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# OAR Box 1872 Prepped by Keeia Richards



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# 7 ) 11-1-5 6 Docket Number: 

# A-90-1 9

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# PETROCHEMICAL S A-90-1 9 I I I 5 6 merciall y availabl e propylen e fo r them . They'l l eithe r

b e deferred , delayed , o r no t ru n at capacity . It

wil l b e ou r

salva

tion. " Th e goo dhealt hof

th e P P industr y i n th e pas t

coupl e o f

year s stem s fro m th e wav e o

f rationalizatio n tha t

swep t Europ e an dth e U.S . i n th e mid-1980s . Now , it' s th e wav e of

P P plan t buildin g i n developin g market s tha t i s givin g mos t producer s th e jitters . Ther e ar e sufficien t project s o n pape r

i n Sout h Americ at o tak e tha t

continen t

froma ne t importe r t o ane t exporte r o f PP . Shel l plan s capacit y i n Brazi l an d Argentina , an dther e ar e scheme s afoo t i n Colombia—withtwo-third s of it s outpu t destine dfo

r export—Venezuela , an dMexico . Ne w plant s i n Thailan d an dMalaysi aar e als o reckone dt o b e expor t market-dependent . A s aresult , 1990-9 1 loo k

a s i f they'l l b e "ver y diffi

cul t years " i n PP , say s asourc e wit h Shel l Internationa l Chemica l (London) . Th e exces s o

f P P capacit y ma y b e a mixe dblessin g fo

r th e business , sinc e it'l l enabl e th e sustitutio n proces s t o kee p righ t

o n going . I n th e pas t

coupl e o f years , displacemen t

of polystyren e b y P S ha s bee n anoticeabl e trend . "Th e differentia l go t

s o large . Th e bes t

ex ampl e i s i n cutlery, " say s Fran k An

drusko , vic e presiden t

fo r marketing / polymer s a t

Amoc o Chemica l (Chi

cago) . H e see s tha t

proces s continuin g an dregard s substitutio n o f high-den

sit y polyethylen e amajo r

facto r a s well . " A great man y fabricator s i n th e injec

tion-moldin g busines s ar e talkin g abou t substitution , o r

workin g o n it , bu t

onl y tw o customer s of

our s did, " say s Mike Kimmins , polypropylen e sale s man ager at Phillip s 6 6 (Pasadena , TX) . On e exampl e wa s a20-millio n lb/yea r LLDPE/HDP

E accoun t

tha t switche dt o P P i n th e latte r

par t o f 1988 , motivate d a s muc hb y availabilit y a s b y price , h e says . Whil e it' s aproduc t

tha t i s dramati

call y increasin g it s penetratio n of othe r markets , no t

everyon e i s convince dPP i s ajuggernau t

that'l l rol l othe r

com modit y polymer s flat . " I thin k th e in

ter-competitio n issu e i s overblown, " say s Bil l Stavropoulos , grou p vic e president/plastic s an dhydrocarbon s at Do w Chemical , whic hproduce s awid e spectru mof

resin s rangin g fro mPV C t o polycarbonat e but , significantly , no t includin g PP . "It' s muc hles s impor

tan t t o th e busines s tha n replacemen t o f traditiona l material s b y plastics. " H e notes : "P P i s aver y versatil e material , bu t it' s bee n haunte db y overcapacit y i n th e past , an dwil l b e agai n i n th e future. " 

# PTA : A RUNAWA YTRAI N "Pur e terephthali c aci d(PTA) de

man doutstrippe dexpectation s i n 198 8 an di s goin g lik e atrai n i n 1989, " comment s Charle s Glastonbury , fiber intermediate s busines s manage r wit h IC I Chemical s & Polymer s Div . (Wil

ton , UK) . Tha t PT A deman dshow s n o sig n o f easin g is , Glastonbur y believes , signifi

cant . H e note s polyeste r

producer s hav e no t onl y absorbe dmonoethylen e gly

co l (MEG ) pric e hike s alread y thi s year , bu t the y hav e als o absorbe dpara-xylen e increase s passe do n b y PT A pro ducers . Polyeste r

an dPET sellin g prices , however , hav e no t rise n cor respondingly . Sinc e polyeste r ra w material s price s hav e no w passe dth e poin t at whic hthe y coul dchok e de

