operating capacity for the year of 3.2 billion pounds. These figures appear overstated, as do the monomer figures. It's likely that with production esti mated at 2.66 billion pounds this ar, average operating capacity will ue about 3.0 billion pounds. During the first four months of 1969, polymer production increased 13% over the same period last year, lich with some changes in the polymeriza tion mix. Suspension homopolymer accounts for 68% of production so far this year, up from 63% last year. nto Suspension copolymer accounts for i 18% so far this year, down from 23% fiat last year. Dispersion (paste) resins hat remain unchanged at 14%. In spite )ac- of the generally good outlook, pro oner ducers still have problems which age they're worried about. 4.0 Wide mix. B. F. Goodrich, which )o makes about all types and grades of luc- PVC resins, indicates concern about mi having to produce such a wide prod llior uct mix. >vc Hooker's Bill Daly, business man tlion ager for chemicals and polymers, says ronf that his company is worried that its hes? v three fastest growing markets--rigid .96? specialties, packaging sheet, and cast- lng--might slow down with the overall ;ver economy. thei' And about pricing, Dick Kulick, >lant _'tce president of marketing for Ten- -co's plastics division, comments that ef>1 ven with last January's price increases and with good growth this year, the ilfion company feels there should be more nS* t an increase in the average selling plat Ptice for its homopolymer resin mix. Vinyl chloride monomer capacity will total 4.8 billion pounds at the end of 1969 Producer Location Capacity (millions of pounds) Allied Chemical American Chemical Geismar, La. Watson, Calif. 300 175 Continental Oil Dow Chemical Diamond Shamrock Ethyl Corp. B. F. Goodrich Chemicals Monochem PPG Industries Tenneco Union Carbide Lake Charles, La. Freeport, Tex. Oyster Creek, Tex. Piaquemine, La. Deer Park, Tex. Baton Rouge, La. Houston, Tex. Calvert City, Ky. Geismar, La. Lake Charles, La. Houston, Tex. Texas City, Tex. 600 180 800* 300 100 300 200 1000 300 300 255 150** Total 4,810 * Dow just started up part of its Oyster Creek plant in June and is making shipments. ** Union Carbide will phase out its Texas City plant by early 1970 and purchase merchant monomer. Polyvinyl chloride capacity will total 3.7 billion pounds at the end of 1969 Producer Location Airco Calvert City, Ky. Allied Chemical Painesville, Ohio American Chemical Long Beach, Calif. Atlantic Tubing Cranston, R.l. Borden Illiopolis, III. Leominster, Mass. Continental Oil Aberdeen, Miss. Diamond Shamrock Deer Park, Tex. Delaware City, Del. Escambia Chemical Pensacola, Fla. Ethyl Corp. Baton Rouge, La. Firestone Tire & Rubber Perryville, Md. Pottstown, Pa. General Tire & Rubber Ashtabula, Ohio B. F. Goodrich Avon Lake. Ohio Capacity (millions of pounds) 120 200 70 100* 250 (combined total) 155 240 (combined total) 50 150 115 125 75 Goodyear Ti ombined total) Great Amer Hooker Keysor Chei Monsanto Olin Pantasote Stauffer Tenneco imbined total) Union Carbii Uni royal imbined total) Atlantic Tubing __ ________ as xne result of a fire but the company plans to rebuild capacity--how much is still uncertain. b Goodrich will nave the Pedricktown plant on stream by the end of 1969. Goodyear will expand the Piaquemine plant to 80 million pounds a year in late 1970. d Hooker will expand the Burlington plant to 120 million pounds a year in 1970. * Staufter will expand the Delaware City plant to 150 million pounds by the end of 1970. Note: Dow Chemical will shut down its Midland, Mich., plant, rated at 60 million pounds a year, by the end of 1969 and thus end its PVC operations. _f \ Ln r- 7' ' 6 7 \' \ 1 AUG. 4, 1969 C&EN 19 L ') influsipy/Business Tight monomer supply plagues PVC producers Booming demand, Oil Refining (Corco) that will make it possible for Corco to supply feedstock to low profit levels, and their jointly owned olefins plant at Penuelas. This plant, which supplies operating problems have ethylene feed for the Guayanilla vinyl teamed to create vinyl chloride plant, has been shut down since April 13 because of a feedstock shortage chloride shortage and mechanical problems. The two companies (PPG and Corco) are in liti gation over the values of the feedstocks, but the interim agreement, which will Recently released Tariff Commission extend through the rest of the year and statistics confirm what vinyl chlo