Industry / Business
Cyclohexane output will hold steady this year... Billions of pounds
Cyclohexane stays tight despite strong demand Link to benzene discourages producers of nylon raw material from adding new capacity Cyclohexane is just unloved. This feedstock for raw materials for nylon has drawn barbs from users for two years because of its scarcity. This would be expected. But even producers, despite high dollar sales this year, are not enthusiastic enough to invest new capital in the product. Why? Because of cyclohexane's peculiar relation to benzene. This link is so strong that it, and not the usual market forces, sways future capacity planning. At least up to now. The trouble is that cyclohexane has sold historically at about the same price as benzene. This means that unless benzene is in great oversupply, making cyclohexane by simple catalytic hydrogenation of benzene is of no particular advantage to the oil companies that produce these chemicals. Because benzene demand in the past two years has been insatiable for styrenic plastics and motor fuel blending, cyclohexane output has been on a plateau at a little more than 2 billion pounds per year, even though production of nylon has boomed. "As long as you can sell benzene for the same price as cyclohexane, there is no incentive to expand," says Charles B. McKnight, marketing director for olefins and cyclics in the chemicals group at Phillips Petroleum. Phillips' cyclohexane capacity of 1.3 billion pounds per year at Borger and Sweeny, Tex., and Guayama, P.R., is nearly half of the U.S. total. Not that the cyclohexane business is bad. "We are quite optimistic for the next several years on the cyclohexane business," Mr. McKnight remarks, with reason. Cyclohexane prices have about tripled in the past year, paralleling the rise in benzene prices. U.S. Tariff Commission figures show the average sales price of cyclohexane soaring from 5 cents per pound in 1973 to 14 cents per pound during the first five months of 1974. Despite little change in physical volume, higher prices have produced bigger sales in the first five months of this year than in all of 1973. Mr. McKnight does not detect any
downward price pressure yet for cyclohexane, even though some nylon markets have turned soft (C&EN, Sept. 30, page 7). He believes that the letup in nylon simply will give nylon producers a chance to refill depleted materials pipelines. Hence, cyclohexane production also probably will hold up. Exports of cyclohexane, traditionally a large share of the business and now accounting for a bit more than 20% of sales, are also holding up this year. Although, Mr. McKnight says, exports from the continental U.S. to Europe may be weakening, exports from Puerto Rico are still strong. Despite cyclohexane's extremely strong sales this year, incentives for adding new capacity are lacking, nevertheless, Mr. McKnight concludes. Part of the reason is that new capacity would have to be tied to expensive refinery expansions for benzene and sources of hydrogen. But a few other inhibiting factors also weigh on cyclohexane producers. One is cyclohexane's rocky sales and price history in the past decade. In the past, slack demand in the nylon market has been translated immediately to cyclohexane, forcing producers to absorb sales losses and endure inventory gluts. Nylon market forecasts have been notoriously wide of the mark, either up or down. For example, losses to polyester, which had been expected to trim demand for nylon in the past few years, have not materialized, catching materials suppliers unprepared. Another factor that might appear to have deterred cyclohexane expansion is substitution of noncyclohexane raw materials in making such nylon 66 intermediates as adipic acid and hexamethylenediamine (HMDA). For example, Monsanto this month announced plans for a new unit to make adiponitrile, an HMDA intermediate, at Pensacola, Fla., based on acrylonitrile. Monsanto's old HMDA and adipic acid plants at Pensacola are based on cyclohexane. However, Mr. McKnight cautions that propylene feedstock for producing acrylonitrile will be tight, too. In any event, he had expected Monsanto's switch and believes it may be the last major move away from cyclohexane as a raw material. The reason is intriguing. "Users may be looking to produce their own cyclohexane," Mr. McKnight suggests. "I personally wouldn't consider this, but a
74 a
. . . but sales are way up because of higher prices $ Millions
300
'64 '66 a Industry estimate.
'68 70 72 74Source: U.S. Tariff Commission
user would have to look at it. He would have to buy benzene." Or just possibly, a current cyclohexane buyer might consider making cyclohexane if he had a large captive source, such as a chemical refinery, for benzene. Certainly, more cyclohexane must come from somewhere in just a year or two, unless nylon demand collapses. Capacity for making cyclohexane-based caprolactam, a raw material for nylon 6, will be doubling by 1977. And Du Pont has large new adipic acid capacity due at Victoria, Tex., in 1976. Unless the eight oil companies currently making cyclohexane build more capacity soon, therefore, the ball may pass to petrochemical users.
Carbide bullish on chemicals outlook More voices have been added to a rising chorus this year of optimism about the outlook for the U.S. chemical industry. Speaking to the Financial Analysts Federation in Detroit this month, Union Carbide vice president Richard J. Hughes discounted the threat of excess capacity any time in the next several years. As he sees it, lack of sufficient internally generated cash, high rates on borrowed capital, soaring construction costs, feedstock shortages, and scarcities of engineering talent needed to design and build new plants are all moderating future petrochemiOct. 21, 1974 C&EN
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