p. 1



# OAR Box 1107 Prepped by Ollie Stewart



### Document

Number: 

# 6DIV-B-1 1
Docket Number: 

# A-81-2 1

Printed 4/11/2008 3:03:47

PM Sheet 61 of 90P. 2



## , RADIA N

- * ; " CORPORATIO N 

### 4 

### K-

_v 

# A-8I-2 L
IV-B-l l

MEMORANDUM

DATE : Jul y

18 , 198 6

FROM : Kare nK . Fidle r

TO : Viny l Chlorid e Docke t

SUBJECT : Economi c Impac t Analysi s fo r Viny l Chlorid e Standar dRevision s
Attache dar e portion s o f aneconomi c analysi s prepare ddurin g revie w o f th e standard . Becaus e thi s informatio nwa s referre dt o inrespons e t o two separat e publi c comment s onpag e 2-6 5 o f th e promulgatio nBID , i t i s bein g include dinth e docket .
Attachmen t KKF/j qP. 3

ECONOMI C IMPAC T ANALYSI S
Thi s repor t present s informatio nneede dt o examin e th e potentia l economi c impact s o f possibl e revision s t o th e viny l chlorid e standar do nthre e indus tria l chemica l products : ethylen e dichlorid e (1,2,-dichloroethane) , viny l chlorid e monome r (chloroethylene) , an dpolyviny l chloride . Thi s repor t i s divide dint o thre e majo r parts . Sectio n1. 0 provide s a nindustr y profil e fo r eac hchemica l i norde r t o identif y th e factor s an

dtrend s tha t woul dinfluenc e th e natur e an

dmagnitud e o f th e economi c impact . Sectio n2. 0 addresse s thos e test s o f macroeconomi c impac t whic hai dindeterminin g whethe r o r no t a mor e detaile dregulator y

analysi s woul dbe require dunde r Executiv e Orde r 12291 . Inorde r t o compl y

wit hth e Regulator y Flexibilit y

Ac t (RFA) , Sectio n2. 0 als o consider s th e exten t t o whic hsmal l businesse s migh t b e differentiall y impacted . Finally , Sectio n3. 0 contain s th e reference s employe dinthi s study . 1. 0 INDUSTRYPROFIL E 1. 1 INTRODUCTION Th e principa l chemica l o f interes t i s ethylen e dichlorid e (EDC) . However , ther e i s a clos e economi c relationshi pamon g EDC , viny l chlorid e monome r (VMC) , an

dpolyviny l chlorid e (PVC) . Th e vas t majorit y o f EDC produce denter s int o th e productio no f VCM , an dsimilarl y

mos t VC

M produce d enter s int o th e productio no f PVC . Therefore , VCM an dPV C ar e include din th e discussio nher e t o provid e insigh t int o th e economi c environmen t fo r EDC . Additionally , ED C an dVCM ar e frequentl y

produce da t th e same location . Further , a larg e percentag e o f th e EDC produce di s use dcaptively . 1. 2 NUMBE RANDSIZ E DISTRIBUTIO N O F TH E MANUFACTURER S Tabl e 1- 1 identifie s th e producer s o f EDC an dVCM . Ethylen e dichlorid e i s produce db

y 1 2 firm s in2 1 plants . Tota l annua l nameplat e capacit y o f ED CP. 4

TABL E 1-1
. IDENTIFICATIO N AN D CAPACITIE

S O F ETHYLEN

E DICHLORIDE

/ VINY L CHLORID

E PRODUCERS

1 " 6 (Capacit y i n thousand s o f metri c tons )

Produce r Atlanti c Richfiel d Borde n Chemica l Conoc o Chemical 0 Diamon d Shamroc

k Do wChemica l

Ethy l Corporatio n
Formos a Plastic s Georgia-Pa d f1c B.F
. Goodrich 0

*

PP G Industrie s Shel l Chemica l

- Unio n Carbid e
Vulca n Material s Locatio n Por t Arthur , TX a Geismar , LA

a Lak e Charles , L

A Dee r Park , TX a » c Plaquemine , LA a Oyste r Creek , T

X Freeport , T

X Bato n Rouge , L

A Pasadena , T

X Poin t Comfort , TX a Bato n Rouge , L

A Plaquemine , LA a Calver t City , K

Y Convent , LA

a L a Porte , TX

a Lak e Charles , L

A Norco , LA

S Dee r Park , T

X Texa s City , T

X Taft , L A Geismar , L

A Tota l Capacit y ED C 205. 0 232. 0 525. 0 145
. 864. 0 477. 0 727. 0 318. 0 102. 0 386. 0 250. 0 750. 0 455. 0 364. 0 720. 0 1,230. 0 545. 0 636. 0 68. 2 68. 2 159. 0 9,226. 4 VC

M
277. 0 318. 0 0 568. 0 341. 0 68. 2 136. 0
241. 0 136. 0 455. 0 455. 0
455. 0 409. 0 318. 0 382. 0

4,559. 2

a Bega n operatio n sinc e promulgatio n o fth e viny l chlorid e regula tio n 1 n Oct. , 1976
. D Acquire d b

y DuPon t o n Septembe r 30 , 1981
. c Diamon d Shamroc

k operate s Dee r Par k

unde r a tol l agreement . d B.F
. Goodric h ha

s postponed a 726,00 0 metri c ton s pe r yea r VC M plan t a t Convent , LA , Indefinitely
. e Close d Indefinitely
.P. 5

