OAR Box 1872 

Prepped by Keeia Richards 

Document Number: 

49) 11-1-98 

Docket Number: 

A-90-19 

Printed 11/26/2008 8:51:51 AM Sheet 49 of 204 

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Veom'in the future," he said. 

Mr. Reilly said the bill was also needed to 

jijt EPA on equal footing with other Federal 

tiepartments now facing major pollution 

iivobfems requiring EPA oversight. For exr.'mple, he said EPA would be a key watchdo-~ 

over cleanup efforts at Energy Department'.' 

r.uclear weapons plants and Defense Depart-

• went's military installations. 

Li the international arena, Mr. Reilly said' 

" cabinet status for EPA is necessary to assure 

foreign governments that the US takes environmental issues seriously, particularly in 

view of increasing world cooperation on 

ozone depletion, global warming and ocean 

pollution. 

The EPA chief said his lack of cabinet 

status was especially noticeable when he represerted the US at "two major international 

conferences last year. "At each of these 

meeting, most, if not all of the countries 

attending were represented by a cabinetlevel official," Mr. Reilly noted. He added 

that foreign officials found it "hard to understand" why he did not enjoy similar statas. 

Elevating EPA to the cabinet would serve 

as "recognition of the very important role 

EPA has in maintaining the well-being of the 

people of this counciy," said Ron Van Mynen, 

vice-president of health, safety & environment at Union Carbide Chemicals & Plastics.-

. Mr. Van Mynen told t he panel an important 

objective of the new department should be 

Continued on Page 2£ r. 

^SSJK&SSSK 

FEBRUARY 12,-(S90 

The ethylene glycol market suffered 

two major blows last, year, the disappearance of previously vigorous export 

sales and a massive carryover of antifreeze inventories. Peering into 1990, 

producers are confident that antifreeze 

purchasing will be back to normal levels, but whether export demand will revive or not is anyone's guess. .-. ' 

Equally uncertain is whether the long, 

steep decline in prices has come to an end, or 

whether further deterioration is in the cards. 

See pg. 54 for CMR 's Chemical 

\ Profile on Ethylene Oxide. 

ing the Freeport employees who are retained 

by the buyer, and accomplishes an important 

goal of Freeport's previously announced restructuring plan to focus on the phosphate 

fertilizer and sulfur business. The proceeds 

of the sale will initially be used to pay down 

debt but ultimately will be used to fund in 

part the development of the Main Fass Block 

299 sulfur project, a 67-million-long-ton sulfur discovery in the Gulf of Mexico requiring 

approximately $320 million for Freeport's 

interest to bring on production." 

Industrial grade glycol is priced at 34 cents 

. per pound for distributors, down as much as 

20 cents frornjnid:1989, and ethylene oxide is 

50 cents per'pijund, down 10 cents in the same 

period. The collapse of export prices has 

played a significant role in the Tail of domestic prices, and the unexpectedness of the export nosedive is making people in the industry gun-shy about predicting the future. 

The antifreeze carryover into 198? was a 

result of the ethylene shortages of 1988, 

which caused buyers to hoard ethylene 

derivatives in order to hedge against continued price increases. That buying "frenzy" or 

"panic," as producej-s have called it, 

ETHYLENE OXIDE: The year 1990 will see improve-

• merit, thanks to antifreeze demand:........Tl. Page 54 

CYCLO;'';Shbrt-term outages reduce availability of 

product and touch off a scramble. }•;'. ;7. Page 16 

PHOSPHATES: Producers shift to value-added productsand seek to cut operating bosts.. . .Page 29 

amounted to about 217 million gallons of 

ethylene glycol for antifreeze in 1988; in 

1989, preliminary purchase estimates range 

from 170 million or less to 185 million gallons, a drop of 15 to 22percent. .-•.-.'., 

' "Stores, blenders and producers all had 

inventory; even consumers had a couple of 

gallons in the basement,": says a producer, 

referring to the inventory carryover. The 

problem was exacerbated by the high value 

of the carried-over material, which was 

bought in a rising market. As prices weakened in 1989, sellers were reluctant to bring 

their product to the markat at a loss. 

