P.1 

OAR Box 1872 

Prepped by Keeia Richards 

Document Number: 

16) II-I-65 

Docket Number: 

A-90-19 

Printed 11/26/2008 8:51:49 AM Sheet 16 of 204 
A-90-19 

II-I-65 

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OXYCHEM TAKES ANOTHER SOVIET STAKE 

Occidental Chemical has signed a 

definitive agreement to set up a $200-

million polyvinyl chloride (PVC) resins and films joint venture at Kalush in 

the Soviet Union. The deal was inked 

last week in Moscow by OxyChem 

president J. Roger Hirl; O. N. Romapenko, director of the chlorovinyl 

product[on complex at Kalush; and 

V. M. To: -nkfli deputy minister of the 

USSR's chemical and petrochemical 

Ipdustry. 

Unconfirmed reports suggest that 

OxyChem, which is providing technology and know-how, will hold a 25% 

stake in the venture—a share equivalent to its estimated investment in the 

project. 

The venture, to be known as Arnica, 

will prcroed in two stages. The first 

involve: instruction of a 40,000-m.t./ 

year PVC dispersion resins plant using 

OxyChem's Hybrid technology, with 

work starting in 1990 for completion 

by 1993. Output will be used to make a 

variety of consumer products, including vinyl flooring and upholstery fabrics. In the second stage, a 50,000-m.t./ 

year PVC film plant will be built, although a time frame has not yet been 

drawn up. Products will include food 

packaging film, pond and reservoir 

linings, and wall coverings. 

"This venture represents a further 

commitment to OxyChem's PVC business," Hirl says. "We anticipate markets for Arnica's products will grow 

steadily and rapidly over the ensuing 

years as the Soviet economy continues 

to develop." It is believed that both the 

resins and films plants can be easily 

debottlenecked to increase capacity. 

Under the terms of the deal, 75% of 

production from Arnica will be sold in 

the Soviet Union and other East bloc 

countries. OxyChem will sell the remaining 25% in the international 

marketplace. It is understood that all 

feedstock requirements will be provided by the existing complex at Kalush 

in the Ukraine. 

Says Occidental Petroleum chairman Armand Hammer. "We are a very 

pleased this project is going forward. It 

Hirl: a commitment to PVC. 

is in keeping both with the strengthening of our chemicals business and with 

current efforts to elevate the standard 

of living for the Soviet people." 

PETER COOMBES 

EDC TABS TAKE A DIVE 

The ._ownward slide in ethylene 

dichloride (EDC) prices continues as 

buyers report transaction levels for the 

material at 8 cts/lb, with strong indicators of even further price deterioration 

in the near future. 

The drop-off from the 12-ct/lb levels of three months ago can be blamed 

in part on lower overseas demand for 

EDC. from countries such as Taiwan 

and • .an. coupled with sliding domes!:, Jemand for vinyl compounds 

such as vinyl chloride monomer (VCM) 

and polyvinyl chloride (PVC). "Both 

producer and customer inventories [for 

EDC) are high," says Ken Steel, executive vice president of K. A. Steel Chemicals (Schiller Park, IL), a distributor 

and manufacturer of chlor-alkali derivatives. "The result," he adds, "has 

been lower product prices." 

Most market observers echo that 

evaluation, noting that a drop in EDC 

demand coupled with an increased 

chlorine supply has led to a price dip. 

"I may be being a bit pessimistic, but I 

see prices going as low as 7 to 6 cts/lb 

before this latest trend is over," says an 

EDC/VCM buyer for Marubeni (Houston). In fact, more than one market 

player says that material recently has been quoted in the 

7-ct range; but it's not clear 

how much material was involved and if there were any 

takers at that level. 

A major question for chloralkali producers is whether 

operating rates will have to 

be reduced in the face of stagnant chlorine demand while 

caustic soda continues to 

show strength in the marketplace. With operating rates 

near 95%, producers have 

been forced to store EDC in 

tanks and salt domes and then eventually lower prices in an attempt to move 

inventory. But as one marketer comments: "Lower pricing or not. the 

demand is just not there." 

On the derivatives market, VCM is 

holding at about 24.25 cts/lb. while 

PVC—depending on grade—is currently selling at 39 cts to 41 cts/lb. 

"Orders for August seem to be picking 

up," says a major PVC producer. "Tl 

may be another penny drop in i 

between August and September, but 

inventories should be dwindling, and 

we expect prices to firm by the September-October period." 

Market players hesitate to predict 

the duration of the current glut of EDC. 

"There are just too many variables to 

consider in making that kind of prediction," says a market source. 

On the other hand, sources agree 

that if chlor-alkali producers st;i 

ducing operating rates to offset lower 

chlorine demand, prices on the caustic 

side will move upward. "Without a 

doubt caustic prices would increase," 

says an East Coast distributor. "But I 

think a big reason producers haven't 

lowered operating rates no 

even with a negative return on chlorine, caustic soda sales are doing very 

well and have offset this." 

MA URICE MARTORELLA 

August 16.1989/Chemicalweek 7 
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