mand , Glastonbur y reckon s thi s show s "peopl e ar e no w locke dint o usin g polyeste r fiber , film , an dPET. " I t

als o ^mm^m^mm^ suggests , h e says , tha t deman delasticit y linke dt o pric e ha s bee n overestimated . Marke t observer s see mt o accep t thi s scenari o bu t

agre e polyeste r

pric e in

crease s woul dhel p eas e th e pressur e o n PTA . "Producer s can' t

pus hto o hard . The y may ge t second-quarte r

rises , bu t

fo r [th e thir dan dfourt hquarters ] it' s anyone' s guess, " say s one . Currentl y price s stan dat $765/m.t . Far Eas t c.i.f , bu t som e smalle r

produc

er s ar e sellin g int o th e growin g spo t marke t at level s aroun d$900/m.t . I n Europe , level s stan dat

DMl540/m.t . FD , whil e i n th e U.S . price s ar e nea r 31. 2 cts/l b FD . ICI say s there' s no w mor e deman d tha n i t ca n supply . Glastonbur y figure s regula r customer s i n Europ e an dth e U.S . ar e gettin g th e supplie s the y need , bu t h e say s ashortag e exist s i n th e Far East , India , Pakistan , Lati n America , an dAfrica . Worl dPT A capacit y i s abou t 6 mil

lio n m.t./year . Petrochemica l Consult

ant s Internationa l (PCI ; Crawley , UK ) calculate s anothe r

6 millio n m.t . wil l b e adde db y 1995 . Growt hi n PT A consumptio n wil l b e almos t

10%/year , PC I estimates . Som e 6.5 % wil l b e du e t o th e overal l growt hi n th e polyeste r

marke t an dth e 

# The market is tight outside U.S. and Europe balanc e takin g marke t

shar e fro

mdi

methy l terephthalat e (DMT) . O f th e ne w capacity , som e 4. 5 millio n m.t . i s be i n g installe di n Asia , whic hwil l accou;; : fo r 40 % o f worl dcapacit y an d50 % .. ' worl dconsumptio n b y 1995 . I f thi s capacit y expansio n move s ahea da s planned , PCI foresee s aPT A surplu s of 1 millio n m.t . b y 1991 , risin g t o 1. 5 millio n m.t . b y 1995 . Bu t thi s presuppose s avery hig hoperatin g rate , an dth e U.K . consultant s sugges t tha t th e surplu s wil l no t

necessaril y b e to o traumatic . However , PT A margin s are forecas t t o weake n b y mid-1990 .

Amoc o Chen::

- cal , th e bigges t I U.S . PT A pro ducer , i s les s bull

is htha n PCI o n growth . Accordin g to Richar dMarion , marketin g man ager fo r fibe r an d fil mintermedi

ates , deman d: -i likel y t o ris e b

y ^^^^^^ ^ 4.5%-5 % ove r th e •TM* — "•^•••'••• ^ nex t 1 0 years , an d b y 6.5%-7.1 % ove r th e nex t five . ICI Chemical s an dPolymer s say s PTA deman dgre w 14 % las t year , drive n b y a n 8 % ris e i n polyeste r fibe r con sumption , a20 % hik e i n PE T usage , an dreplacemen t

of DMT . T o mee t thi s stron g growth , IC

I wii'i expan dPTA capacit y at Wilto n fro

m 500,00 0 m.t./yea r

t o 550,00 0 m.t./year b y mid-198 9 an di s involve di n tw o Fa r Eas t projects . "I n Taiwan , i t

i s ou r fir mintentio n t o hav e a350,000-m.t . plan t b y en d 1991, " say s Glastonbury . P-xylen e will b e source dfro mworl dmarkets , an dIC I i s confidentl y negotiatin g fo r supplies . H e reckon s Taiwa n wil l b e th e biggt-i- f polyeste r produce r

i n th e worl db

y 1992 , ahea dof

th e U.S . an dEurope , an dh e add s tha t

"IC I i s determine dt o hav e apresenc e i n th e larges t marke t i n th e world. " Th e U.K . gian t i s als o plan

nin g a250,000

- m.t./yea r PT A plan t

i n Thailand . It

wil l hol da40 % stak e i n thi s unit , whic hi s du e o n strea mb y end-1992 . O n th e technolog y front, ther e are onl y thre e suppliers—Amoco , ICI , ant ! Mitsui—which , Glastonbur y believes , wil l ensur e tha t

n o "profligat e invest

ment " occurs . Whil e ther e hav e bee n n o major advance s i n technology , gradua l im