i s 9,226,40 0 metri c tons . Do w Chemica l i s th e larges t produce r wit hmor e tha none-quarte r (2 8 percent ) o f tota l ED C capacity . Th e fou r larges t firm s (Dow , BFG , Georgia-Pacific , an dPPG ) accoun t fo r 6 1 percen t o f capacit y (Shel l i s exclude dbase do nNorco' s indefinit e closure) . B . F . Goodric hi s ranke dsecon dou t o f th e 1 2 firms . B . F . Goodrich' s ED C facilit y locate da t Calver t City , Kentucky , account s fo r 5 percen t o f tota l capacit y whil e th e Convent , Louisiana , plan t account s fo r anothe r 4 percen t an dth e L a Porte , Texas , plan t anothe r 8 percent . Th e smalles t ED C producer s ar e Unio nCarbid e an dVulca nMaterial s wit hslightl y mor e tha n1 percen t o f tota l capacit y each . Almos t 9 0 percen t o f tota l capacit y i s concentrate di ntw o States : Louisian a (5 6 percent ) an dTexa s (3 3 percent) . I nadditio nt o EDC , Tabl e 1- 1 als o show s th e producers , locatio no f plants , an dcapacitie s fo r VCM . Ther e ar e 9 producer s o f VC M whic how

n1 4 plants . A s i nth e cas e o f EDC , Do w i s als o th e larges t VC M produce r wit h some 2 2 percen t o f tota l nameplat e capacit y o f 4,559,20 0 metri c tons . Th e thre e larges t firm s (Dow , BFG , an dGeorgia-Pacific ) accoun t fo r mor e tha n one-hal f o f tota l capacity . A s wa s th e cas e wit hEDC , 9 0 percen t o f tota l capacit y i s concentrate di nth e State s o f Louisian a (5 7 percent ) an dTexa s (3 3 percent) . Tabl e 1- 2 display s simila r informatio nfo r th e producer s o f PVC . Ther e ar e 1 7 producer s wit h3 5 plants . O f th e 1 7 producers , B . F . Goodric hi s th e larges t wit h7 plant s representin g 2 2 percen t o f th e tota l annua l nameplat e capacit y o f 4,065,30 0 metri c tons , followe db y Tenneco , Hooker , andBorden . Conoco , Georgia-Pacific , an dShintec har e tie dfo r fift hplac e wit h7 percen t o f tota l capacit y

each . Th e to pfou r producer s accoun t fo r almos t one-hal f o f al l PV C capacity , whil e th e to pseve naccoun t fo r som e 7 0 percent . Th e smalles t producer s ar e Keyso r Corporation , an dTalleyran dChemica l wit h 0.5 0 percent , an d1.0 0 percen t o f th e tota l capacity , respectively . Again , a significan t amoun t o f capacit y i s concentrate di nLouisian a (1 8 percent ) an d Texa s (2 6 percent) , bu t thi s time Texa s ha s th e large r share . Som e analyst s fee l that , give nforeig ncompetitio nan dth e natur e o f th e busines s cycl e an dth e constructio ncycle , th e rank s o f PVC producer s ma y ; g r 1 1 thi nt o a mer e doze no r s o firm s i na fe w years . Th e likelihoo di s grea t tha t thes e PVC producer s wil l b e thos e wit hthei r ow nED C feedstocks ,P. 6

TABL E 1-2 . IDENTIFICATION AND CAPACITIE S O F POLYVINY L CHLORID E PRODUCER S (Capacit y

inthousand s o f metri c tons ) 7- 9

Produce r Locatio n Capacit y A1 r Product s
Borden , Inc
.

CertainTee d Conoc o Ethy l Corporatio n
Formos a Plastic s
Genera l Tir e Georgia-Pacifi c B.F
. Goodric h

Goodyea r Tir e 4 Rubber Calver t City , KY a Pensacola , F

L Geismar , L

A Illiopolis , I L Leominster , M

A Lak e Charles , L

A Aberdeen , M

S Oklahom a City , O

K Bato n Rouge , L

A Delaware City , DE

° Delaware City , DE C Poin t Comfort , T

X Ashtabula , O

H Plaquemine , L

A Avo n Lake , O

H Dee r Park , TX

0 " Henry , I L Lon g Beach , CA

e Louisville , K

Y Pedricktown , N

J Plaquemine , L

A Niagar a Falls , N

Y
CONTINUED 90. 9 90. 9 86. 4 145. 0 90. 9 86. 4 207. 0 118. 0 81. 8 68. 2 127. 0 241. 0 56. 8 318. 0 18 2 118. 0 90. 9 68. 2 170. 0 182. 0 86. 4 31. 8P. 7

TABL E 1- 2 (CONCLUDED) . IDENTIFICATION AND CAPACITIE S O F POLYVINY L CHLORID E PRODUCERS 7 ' (Capacit y inthousand s o f metri c tons )

Produce r Hooke r Chemical f

Keyso r Corporatio n Pantasot e Shintec h Talleyran d Chemica l Tennec o

Unio n Carbid e Locatio n Bato n Rouge , L

A Burlington , N

J Perryvllle , MD

9 Pottstown , P

A Saugus , C

A Passaic , N

J Freeport , T

X Ne wBedford , MA

9 Burlington , N

J Flemin g ton , N

J Pasadena , T

X Sout h Charle s town , W V Texa s City , T

X
TOTA L Capacit y 104. 3 86. 4 11 8 109. 0 22. 7 25. 0 309. 0 35. 4 72. 7 47. 7 318. 0 22. 7 56. 8 4,065. 3

a Idl e sinc e March , 1982
. bpurchased fro m Diamon d Shamroc

k i n 1982
. c Purchase d fro m Stauffe r i n 1982
. d Purchase d fro m Diamon d Shamrock

i n 1981
. e Goodric h ha

s postponed a 500,00 0 metri c tons/yr
. uni t a t Convent , LA , indefinitely
. Subsidiar y o fOccidental
. 9Shu t dow

n a t presen t and ma

y b e s o permanently
.P. 8

1. 3 OUTPU T AN DREVENU E Output , th e valu e o f output , an dth e valu e o f merchan t sale s (i.e , noncaptiv e sales ) fo r ED C ar e presente dinTabl e 1-3 . Thei r respectiv e averag e annua l growt hrate s ar e presente dinTabl e 1-4 . Ethylen e dichlorid e outpu t gre w