into 1974, if necessary, should clear the ride producers and consumers both feedstock hurdle. The olefins unit was know--monomer producers are run expected to be back in service in mid- ning their plants all out to meet a grow May, but as this issue of C&EN went to ing demand that is being stimulated by press, it still was not operating. If the booming polyvinyl chloride plastics PPG's vinyl chloride unit remains out or business. They also know that it is an even on partial service much longer, a uphill battle. As a result of operating serious crimp will develop in the al problems late last year and again this ready tight supply situation that finds year, the supply of vinyl chloride is many polyvinyl chloride producers on extremely tight and it will remain tight allocation for their monomer. at least until the end of the year, when While the industry is watching what Shell Chemical's 700 million pound-per- developments in Puerto Rico will do to year plant is scheduled to go on stream the vinyl chloride supply situation, it at Norco, La. must also face up to the task of building According to the Tariff Commission, U.S. producers churned out 1.37 billion pounds of vinyl chloride monomer Output of vinyl chloride during the first quarter of the year. will require new capacity!.. That is equivalent to an annual rate of 5.5 billion pounds, which adds up to a nifty 96% of present nameplate capaci ty. However, if the recent past is any indication, this enviable operating rate is one that cannot be sustained for long periods. Shell's new unit probably will arrive too late to be much help this year, which means that the current, in- place nameplate capacity of 5.73 billion pounds will be sorely pressed to produce the 5.5 billion pounds that is expected. One possible way of filling the gap if additional operating problems crop up will be to cut back on exports. Vinyl chloride exports have been running 1968 1970 1972 1974 1976 better than 600 million pounds annually for at least the past three years (last Current capacity is 5.73 billion pounds per year, b Production. Sources: Tariff Commission, Conoco Chemicals estimates year they were 621 million pounds). Latest casualty among monomer ... but new price will be plants is PPG Industries' 500 million needed for investment pound unit at Guayanilla, P.R., where operations were disrupted by a com bination of power failures and feedstock shortages. As C&EN went to press, of ficial word from PPG was that the power problems continue to plague the south ern coast of Puerto Rico and there was little activity at the three-plant complex at Guayanilla, which includes the vinyl chloride unit, an ethylene glycol plant, and a chlorine plant. wvmsyvi yvuHU ? (Market price, 1S72 4.25* (Additional price needed for: I Acceptable profit in 1072 0.5S ! Fuel cost increase of 50 cents | per million B.Lu. 1.40 I Capital charges cost $ escalation 0.80 >New price 7.00 Meanwhile, PPG has signed an in terim agreement with Commonwealth (Smm: Conoco Chomkala new capacity to meet demand pro jected four years from now. At the recent meeting of the Chemical Marketing < Research Association in New York City, John D. Bryan, olefins manager for i Conoco Chemicals, a division of Con- 'S tinental Oil, gave his ideas of how much ' new capacity will be needed and what I kind of price will be necessary to pro- ' : vide an incentive for the investment. Mr. Bryan notes that over the past five 1 years polyvinyl chloride production has 1 grown just under 15% per year. Pro- ' jecting growth through 1977 at a more V conservative 10% annually, Mr. Bryan 1 sees an annual PVC requirement of 6.8 f * billion pounds four years down the 1 road. ? Even assuming no growth at all in ? vinyl chloride exports," this 1977 PVC { ( figure will require 7.7 billion pounds of monomer to sustain it. That's about 2 ( billion pounds more than existing mon- ( omer capacity and equivalent to 3.3 billion pounds of ethylene dichloride capacity, which now stands at 10.85 ( billion pounds. As Mr. Bryan sees it, the new capacity requirement for vinyl chloride will call for three new, 700 mil- s lion pound plants, only one of which is now under construction--the one by Shell. Other companies, he says, un- ( doubtedly recognize the need for addi- i tional vinyl chloride capacity, but producers have had such low returns on t their existing units that they hesitate to ( make a similar mistake. Nevertheless, j