2 6 Chemicalweek/Marc h 29 , 198 9P. 3

* >

# I i provement s hav e bee n mad e i n th e pas t

five years . BothAmoc o an dIC I proc esse s ar e base do n ai r

oxidatio n o

f p xylene . Glastonbur y believe s bette r stoichiometri c efficienc y an denergy consumptio n level s hav e bee n achieved , alon g wit hmajo r improve

ment s i n purity . Fo r PT A producers , th e goo dnew s i s tha t th e switc hfromDM

T t o PT A look s t o b e speedin g u p i n th e comin g years . Ne w polyeste r

plant s us e PT A becaus e o n apound-for-poun dbasis , i t yield s mor e polyeste r

tha n DMT . An d wherea s DMT processin g yield s metha

nol , whic hha s t o b e recycled , PTA simpl y yield s water . Accordin g t o PCI , DM T i s require dfo

r anumbe r

of spe cifi c type s of

polyeste r

products . Bu t th e consultant s thin k

ne w DMT plant s wil l onl y b e buil t

i n developin g coun trie s fromno w on . I n Europe , Hiil s AG(Troisdorf , Wes t Germany ) i s th e bigges t

merchan t

DMT seller , operatin g 400,000-m.t./yea r ca pacit y at Liilsdor f an dSteyerberg . Th e onl y othe r

selle r i s Hoechst , wit hsom e 40,00 0 m.t./yea r

availabl e after

captiv e use . Accordin g t o Anfrie dLange , DMT marketin g manage r

i n th e group' s fiber ra w material s division , polyeste r pro ducer s hav e bee n takin g DM T whe n PT A supplie s hav e bee n short . H e say s ;urren t deman dlevel s ar e "highe r tha n anticipated, " an dsinc e intermediate s plant s ar e ru n a s clos e t o capacit y a s possible , ther e isn' t

muc hslack . Hiil s plan s no t

t o lif t DMT capacit y bu t t o switc hpar t

of it s DMT produc

tio n t o PT A "i n th e nea r future, " a s som e o f it s customer s chang e fromDM T t o PTA . Lang e say s PT A capacit y wil l b e anythin g from50,000-150,00 0 m.t. , a s Hiil s ca n mak e th e conversio n i n ••.mall, low-cos t

steps . 

# A PROSAI C MARKE TTURN S HO T Righ t now , malei c anhydrid e i s a nic e busines s t o b e in . Industr y veter ans , accustome dt o oversupply , say fo r th e firs t tim e i n ove r

2 5 years , aworl d shortag e exists . A s Terr y Baker , acon sultan t wit hChe mSystem s (London) , remarks : "Malei c use dt o b e aprett y borin g chemical . Bu t

i t reall y ha s blos

some di n th e las t

coupl e of

years. " I n th e U.S. , wher e th e numbe r o f producer s dwindle dt o jus t five , oper atin g rate s hav e bee n wel l ove r 90 % i n th e pas t year . Las t year , U.S . consumptio n wa s abou t 410 millio n pounds , whil e out pu t of 42 5 millio n pound s wa s margin

all y belo w nameplat e capacity . Fo r 1989 , outpu t

wil l b e considerabl y i n exces s of thi s figure . Monsant o expect s t o hav e raise dit s capacit y a t

Pensacol afrom18 5 millio n t o 24 0 millio n lbs/yea r

b y September , an dbot hAmoc o an dMobay anticipat e incrementa l increase s durin g th e year . N o ne w malei c anhydrid e plant s ar e planne di n th e U.S . I n Europe , whic h ha s suffere dshortage s of malei c i n th e pas t year , consumptio n i n 198 8 i s esti

mate dat 36 5 millio n pound s compare d wit htota l productio n capacit y of 36 0 millio n pounds . Accordin g t o Charle s vo n Doersten , malei c anhydrid e busi

nes s manage r

a t Monsant o Chemical , thi s defici t

ha s pushe dEuropea n price s 1 0 cts/l b highe r

tha n i n th e U.S . Thi s shortag e ha s prompte danum be r of ne w plan t

announcement s i n Europ e which , som e observer s believe , coul dlea dt o overcapacit y i n th e mid