a t a 9. 1 percen t annua l rat e ove r th e 1970-7 4 perio dandthe n decline dt o a 6. 4 percen t annua l rat e ove r th e 1975-7 9 period . I t ha s recentl y

bee nexperiencin g negativ e growt ha t a n8 percen t annua l rate . I n 1981 , ED C outpu t wa s 4,523,00 0 metri c ton s value da t $797. 9 million . A s Tabl e 1- 4 shows , growt hrate s i nth e dolla r valu e o f outpu t an di n th e dolla r valu e o f merchan t sale s hav e tende dt o far e bette r ingoo dtime s whe nED C price s ar e risin g tha ngrowt hrate s i nphysica l output . The y hav e als o tende dt o far e wors e tha noutpu t inhar dtimes . Thu s indicatin g tha t price s fluctuat e mor e tha nphysica l output . Th e merchan t marke t ha s exper ience dth e greates t declin e ove r th e 1980-8 1 period , declinin g a t a 3 2 percen t annua l rate . A

likel y explanatio nfo r thi s i s tha t mos t ED C i s use dcaptivel y i nth e productio no f VCM , an donl y abou t 8 t o 1 0 percen t i s sol dcommercially . Simila r t o the informatio npresente dabov e fo r EDC , Tabl e 1- 5 display s output , th e valu e o f output , andth e valu e o f merchan t sale s fo r VCM . Tabl e 1- 6 display s thei r respectiv e averag e annua l growt hrates . Viny l chlorid e monome r outpu t gre w a t an8. 6 percen t annua l rat e ove r th e 1970-7 4 period , andthe ndecline dslightl y t o finis hou t th e decad e a t an8. 0 percen t annua l rate . Lik e EDC , VC M ha s recentl y

bee nexperiencin g negativ e growt ha t a 6. 4 percen t annua l rat e ove r th e 1980-8 2 period . I n1982 , VCM outpu t wa s 2,907,00 0 metri c ton s andwa s value da t $897. 4 million . Bot hth e valu e o f outpu t andth e valu e o f merchan t sale s hav e experience d healthy annua l advance s ove r th e 1970-7 9 period . Sinc e 1980 , however , the y hav e bee ndeclinin g a t doubl e digi t rates . Merchan t sale s ar e als o declinin g inimportance . In1977 , merchan t sale s accounte dfo r 7 0 percen t o f th e tota l valu e o f output , whil e i n198 1 the y accounte dfo r onl y

4 5 percent . Table s 1- 7 an

d1- 8 presen t simila r dat a fo r PVC . Polyviny l chlorid e outpu t advance da t a 9. 7 percen t annua l pac e ove r th e 1970-7 4 period , an d the ndecline dt o a 6. 8 percen t rate . Inrecen t years , i t ha s bee ndeclinin gP. 9

TABL E 1-3 . OUTPUT , TH E VALU E O F OUTPUT , AN D TH E VALU E O F MERCHAN T SALE S O F ETHYLEN E DICHLORIDE , 1970-81 1 2

Yea r 198 1 1980 197 9 1978 197 7 197 6 197 5 197 4 197 3 197 2 197 1 1970 Outpu t

(Thousand s o f Metri c Tons) 3 4,52 3 5,03 8 5,34 9 4,98 9 4,98 7 3,64 7 3,61 8 4,15 6 4,21 4 3,54 1 3.42 8 3,38 3 Valu e

(M i o f $ 1 1 o f Outpu t 1 1 Ion s Dollars ) 797. 9 ,110. 9 ,129. 4 880. 1 879. 7 643. 3 638. 2 458. 2 278. 8 234. 2 226. 8 223. 8 Valu e o f

Merchan t Sale s (Million s o fDollars ) $ 68. 7 114. 2 151. 2 82. 6 123. 1 110. 0 61. 7 68. 6 40. 5 38. 9 36. 6 38. 3

a T o conver t fro

m metri c ton s t o shor t ton s multipl y b y 1. 1P.1 0



### TABL E 1-4
. AVERAG E ANNUA L GROWT H RATE S FO R OUTPUT , TH E VALU E O F OUTPUT ,

AN D VALU E O F MERCHAN T SALES : ETHYLEN E DICHLORID E

Averag e Annua l Growt hRat e Tim e Period 1980-8 1 1975-7 9 1970-7 4 Outpu t

-8.0 % 

### 6. 4 9. 1 Va

l ue o f Outpu t -14.9 % 21. 0 22. 3 Valu e o f

Merchan t Sale s -32.1 % 25. 9 16. 2P.1 1

TABL E 1-5 . OUTPUT , VALU E O F OUTPUT , AND VALU E O F MERCHAN T SALE S O F VINY L CHLORID E MONOMER , 1970-1982 13,1 4

Yea r 198 2 198 1 198 0 197 9 197 8 197 7 197 6 197 5 197 4 197 3 197 2 197 1 197 0 Outpu t

(Thousand s o f Metri c Tons ) 2,90 7 2,98 3 2,95 6 3,42 1 3,14 8 2,71 5 2,57 4 1,90 3 2,54 9 2,42 7 2,30 8 1,96 6 1,83 2 Valu e o f Outpu t (Million s o f Dollars ) $ 897. 4 1,118. 2 1,173. 2 1,433. 2 902. 4 718. 4 567. 6 419. 6 449. 6 214. 1 203. 6 173. 4 161. 6 Valu e o f

Merchan t Sale s (Million s o f Dollars ) $ 503. 7 569. 5 728. 1 618. 4 507. 5 314. 8 221. 3 259. 6 147. 5 132. 6 125. 3 107. 0P.1 2



### TABL E 1-6 . AVERAG E ANNUAL GROWT H RATE S FO ROUTPUT , TH E VALU E O F OUTPUT , ANDVALU E O F MERCHAN T SALES : VINYL CHLORID E MONOME R