he feels that a decision will have to be 4 t reached by the end of this year in order to have a new, grass-roots plant op- j erating by mid-1976 and effectively j c operating throughout 1977. ,< But Mr. Bryan thinks that it will take j j a 7 cent-a-pound price tag on vinyl chlo- f ( ride to justify building a new plant, j t Last year, spot prices ranged from ' j 4.00 to 4.25 cents. And, although spot t prices have now risen above the 5-cent list price, vinyl chloride still is moving ( at less-than-list under long-term con- < tract. Based on energy values and W' t stalled capital costs at the time, vmy* < chloride prices last year should hve t j been 4.75 to 5.00 cents to provide an ac- t i ceptable profit level, in his opinion- ' These prices are based on assun)e_ ' energy value of 25 cents per nulh 1 B.t.u. and capital costs for a balanc ethylene dichloride-vinyl chlon plant of about $4.4 million per 100 lion pounds of vinyl chloride. . . 1 Mr. Bryan's 7-cent price projecti t also is based on the belief that fuel ga values on the Gulf Coast probably * 1 going to rise to the 75 to 80 cents pe ( 6 C&EN May 28, 1973 million B.t.u. range over the next few Fight looms over Houston channel cleanup years. This is a 50-cent increase over current values. If this increase is fully reflected through all energy and raw Chemical and other industries located Several of the companies whose per erial costs, it would lead to an in- along the Houston Ship Channel are mits were discussed, including Cham i..ase of 1.4 cents per pound in vinyl facing a difficult time in getting permits pion International, Crown Central Pe chloride prices. from the Environmental Protection troleum, Atlantic Richfield, and Petro- Capital costs for building a new vinyl Agency to discharge waste waters into Tex Chemical, plan to send their wastes chloride plant also will increase. Mr. the channel. At the first of a series of to the Gulf Coast Waste Disposal Au Bryan estimates that capital charges for hearings to be held on various water thority and contend that they do not a new balanced vinyl chloride plant ways, some company officials in need a discharge permit. L. Jack Davis, coming on stream in 1976 will be about Houston, Tex., told EPA officials that GCWDA general manager, told the $5.4 million per hundred million pounds they cannot meet the requirements of hearing that GCWDA had applied for of monomer. These capital charges alone proposed EPA permits. Others threat a permit early in May, after having will increase vinyl chloride tabs by 0.3 ened court action to try to make EPA notified EPA of its intent to apply in cent and this ignores the capital readjust permit requirements to con February. form with other EPA guidelines for The reductions in the quantities of waste discharges by industry. pollutants that may be discharged Current vinyl chloride capacity The hearing seemed to settle nothing. under permits proposed by EPA vary is close to 6 billion pounds However, it did point out how far apart both in size and fraction. For instance, industry and EPA are in their posi Ethyl Corp.'s Houston plant now dis Million pounds per year Capacity, tions. And it indicated that resolution charges one stream of treated plant 1973 of these differences could well turn out effluent and two cooling water streams Allied Chemical Geismar, La. American Chemical Watson, Calif. Conoco Chemicals Dow Chemical Lake Charles, La. Freeport, Tex. Oyster Creek, Tex. Plaquemine, La. Ethyl Corp. B. F. Goodrich Monochem Baton Rouge, La. Houston, Tex. Calvert City, Ky. Geismar, La. PPG Industries 1 Oil Guayanilla, P.R. Lake Charles, La. Deer Park, Tex. ^fAL 300 170 625 180 700 340 270 150 1000 350 500 300 840 5725 to be a long and expensive business for the firms involved. The basis for the action on the permits for the Houston Ship Channel is EPA efforts to further reduce the amounts of various wastes going into the key industrial waterway. As a result of ear lier hearings on pollution of Galveston Bay by waste flushed down the Houston Ship Channel (C&EN, Feb. 21, 1972, page 12), EPA wants to limit the level of biochemical oxygen demand of dis charges into the channel to 35,000 pounds a day. The Houston hearings, which began at mid-month, involve directly only that contain 3365 pounds of BOD a day and 13,611 pounds of chemical oxygen demand. Under the proposed EPA per mit discussed at the hearing (Ethyl has filed an