Most but not all people in the industry 

agree that inventories have been drawn down 

and that ethylene glycol can start 1990 with a 

clean slate. Some producers report that they • 

have had requests for antifreeze materia! in; 

the last coupl.e of wveks, to be resold immediately, during this winter season. Some market players caution, however, that it will take 

a little more time to completely woik down 

the heretofore bloated inventories, and one 

producer says, "Everyone was caught by surprise at the beginning of the season when they 

saw how high inventories were, so I don't 

know how they'd know the inventory any better now." In any case, there is near-universal 

agreement that 1990 should bring normal antifreeze buying levels. 

The problem with the export market was 

that China and ihe Far Eastern countries that 

Continued on Page 54 .' 

•flNSSBECMR-:-

Advertisers' Index 52 

CMR Business Briefs v.v;...;......... . i 3 

Chemical Imports 'F 

Chemical Prices. . 38 

Chemical Profile ..-..' 54 

Classified Advertisements ....:. . 52 

D.C. Currents ........../.,. . 7 

Detergents NewsFi ont.......;. 33 

Financial Nev/sFVont. ••••••. • •'• • • 32 

Jobs & People ...:.. . 53 

Meciings Calender <..» 54 

News Capsule , S 

PlasticsWeek...., ;....'.. . 35 

Specialties NewsFronl 36 

Complete News Index on Page 4 

I '• 

Febru;:.Yl2. ~S90 CHEMICAL MARKETING REPORTER 
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February 12,1990 

CAPACITY* 

...480 

450 

.......210 

"ex 550 

110 

sx 585 

550 

...230 

....825 

....110 

900 

820 

;. 1^330 

.7,510 

shst Cetenese debcrfenecked by 125 million 

Ian; in August 1S88, after it had been placed cn 

add 90 million pounds in 1991. Oxy will add 30 

Ing a 450-miliion-pound plant at the Gulf in 1993. 

prough a restart in October 19SS. Union Carbide 

) million pounds in the third quarter of 1992 by 

units at the site to an oxygen-based system and 

every and refining systems. In Alberta, Canada, 

to its existing 400-miHion-pound Prentiss unit, 

n-pound unit, due up at the end of 1992 or early 

S

apacities at Seadrift and Taft from 670 million 

speciively, over the iast couple ot years. Profile 

/12/90.' 

5.9 billion pounds; 19S4: 6.4 billion pounds, 

p, each on the Older of 25 million pounds per 

|:ent per year; future: 2.5 percent per year 

[5c. per pound, tanks, f.o.b. works; low, 7c 

jpound, tanks, f.o.b. works. 

ionic surfactants, 13 percent; ethanolamines, 

nt; diethylene glycol, 6 percent; triethylene 

eluding polyethylene glycol, urethane polyols 

|are growing at a greater rate than EO overall, 

|inuedonPage31 

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trade with it simply stopped buying, as a 

result of China's domestic and international 

problems following the Tiananmen Square 

massacre last June. By August, the export 

pipeline was starting to back up and prices 

were falling. 

Exports of ethylene glycol in 1938 totaled 

603.8 million pounds, according to International Trade Commission figures, and 1989 

annualizes out to over 1 billion pounds; however, a major US exporter warns that the 

1989 figures are almost certainly oversiated, 

probably due to reporting errors arising 

;

 from the transition to metric measurements. 

One US glycol manufacturer says, "The 

growth of monoethylene glycol had been 

driven by exports to the Far East. The industry went after that market; they thought it 

would keep bo<ar.ing and booming and booming." He notes that many of the ethylene oxide and glycol plants being buiit or scheduled 

for construction were planned by their 

builders to meet that Far Eastern demand. 

Export prices had been as high as 50 to 55 

cents per round, but they plummeted with 

the lack of demand. Now that export prices 

have sunk to 22 cents or less per pound, it is, 

sources say, a matter of exporters around the 

world trying to hold on to their share of the 

temporarily diminished market. Some forecasts call for a return of Far East business 

after the Canton Fair in the spring, meaning 

stronger exports in the second half. 

PRICE STABILITY. SEEN 

1

 Domestic tabs have followed export prices 

down, albeit at a respectable distance, and on 

the supply side, domestic ethylene prices are 

thought to have a little room for further 

weakening. The December cold snap temporarily halted ethylene's fall (the price in January was 24 cents per pound, compared to 34 

cents in January 1989), but if it slips further it 

could put downward pressure on ethylene 

oxide and ethylene glycol, although no one 

seems to have a clear sense of how much, if 

any, downward momentum is left in oxide 

and glycol. Price stability is called for by 

some, but others are less sure. 