Averag e Annua l Growt hRat e Tim e Period 1980-8 2 1975-7 9 1970-7 4 Outpu t

-6.4 % 

### 8. 0 8. 6 Va

l ue o f Outpu t -14.2 % 27. 9 29. 6 Valu e o f

Merchan t Sale s -16.7 % 25. 6 22. 8



### 1 0 

# JP.1 3

TABL E 1-7 . OUTPUT , VALU E O F OUTPUT , AND VALU E O F MERCHAN T SALE S O F POLYVINY L CHLORIDE , 1970-1982 15,1 6

Yea r 198 2 198 1 198 0 197 9 197 8 197 7 197 6 197 5 197 4 197 3 197 2 197 1 197 0 Outpu t

(Thousand s o f Metri c Tons ) 2,49 4 2,60 0 2,49 6 2,81 7 2,66 6 2,38 9 2,06 1 1,67 6 2,15 1 2,98 4 1,96 0 1,55 9 1,41 3 Valu e o f Outpu t (Million s o f Dollars ) $1,319. 8 1,662. 6 1,761. 2 1,798. 8 1,528. 4 1,369. 6 1,181. 6 886. 9 1,090. 9 689. 3 561. 8 446. 9 405. 0 Valu e o f

Merchan t Sale s (Million s o f Dollars ) $ 1,463. 2 1,486. 1 1,647. 3 1,322. 5 1,155. 3 925. 6 666. 3 907. 8 597. 9 503. 1 402. 7 383. 5



## 1 1P. M



### TABL E 1-8 . AVERAG E ANNUAL GROWT H RATE S FO ROUTPUT , TH E VALUE O F OUTPUT , AN DVALU E O F MERCHAN T SALES : POLYVINY L CHLORID E

Averag e Annua l Growt hRat e Tim e Period 1980-8 2 1975-7 9 1970-7 4 Outpu t

-3.8 % 

### 6. 8 9. 7 Va

l ue o f Outpu t -9.4 % 11. 9 22. 5 Valu e o f

Merchan t Sale s -5.7 % 15. 2 20. 5



### 1 2P.1 5

a t a 3. 8 percen t annua- ! rat e - a rat e whic hi s hal f o f th e ED C declin e an d abou t two-third s o f th e VCM decline . I n1982 , PVC outpu t wa s 2,494,00 0 metri c ton s an dwa s value da t $1,319. 8 million . A s wa s th e cas e fo r ED C andVCM , th e valu e o f outpu t andth e valu e o f merchan t sale s o f PVC hav e als o experience dhealthy growt hrate s ove r th e las t decade . The y

hav e als o experience dsimila r decline s lately , declinin g a t 9. 4 percen t an

d5. 7 percen t annually . Th e trendinmerchan t sale s o f PV C a s a percentag e o f th e tota l valu e o f output , however , ha s bee nup , rathe r tha ndown , a s wa s th e cas e fo r VCM . In1975 , merchan t sale s o f PVC wer e 7 5 percen t o f th e tota l valu e o f output ; whil e b y 1981 , the y

wer e 8 8 percen t o f th e total . 1. 4 CAPACIT YUTILIZATIO N Capacit y utilizatio nrate s fo r VCM andPVC fo r th e 1975-8 2 perio dar e displaye di nTabl e 1-9 . Bot hVCM andPV C reache da pea ki nutilizatio nrate s i n197 9 (93.2 percen t an d87. 4 percent , respectively) . Sinc e 1979 , utilizatio n rate s hav e steadil y

decline dwit hbot hVCM andPVC experiencin g operatin g rate s o f approximatel y 6 2 percen t o f capacity . Thi s percentag e represent s th e lowes t rat e inth e las t 8 year s fo r VCM , andth e secon dlowes t rat e fo r PV C i nth e same time span . Give nincrease dforeig ncompetitio n(se e Sectio n1.7) , operatin g rate s inth e 6 0 percen t and7 0 percen t rang e ma y be th e ne w reality . 1. 5 PRICE S Tabl e 1-1 0 present s uni t price s o f ethylene , EDC , viny l chloride , an d PVC fo r th e 1970-8 3 period . Ethylen e price s ar e include dsinc e change s in ethylen e price s star t a rippl e effec t tha t work s it s wa y ou t t o PVC . Fo r example , i nJanuar y

198 2 anannounce dincreas e i nth e pric e o f ethylen e b y 6.6^/k g an dchlorin e b y l.ltf/k g prompte dDo w

andPP Gt o announc e a 4.4<£/k g 1 8 increas e i nth e pric e o f VCM . Inturn , Goodric hannounce dan8.8<t/k g hik e i nPVC , bu t wa s force dt o rol l th e pric e back . Now tha t th e marke t fo r PV C i s improvin g (May

1983) , Goodric hwil l try t o mak e an17.6tf/k

g pric e hik e stick. 1 9



### 1 3P.1 6



### TABL E 1-9 . CAPACIT YUTILIZATIO N RATE S FO

RVINY L CHLORID E MONOME R ANDPOLYVINY L CHLORIDE , 1975-1982 2 0

Yea r Capacit y Utilizatio n Rates 3



### ~VCT—

—mr 1982 62. 0 62.2 % 198 1 66. 2 70. 7 1980 80. 4 71. 9 

### 1979 93. 2 87. 4 1978 88. 5 85. 4 197 7 80. 8 76. 7 1976 72. 2 67. 4 197 5 62^ 7 57. 5

a N o dat a o

n capacit y utilizatio n rate s fo r ED C wer e available
.