amended application), the company will be allowed to discharge until Dec. 31, 1974, BOD levels at an overall rate of 615 pounds a day as an operating average, 1230 pounds a day for any 30 days, and a maximum of 1845 pounds on a single day. After Jan. 1, 1975, the BOD levels will drop to 310, 465, and 620 pounds a day for each of the three categories. The reductions, as an operating average, run 81.5% through 1975 and 90.7% in 1975. Source: Conoco Chemicals nine companies with plants or refineries Clear definitions of operating average located near the channel. Other com occupied several hours of the hearing's panies will have hearings later. Each time. Other definitions led to long charges that should also be included for company had applied for a permit, al wrangling between EPA and company new ethylene and chlorine investments. though some intend to send their wastes officials. As the hearings closed, def These would raise the price of ethylene to the regional Gulf Coast Waste Dis initions remained lacking in most cases. and chlorine enough to justify an ad posal Authority (C&EN, Feb. 5, page Another thorny problem is what is ditional 0.5 cent to vinyl chloride's 16) and believe that they do not need a meant by "best practical methods" price, or a total of 0.8 cent per pound as permit. in reference to handling wastes. Since * a result of increased construction costs. At the hearings, EPA officials offered the best practical method was never Assuming that future vinyl chloride proposed levels of waste to be permitted defined at the hearings, several com prices increase enough to warrant new --levels which generally are to decline pany officials were forced to admit that capacity, producers still must face an with time--and a possible timetable their currently used treatment facilities other set of problems. The 2 billion for additional facilities to handle the or new facilities under construction pounds of additional vinyl chloride wastes. The companies countered by or being designed might not meet the t capacity that is needed by 1977 will describing their problems in meeting limits proposed in some of the permits. j also require an additional 1 billion the proposed permit requirements and In commenting on the admission by I pounds per year of ethylene and 1800 questioned the validity of EPA pro Robert W. Maeser of Ethyl that a new tons per day of chlorine. posals, the technical quality of methods facility coming on stream this August Mr. Bryan says that, optimistically, cited by EPA officials for analysis and would violate the proposed permit, my 3.5 to 4.0 billion pounds of new control of wastes, and the technical Mr. Stein, who heads EPA's water qual ethylene capacity is expected to be on knowledge of some EPA officials. ity enforcement division, said that he stream by 1977. Most of this new ethyl- During the early sessions, industry's could not recall a similar case in which i en.e capacity already has been com- efforts to reduce pollution of the chan the Government wanted immediate * and, says Mr. Bryan, it is un- nels received praise from some environ compliance with waste discharge stan Jsely that much of it is committed to mentalists. A Houston Sierra Club dards. Other companies on the channel 'm>'l chloride because the contracts spokesman, Will Taylor, commended would receive various delays before ere signed when monomer prices were industry for helping to reduce the BOD having to meet proposed limits. unrealistically low. of discharges to the channel from The next immediate step for the com * conceivable, then, that the com 100,000 to 45,000 pounds a day, and panies involved may be an appeal mon of low profit levels, lack of pointed to the city of Houston as the during a 10-day period following the ^"ylene, and large capital requirements biggest polluter in terms of BOD. Mur recommendations of Mr. Stein to EPA. cM^ .lw construction of new vinyl ray Stein, the federal hearings exam These recommendations are supposed MrR 6 ^ants- If this happens, says iner, retorted that "if we [EPA] had to be made within 20 days after the rid tfya.n' Ihe booming polyvinyl chlo- made as much progress with municipal hearings, but Mr. Stein delayed closing dem us'ness will be limited not by ities as with industry we would be a lot the hearings to let company .officials/ ar*d but by monomer supply. farther down the road." examine EPA data. _ i > '1 1 ' \J May 28, 1973 C&EN 7