Feedstock shift near for steam crackers A surplus of light hydrocarbons in the world is moving nearer to reality. When the surplus arrives later on in the 1980s, the pattern of feedstocks for making ethylene and other chemicals in steam crackers will change further. Because of lower costs brought on by higher overseas production of light hydrocarbons—ethane, propane, and butanes—ethylene feedstocks in Europe and Japan will contain fewer heavy liquid hydrocarbons, according to a study just published by Houston-based DeWitt & Co., and prepared in cooperation with McClanahan Consultants, also of Houston. In the U.S., changes in feedstock economics will tend to reduce the share of ethylene feedstocks supplied
by light hydrocarbons, according to the study. The quantity,of ethylene produced from light hydrocarbons in the U.S. in 1985 is forecast at 22 billion lb out of a total production of 33 billion lb. In 1981, about 21 billion lb of ethylene—almost 71% of total production—came from light hydrocarbons, the study says. This quantity of ethylene produced in 1981 required about 660,000 barrels per day of light hydrocarbons. The rest of 1981 ethylene production required about 350,000 bbl per day of heavy liquid hydrocarbons, with a lower ethylene yield on a unit basis. New ethylene capacity based on ethane in Mexico, Canada, and the Middle East will account for almost 10% of worldwide production in 1985. When this capacity is on stream, ethane-based ethylene will be 27% of the worldwide total, up from 23% in 1981, the study says. •
Dip in capital spending follows profits decline It certainly is no secret that chemical companies in the U.S. are slashing capital spending budgets as their earnings continue to deteriorate. Just how bad the situation is, however, becomes clear in the latest survey of capital spending by the New York City-based Conference Board. In its report on the second quarter, the Conference Board found that spending on new plants and equipment by chemicals and allied products companies fell 8.1% from the first quarter to $2.80 billion. That still represents an increase, but only a slight one of 0.4%, from secondquarter 1981. Inflation continued to take its toll Chemical capital spending drops slightly... 1 $ Billions 3.5
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I
I
3.0
$
2.5
J Current
2.0 1.5 $ iConstant 1972
1.0 0.5 0
\
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1980 Source: Conference Board
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I 1981
I 1982
and equipment) fared better than did actual capital spending, but on an annual basis it was much worse. According to the Conference Board survey, capital appropriations in the second quarter totaled $2.25 billion on a current-dollar basis. This is down just slightly from the $2.27 billion appropriated in the first quarter of this year. But on a constantdollar (1972) basis, capital appropriations totaled almost $1.10 billion, a decline of 6.8% from the first quarter's appropriations. On a yearly basis, however, appropriations took a dive. Current-dollar appropriations in the second quarter fell 25.5% from a year before to $2.25 billion, and constant-dollar appropriations dropped 32% to $1.10 billion. For the first half, current-dollar appropriations added up to $4.51 billion, a drop of 24.5% from firsthalf 1981. And on a constant-dollar basis, appropriations for the first half totaled $2.27 billion, a drop of 29.0% from the like period of 1981. In its report on business for August, the National Association of Purchasing Management found that capital spending last month was particularly weak. NAPM says that only 47% of its members responding to the survey reported buying capital goods one year or more ahead. This is the lowest percentage since April 1964, and NAPM says the drop from July's 55% was "precipitous—the most severe since January 1973." D
on capital spending, according to the report. On a constant-dollar (1972) basis, capital spending for chemicals and allied products dropped 13.7% from the first quarter to $1.37 billion, and it fell 8.4% from secondquarter 1981. For the first half this year, currentdollar capital spending increased 4.0% from last year's first half to $5.85 billion. But again, in terms of constant dollars, the situation is not so good: Capital expenditures for the first six months totaled $2.95 billion, Manville liability suits a drop of 4.0% from first-half 1981. On a quarter-to-quarter basis, cause industry concern capital appropriations (money that is planned to be spent on new plants When Manville Corp. filed for reorganization late last month under Chapter 11 provisions of the Fed...while appropriations eral Bankruptcy Code, it seemed at first merely a daring gamble for the fall much faster company: Its basic financial opera$ Billions tions were sound but it was stagger3.5 ing under an ever-increasing load of 3.0 product liability suits. The suits are being filed by workers exposed to $ Current 2.5 asbestos when they worked at the company's Johns-Manville subsidiary. 2.0 More than 16,500 such lawsuits are pending against it, and some 500 1.5 more new cases are being added each $ Constatit 1 9 7 2 ^ * 1 month (C&EN, Aug. 30, page 7). 1.0 In the uproar that followed the bankruptcy filing, the fallout has 0.5 started. Whatever happens to Manville itself, the effects are being felt 1 1 1 i J r 0 by other companies in similar busi1980 1981 1982 ness areas. And the prospect of similar kinds of product liability suits, Sept. 6, 1982 C&EN 5