The ethylene oxide balance will be aided, 

sources say, by the plant turnarounds scheduled for this year, four of them in the first 

quarter, and at less-: one in the summer. 

Starting in 1991, though, numerous capacity 

expansions are due up in the US arid abroad, 

including a new "450-million-pound Shell 

Chemical Company plant at the Gulf, and a 

new 480-miilion-pound Union Carbide Corporation plant in Prentiss, Alberta, Canada. 

With an EO growth rate of about 2.5 percent 

per" year, there is some question as to how 

readily that capacity will beabsorbed.

 :

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Tn addition to increasing capacity, producereof ethylene oxide say they are trying to 

ensurejtli.'sUhe .1.990's arcLiwt V repeatpf the 

1980's, a poor decade_for. profits. .With 

ethylene oxide ihejeast profitable of the ma; 

jor^hylene"JcV-rivativ^.a'Oeast".u.nUr_the 

price run-up ih:;t began over_a year ago, and 

with sales of oxide itself Jens p'rdfitableThan 

sales of its derivatives, sevcrarUS producers 

areSej-emphasizing their ;;ierchantEO sales. 

Texaco Chemical Cch.pany intends to'be F 

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^ Continued from Page 3 

.' out of the merchant market after the end of 

; this year, and Union Carbide is looking at the 

end of 1991. Dow Chemical Company, which 

is not a major merchant supplier to begin 

with, says that it will continue to service its 

present customers, but is not seeking new 

^ones. 

Safety questions regarding EO, both 

worker-exposure and transportation issues, 

are causing concern in the industry, but profitability is the primary reason for the merchant pull-outs. Other producers, though, are 

encouraging their customers to locate their 

derivative units "across the fence" from the 

EO sources, in order to allow pipelining 

rather than rail or truck transportation. 

With elhyleneglycql accounting for 60 percent of US EO production, the fortune's of the 

two are closely tied."Among EO's other 

derivatives, _i^m 

etha"n^lami"nes_a'fe look'ejd"up'on ".as" the 

strongest sources of growth," cm'the order of 3 

per-cent_or more per year, compared to an 

anticipated. average "glycoljgr'owth_rate_6f 

about 2 percent, -..-. . 

ETHERS PRICES DOWN 

Glycol ethers, long suffering from health 

and safety concerns, are expected to have a 

growth rate of anywhere from 1 percent to 

minus 1 percent per year, with the exception 

of ethylene glycol monobutyl ether (EB), 

which has for the most part escaped suspicion as a health hazard. Along with EG, 

prices on the glycol ethers came down again 

in January; EB is now 43 cents per pound. 

down 12 cents from January 1989. 

Polyester, the iargest ethylene glycolderfvaTIve'asidefrom antifreeze, should benefit'this "year from the lower "glycol prices. 

Higher raw materials costs have made 

' polyester vulnerable to competition from 

other materials, notably in the case of 

polyethylene terephthalate bottles which 

compete with glass and aInmin"T.. A resurgence in PET resin demand growth is expected this year. 

Diethylene glycol marketers are looking 

for 2 to 3 percent growth after an unspectacular 1989, which was dampened by poor antifreeze demand. Recent tightening has 

brought at least one price hike this month 

(see the Aliphatics market, page 19, for details). For triethylene glycol, the recent cold 

weather brought a spate of buying for natural gas dehydration, its largest use; beyond 

' that, stable 2 percent growth is expected. 

TEG, along with ethylene, EO, EG and DEG, 

has been brought into a tighter balance by the 

production outages precipitated by the cold 

weather earlier this season. 

RONALD BEC-LEY 

BASF Correction 

A previous report on sulfone polym rs 

(CMR, 1/29/90, pg. 3) should have said that 

BASF first made known its intention to market polysulfone at the Design and Engin-.v»-

ing Show in April 1989, not at the National 

Plastics Exposition in June, as stated. Also, 

lower,' not higher gel content allows for a 

more homogenous extrusion. 

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