### 14P.1 7

TABL E 1-10
. UNITPRICE

S O F ETHYLENE

, ETHYLEN

E DICHLORIDE , VINY

L CHLORIDE, AN D POLYVINY

L CHLORIDE : 1970-1983 21,2 2 (Dollar s pe r kilogram )

Yea r 1983 a 1982 198 1 1980 197 9 1978 197 7 197 6 197 5 197 4 197 3 1972 197 1 1970 Ethylen e 0.495 b « c 0.4 0 0.5 5 0.4 8 0.3 1 0.2 9 0.2 6 0.2 4 0.2 0 0.1 8 0.0 7 0.0 7 0.0 7 0.0 7 Ethylen e

Dichlorid e 0.33 6 0.3 1 0.1 8 0.2 2 0.2 4 0.1 8 0.1 8 0.1 8 0.1 8 0.1 1 0.0 7 0.0 7 0.0 7 0.0 7 Viny l

Chlorid e 0.4 6 0.4 0 0.3 7 0.4 0 0.4 2 0.2 9 0.2 6 0.2 2 0.2 2 0.1 8 0.0 9 0.0 9 0.0 9 0.0 9 Polyviny l

Chlorid e 0.6 2 0.5 3 0.6 4 0.7 0 0.6 8 0.5 7 0.5 7 0.5 7 0.5 3 0.5 1 0.3 3 0.2 9 0.2 9 0.2 9

a Price s a

s o fApri l 18 , 1983
. b Th e pric e o fethylen e o n a weigh t basi s i s greate r tha n th e pric e o fED C o r VCM

. Thi s i s explaine d b y th e fac t tha t on

e poun d o fethylene produces approxi matel y thre e and a hal fpound s o fED C and approximate l y tw o pound s o fVC M on a stoichiometri c basis
.
c T o convert fro m kilogra m t o pound s multipl y b

y .45 4



### 15P.1 8

A s Tabl e 1-1 0 shows , ethylen e price s wer e stabl e a t 6.6<t/k g unti l th e oi l embarg o resulte dina 16 6 percen t increas e inth e pric e in1974 . Th e pric e continue dt o ris e unti l 198 1 whe ni t peake da t 55<£/kg . Th e curren t ethylen e pric e (Apri l 15 , 1983 ) o f 49.5<£/k g i s 65 0 percen t highe r tha ni t wa s i n1973 . Th e ED C pric e wa s als o stabl e a t 6.6<t/k g prio r t o embargo . Th e pric e jumpe d6 6 percen t in197 4 an danothe r 6 0 percen t in1975 . I t levele dof f a t 17.6<£/k g unti l 1979 , whe ni t jumpe danothe r 3 8 percent . Th e curren t (Apri l 1983 ) ED C pric e o f 33.6<t/k g i s mor e tha n40 0 percen t highe r tha nth e 197 3 price . Viny l chlorid e monome r price s als o ros e dramaticall y durin g 1974 , increasin g 10 0 percen t ove r th e 197 3 price . Th e pric e increase danothe r 2 5 percen t i n1975 , 2 0 percen t in1977 , and4 6 percen t in1979 . A t 46.2c/kg , th e curren t pric e i s abou t 42 5 percen t highe r tha ni t wa s befor e th e embargo . Finally , th e PV

C pric e wa s als o relativel y stabl e prio r t o 1973 ; then , i t to o increase drapidly . However , th e rat e o f inflatio no f PV C price s ha s bee nles s dramati c tha nha s bee ntru e inth e cas e o f ethylene , EDC , o r VCM . Th e curren t (Apri l 1983 ) pric e o f PVC , 61.6<t/kg , i s onl y 8 7 percen t highe r tha ni t wa s i n1973 . 1. 6 DEMANDDETERMINANT S Tabl e 1-1 1 present s th e percentag e distributio no f domesti c consumptio n o f ED C ove r th e 1972-198 2 period . Th e larges t us e o f ED C i s i nth e productio n o f VCM , whic haccount s fo r almos t 9 0 percen t o f domesti c consumption . Th e shar e o f ED C productio ndevote dt o VCM ha s bee nrisin g ove r time . In1972 , i t constitute droughl y 8 4 percen t o f tota l domesti c consumption , wherea s i t constitute dalmos t 9 0 percen t in1982 . Th e secon dlarges t consume r o f ED C i s 1,1,1-trichloroethan e (1,1,1-TCE) , a meta l cleanin g solvent , whic haccount s fo r 4 percen t o f domesti c consumption . It s shar e ha s als o bee nrisin g ove r time . Eac ho f th e othe r use s o f ED C accoun t fo r 2 percen t o f tota l consump tio no r less . Wit hth e exceptio no f perhap s vinyliden e chloride , thes e othe r use s ar e declinin g andoffe r littl e prospec t fo r growth .



### 1 6P.1 9



### TABL E 1-11 . PERCENTAG E DISTRIBUTION O F DOMESTI C CONSUMPTION O F ETHYLEN E DICHLORIDE , 1972-1982 2 4



### Us e 197 2 197 8 198 2 Viny l Chlorid e Monomer 1,1,1-Tr i chloroethan e Ethyleneamine s Vinyliden e Chlorid e Perchloroethylen e Trichloroethylen e Lea d Scavenge r Miscellaneous 3 TOTA L 83.5 % 3. 6 3. 0 1. 9 2. 6 2. 7 2. 6 0. 1 100. 0 87.1 %

3. 8 2. 5 1. 8 1. 7 1. 6 1. 4 0. 1 100. 0 88.7 %

4. 1 1. 9 2. 0 1. 3 1. 3 0. 6 0. 1 100. 0
3 

### Include s use s a s solvent , fumigant , an dinter mediat e fo r productio no f polysulfld e elastomers .

1 7P.2 0

Ne t export s accoun t fo r approximatel y 4 percen t o f tota l ED C output . Give nth e increase s tha t ar e expecte dinforeig nEDC capacit y (se e Sectio n1.7) , ne t export s ar e expecte dt o declin e ove r th e nex t few years . Import s hav e generall y bee nzero , excep t inth e 1974-7 6 shortag e perio dwhe n 2 3 approximatel y