1990s . Monsant o ha s almos t complete d acapacit y hik e from2 5 millio n t o 6 0 millio n pound s at

it s Newpor t

(Wales ) 

# MALEI C ANHYDRID E AN D DERIVATIVE S DOWNSTREA M OPPORTUNIT YREVIE W New.Markets^||l | Malei c Anhydrid e •N-Pheny l Maleimid e •Mali c Aci d •NewCopolymers 1, 4 Butanedio l Derivative s Technolog y Gamma-B'utyrolacton e Traditiona l Market s •UP R •Lube Oi l Additives •Agncultura l Chemical s 

# CHB ® ti s ;Tetrahydrofurd h

1 Elastomer s •Eng . Resin s

•Fiber s •Pain t Remover s •Blend s •Process Solven t •PVC Cemen t 'Persona l Car e •Magneti c Tap e •Pharmaceutical s •Pharmaceutical s •Elastomer s •Blends Source : B P Chemical s plan t an di s plannin g amajo r ne w Europea n facility t o b e o n strea mb y lat e 1992 . Meanwhile , Ceps aha s plan s fo r aplan t i n Spain , an dAlusuiss e intend s t o buil dane w facility i n Italy , whil e DS M an dAlusuiss e ar e als o studyin g ane w join t

ventur e project . I f Europea n consumptio n grow s at GNP , the n i n th e even t

of al l ne w malei c plan s goin g ahead , overcapacit y wil l occu r sometim e i n 1993 . Howeve r i t i s als o likel y tha t

Europea n producer s ma y follo w th e U.S . an dconver t from benzen e t o butan e feedstocks . Thi s proces s can , accordin g t o som e claims , cu t plan t capacit y b y 20% . Bu t

other s believ e th e impac t

of feedstoc k conver sio n o n outpu t

ha s bee n negligible . I n th e Fa

r East , wher e deman d growt hha s bee n abov e th e tren di n Europ e an dth e U.S. , aplethor ao f ne w plant s ar e announce do r

unde r way . I n Taiwan , Unio n Petrochemica l an d Gran dPacifi c Chemica l ar e buildin g a 35,000-m.t./yea r

uni t base do n Mon

santo' s fixed-be dtechnology , an dTai

wa n Synthetic s ha s a14,500-m.t./year plan t unde r way . B PAmeric aha s teame du p wit h Mitsu i Toats u i n a10,000-m.t./year joint-ventur e plan t

i n Japan , whic hi s no w o n stream . Thi s uni t utilize s th e fluidized-be dproces s base do n B P an d UCB technology . Anothe r 15,000-m.t. / year uni t i s bein g buil t

b y Japan' s Shin

Daikyow aPetrochemical . Thi s plant , alon g wit hTaiwa n Synthetics'facility , i s usin g th e ALM

A fluidized-be dproc es s fromLummu s Cres t

an dAlusuisse . Despit e som e fear s fo

r overcapacity , producer s remai n very optimistic . "W e wouldn' t b e contemplatin g suc hmajor investmen t

i f w e weren't, " comment s Monsanto' s vo n Doersten . In tande m wit hDu Pont , hi s compan y i s develop

in g atransport-be dproductio n proces s tha t ma y b e commercialize dbefore 1995 . Du Pont , alon g wit hB P Chemi

cals , currentl y see s possibilitie s o f producin g 1,4-butanedio l frommalei c tha t coul db e use dt o mak e engineerin g resins , fibers , an delastomers . B P an dAmoco , meanwhile , ar e bot h showin g interes t

i n join t venture s an d investment s i n Europe . "W e wan t t o participat e i n investment s rathe r tha n jus t sel l licenses, " say s Dougla s Campbell , presiden t

of B P Chemicals , recognizin g tha t

"th e dange r

of com petin g technologie s i s overbuilding. "

PETER R. SAVAGE with PETER COOMBES. and DAVID HUNTER in Paris March 29,1989/Chemicalwee k 27