34,00 0 metri c ton s annuall y wer e imported . Sinc e 9 7 percen t o f VCM goe s int o th e productio no f PVC , th e demandfo r VCM parallel s th e deman dfo r PVC . Relativel y smal l amount s o f VCM ar e consume da s a comonome r i nth e productio no f polyvinyliden e chlorid e an d othe r copolyme r resins . Viny l chlorid e monome r i s als o use da s aninter mediat e i nth e productio no f 1,1,1-TCE . However , sinc e th e VCM i s no t isolate ddurin g th e process , it s volume i s no t recorded . Th e percentag e distributio no f th e domesti c consumptio no f PV C i s displaye dinTabl e 1-12 . Constructio ni s b y fa r th e larges t marke t fo r PVC , accountin g fo r almos t 6 0 percen t o f th e total . On e sector , pip e an dconduit , account s fo r almos t hal f o f tota l PVC consumption . Infact , thi s secto r ha s become th e decisiv e facto r indetermining overal l PV C demand . I t ha s increase d i nimportanc e sinc e 1979 , a s plasti c pip e ha s begunt o replac e conventiona l materials . Othe r PV C market s ar e eithe r matur e o r highl y penetrate dmarkets , wit hth e exceptio no f electrical/electroni c use s (especiall y home computers) . 1. 7 SUPPL YDETERMINANT S Th e majo r determinant s o f th e suppl y o f ED C ar e th e pric e an davailabilit y o f ethylene , chlorine , andenergy . A s note dinSectio n1.9 , th e futur e o f petrochemica l productio nlie s wit hthos e countie s wit hchea penerg y an dra w materials . Thus , mor e an dmor e ethylen e productio nwil l occu r inSaud i Arabia , Mexico , Libya , Iran , andIndonesia . Nonetheless , ove r th e shor t term , th e potentia l domesti c suppl y o f ED C shoul db

e approximatel y

8,868,00 0 metri c ton s annuall y

ove r th e 1983-198 7 period . Thi s i s mor e tha nsufficien t t o mee t th e projecte d198 7 ED C deman do f 6,400,00 0 metri c ton s (se e Sectio n1.9) . Th e majo r determinan t o f th e suppl y o f VCM i s th e pric e an

davailabilit y o f EDC . Althoug hth e pric e o f ED C wil l ris e onc e the econom y recovers , the increas e shoul dno t jeopardiz e th e suppl y o f VCM . Althoug hB . F . Goodric h



### 1 8P.2 1

TABL E 1-12 . PERCENTAG E DISTRIBUTION O F DOMESTI C CONSUMPTION O F POLYVINY L CHLORIDE , 197 9 AN D 1982 2 5

Us e 197 9 198 2 Constructio n a . Pipe , conduit , siding , and windo

whardwar

e b
. Flooring , wal l cover ings , an d poo l liner s Consume r goods Electrical/electroni c use s Packagin g Transportatio n Hom e furnishing s Miscellaneou s TOTA L (46.7 ) (9.5 ) 56.2 %

12. 5 9. 3 8. 1 4. 0 3. 0 6. 9 100. 0 (49.1 )

(9.4 ) 58.5 %

11. 7 9. 0 7. 7 3. 8 2. 8 6. 5 100. 0

1 9P.2 2

postpone da 726,000-metri c ton s pe r yea r facilit y a t Convent , Louisiana , th e existin g capacit y

o f 5,210,00 0 metri c ton s shoul dbe mor e tha nadequat e t o satisf y th e projecte d198 7 VCM demando f 3,413,00 0 metri c tons . Finally , th e majo r determinan t o f th e suppl y o f PVC i s th e pric e and availabilit y

o f VCM . Eve na s th e pric e o f VCM firm s up , thi s shoul dno t adversel y

impac t o nPVC supply . B . F . Goodric hpostpone da 500,000-metri c to n(annua l capacity ) PV C expansio nindefinitely , bu t th e curren t capacit y o f 4,517,00 0 metri c ton s wil l be sufficien t t o mee t th e projecte d198 7 PV C demando f 3,214,00 0 metri c tons . 1. 8 FOREIGN

COMPETITIO N A t present , th e Unite dState s i s a ne t exporte r o f ED C wit hgros s export s runnin g abou t 4 percen t o f productio nandgros s import s o f zer o i n mos t years . Th e U . S . i s als o a ne t exporte r o f VCM . Gros s export s averag e betwee n5 and8 percen t o f VCM production , bu t industr y expert s expec t

? 6 export s t o declin e t o les s tha n5 percen t i nth e nex t few years . Import s o f VCM ru napproximatel y

2 percen t o f production , mostl y fro m Canad a and Mexico . Wit hrespec t t o PVC , export s ar e approximatel y 5 percen t o f produc tion , andlittl e growt hi s expecte dinligh t o f th e expecte dincreas e i n foreig ncapacity . Foreig ncompetitio nshoul dintensif y i nth e nea r futur e i nligh t o f th e followin g developments : § Productio no f petrochemical s andplastic s wil l occu r increasingl y i nthos e countie s wit hchea penerg y andchea pra

w materials . Countrie s suc ha s Canada , Mexico , Indonesia , Libya , Saud i Arabia , andIra nar e undertakin g plan s t o expan dethylen e capacit y b y 1 4 billio npound s annuall y (635,00 0 metri c tons ) b y 1986 . Thi s new capacit y

wil l mak e upstream

processin g o f VCM

an dPV C possible . B y th e yea r 2000 , th e U . S . coul dver y wel l be a ne t importe r o f 2 7 ethylen e derivatives .
• Imperia l Chemica l Industrie s (ICI ) andMarley , Ltd. , pla nt o merg e subsidiarie s whic hproces s PVC . Th e goa l o f th e merger , accordin g



### 2 0P.2 3

t o ICI , i s th e formatio no f a Unite dKingdom-base dPVC processin g busines s tha t wil l b e full y competitiv e wit hforeig nan ddomesti c 2 8 suppliers .

• Sout hKore a i s buildin g a PV C plan t tha t i s expecte dt o b e 2 9 operationa l i nmid-1984 . 3 0 • Mexic o expect s t o mor e tha ndoubl e it s PVC capacit y b y 1984 . • Canada' s statu s a s a ne t PV C importe r wa s reverse di n198 0 wit h th e additio no f 40 0 millio nIbs/y r (182,00 0 metri c tons ) capacit y du e t o anexpansio nb y B . F . Goodric hCanada , Ltd. , andt o a new plan t b y Diamon dShamrock/Albert a Gas . Productio ni s expecte dt o doubl e b

y 1990. 3 1

• Finally , th e retrenchin g o f th e Europea nPV C busines s appear s t o hav e eased , bu t no ne w plant s o r expansion s ar e scheduled . A simila r situatio nexist s i nJapa n- no expansion s - ye t no mor e shutdown s ar e expected . 1. 9 ECONOMI C OUTLOO K On e membe r o f th e industr y foresee s a 7 percen t annua l growt hindemand 3 2 fo r PVC resin s betwee nnow andth e endo f th e 1980's . Th e larges t advance s wil l come inth e rigi dpip e market , viny l window s an dsiding , an

dpersona l 3 3 computers . Othe r industr y expert s expec t 4 t o 6 percen t annua l growth . A chemical/plastic s industr y consultan t expect s growt hinth e nea r ter m t o b e close r t o 5 percent , give nth e uncertaintie s surroundin g possibl e ban s o f 3 4 plasti c pip e inconstruction . I f on e accept s th e 5 percen t growt hrat e inPV C deman da s th e mos t realisti c rate , an

di f on e assume s tha t th e 198 3 PV C deman dwil l b e approxi matel y 2,644,00 0 metri c tons , the nth e demandfo r PV C woul db e 3,214,00 0 metri c 3 5 ton s b y 1987 . Thi s woul drepresent a 7 9 percen t capacit y utilizatio nrate , assumin g capacit y

remain s a t th e 198 3 leve l o f 4,065,30 0 metri c tons . Assumin g tha t 9 7 percen t o f VC M productio ni s use dinth e formatio no f PVC an dtha t 1.0 3 unit s o f VC

M produc e on e uni t o f PVC , the nthe derive ddeman dfo r VC M in



### 2 1P.2 4

198 7 woul dbe 3,413,00 0 metri c tons . Thi s woul drepresen t a capacit y utiliza tio nrat e o f 7 5 percent . Finally , assuming tha t 8 8 percen t o f ED C i s use din th e manufactur e o f VCM an dtha t 1.6 5 unit s o f ED C ar e require dt o produc e on e uni t o f VCM , the nth e deman dfo r ED C i n198 7 woul db e 6,400,000 metri c tons , representin g 6 9 percen t o f nameplat e capacity . Thus , no capacit y limitation s shoul dbe encountere di nth e short-run . 2. 0 SOCIO-ECONOMI C IMPAC T ASSESSMEN T 2. 1 EXECUTIV E ORDE R1229 1 Th e purpos e o f Sectio n2. 1 i s t o addres s thos e test s o f macroeconomi c impac t a s presente dinExecutiv e Orde r 12291 . Executiv e Order 1229 1 stipu late s a s "majo r rules " thos e tha t ar e projecte dt o hav e any o f th e followin g impacts :

• A nannua l effec t onth e econom y o f $10 0 millio no r more .
• A majo r increas e i ncost s o r price s fo r consumers ; individua l industries ; Federal , State , o r loca l governmen t agencies ; o r geographi c regions . t Significan t advers e effect s oncompetition , employment , investment , productivity , innovation , o r onth e abilit y o f U . S.-base denter prise s t o compet e wit hforeign-base denterprise s indomesti c o r expor t markets . Th e annualize dcontro l cost s associate dwit heac ho f th e revision s t o th e standar dunder consideratio ni s wel l below $10 0 millio nwhic hi s th e figur e use dt o identif y a majo r rule . N

o majo r increase s incos t o r price s i s foreseen . Mos t o f th e industr y i s concentrate dinLouisian a an dTexas . However , no advers e impact s ar e expecte dineithe r Stat e becaus e al l firm s ar e in complianc e wit hth e existin g standard , andbecaus e revision s t o th e standar d under consideratio nar e administrativ e only .



### 2 2P.2 5

2. 2 REGULATOR YFLEXIBILIT Y Th e RFA o f 198 0 require s tha t differentia l impact s o f Federa l regulation s upo nsmal l busines s be identifie dan danalyzed . Th e RFA stipulate s tha t an analysi s i s require di f a substantia l numbe r o f smal l businesse s wil l exper ienc e significan t impacts . Bot hmeasure s mus t b e met , i.e. , substantia l number s o f smal l businesse s an dsignifican t impacts , t o requir e a nanalysis . I f eithe r measur e i s no t met , the nno analysi s i s required . Th e EP A definitio n o f a substantia l numbe r o f smal l businesse s ina nindustr y i s 2 0 percent . Th e EP A definitio no f significan t impac t involve s thre e tests , a s follows : (1 ) price s fo r smal l entitie s ris e 5 percen t o r more , assumin g cost s ar e no t passe dont o consumers ; o r (2 ) annualize dinvestmen t cost s fo r pollutio n contro l ar e greate r tha n2 0 percen t o f tota l capita l spending ; o r (3 ) cost s a s a percen t o f sale s fo r smal l entitie s ar e 1 0 percen t greate r tha ncost s a s a percen t o f sale s fo r larg e entities . Th e Smal l Busines s Administration' s (SBA ) definitio no f a smal l busines s fo r Standar dIndustria l Classificatio n(SIC ) Cod e 282 1 (Plastics ) i s 50 0 employees . Tabl e 2- 1 present s 198 2 employmen t fo r ED C producer s an dmis cellaneou s sources . Eve nth e fir m wit hth e smalles t numbe r o f employee s (Vulca nMaterials ) i s wel l i nexces s o f 50 0 employees . Therefore , non e o f th e companie s meet s th e SBA definitio no f a smal l business , an dthu s no regulator y

flexibilit y

analysi s woul dbe required .



### 2 3P.2 6

TABL E 2-1 . 198 2 EMPLOYMEN T FO RED C PRODUCER S ANDMISCELLANEOU S SOURCE S

Produce r Numbe r o f Employee s

Conoco 3 41.500 3 6
Conven t Chemical s N A 3 7 Diamon dShamroc k10,88 0 Do w Chemica l 56,OOO 3 8 3 9 Ethy l Corporatio n14,50 0

r 4 0 Georgia-Pacifi c 44,00 0 B . H . Goodric h27.651 4 1
IC I America s N A Moba y Chemica l 6.040 4 2
PP G37,OOO 4 3
e 4 4 Shel l Chemica l 36,504 e 4 5 Unio nCarbide f 15,394 c Vulca nMaterial s 5,937 4 6

a 198 0 employment . No t applicable . Wholly-owne dsubsidiar y o f B . F . Goodrich .

c 197 9 employment . No t applicable . Foreig nparen t corporation .

e Shel l Oi l Company . Include s onl y

th e Chemical s an

dPlastic s Division .



### 2 4P.2 7

3. 0 REFERENCE S 1
. U . S
. Environmenta l Protectio n Agency . Viny l Chloride : ARevie wo f Nationa l Emissio n Standards
. Februar y1982
. Appendi x C
. ~ ~ 2
. SR I International
. 198 3 Director yo f Chemica l Procedures , Unite d States , p . 584 , 964 , 965
. 3
. U . S
. Environmenta l Protectio n Agency . Emission s Contro l Option s fo r th e Syntheti c Organi c Chemical s Manufacturin g Industry : Ethylen e ~ Dichlorid e Projec t Report . Novembe r 1978 , p. 11-3
. 4
. Stanfor d Researc h Institute
. Chemica l Economic s Handbook , p . 651.503 1 E . 5
. Chemica l Marketin g Reporter . Jun e 13 , 1983
. p . 54
. 6
. Chemica l Marketin g Reporter . Jun e 20 , 1983
. p . 66
. 7
. Chemica l Marketin g Reporter . Jun e 27 , 1983
. p . 23
. 8
. Referenc e 1
. 9
. Referenc e 4 , p . 580.188 2 F . 10
. "PVC : APlasti c i n Turmoil. " Chemica l Engineering
. Ma y17 , 1982
. pp . 49-51
. 11
. "Dynami t Nobe l Want s Ou t o f Losin g PVC Business. " Chemica l Marketin g Reporter . Jul y26 , 1982 , p . 3 and 28
. 12
. U . S
. Internationa l Trad e Commission
. Syntheti c Organi c Chemicals
. 1978-1981
. Tabl e 1 , p . 200
. 13
. Referenc e 3
. 14
. "PVC Succes s Breed s Problems. " Chemica l Marketin g Reporter . Jul y5 , 1982
. p . 3 an

d 52
. 15
. Referenc e 3
. 16
. Referenc e 14
. 17
. Referenc e 10
. 18
. "Dow , PP G Boos t VC M Price. " Chemica l Marketin g Reporter . Decembe r 13 , 1982 , p . 48
. 19
. "Goodric h t o Rais e Pric e o f PV C Resin s Eigh t Cent s a Pound. " Wal l Stree t Journal
. Ma y18 , 1983 , p . 4
.



### 2 5P.2 8

20 . Referenc e 14 . 21 . Referenc e 3 . 22 . Chemica l Marketin g Reporter . Apri l 18 , 1983 , pp . 40 , 43 , and45 . 23 . Referenc e 4 , p . 651.503 1 D . 24 . Referenc e 4 , p . 651.503 1 C . 25 . Referenc e 4 , p . 580.188 1 E . 26 . Referenc e 4 , p . 580.188 1 E . 27 . "198 3 HP I Marke t Forecast. " Hydrocarbo nProcessing. Novembe r 1982 , pp . 38B-38J . 28 . "IC I Plan s t o Merg e PV C Processin g Units. " Chemica l Marketin g Reporter . Februar y

7 , 1983 , p . 5 an

d12 . 29 . "PV

C Uni t i s Slated. " Chemica l Marketin g Reporter . Februar y 28 , 1983 , p . 4 . 30 . Referenc e 10 . 31 . Referenc e 10 . 32 . "Plastic s Industr y Ponder s the Possibilit y o f a Turnaround. " Chemica l Marketin g Reporter . Jun e 28 , 1982 , p . 3 an d49 . 33 . "Plastic s Consumptio nt o Grow. " Chemica l Marketin g Reporter . Novembe r 1 , 1982 , p . 7 . 34 . Referenc e 14 . 35 . Referenc e 14 . 36 . Conoco , 198 0 SE C 10- KReport , p . 1 . 37 . DiamondShamrock , 198 2 Annua l Report , p . 1 . 38 . Do w Chemical , 197 9 Annua l Report , p . 1 . 39 . Du n& Bradstree t Inc. , Millio nDolla r Director y 1983 , p . 697 . 40 . Georgia-Pacific , 197 9 SE C 10- KReport , p . 5 . 41 . B . F . Goodrich , 198 2 SE C 10- KReport , p . 5 .



### 2 6P29
.

• r

42
. Referenc e 39 , p . 1483
. 43
. PPG , 198 2 SE C 10- K Report , p . 3
. 44
. Shel l Oi l Company , 198 2 Annua l Report , p . 58
. 45
. Unio n Carbide , 198 2 SE C 10- K Report , p . 5
. 46
. Referenc e 39 , p . 2297
.



### 2 7