Polypropylene goes to diverse uses Other extrusions 7%
Injection molding*
/ '
Film6 7% e ^ r t es Ex .^ 10%
36%
All other 10% Fiber and filament 31%
Estimated 1974 production, 2.35 billion lb a Injection molding breakdown: transportation (auto parts, battery cases, etc.), 13% of total consumption; consumer items (housewares, closures, etc.), 5 % ; rigid packaging, 4 % ; appliances, 3 % ; others, 10%. b Less than 0.010 inch thickness. Source: Hercules Inc.
ylene. And it could be poised to capture some major outlets, potentially amounting to about 50% of current demand, from such competitors. In 1974 sales of polypropylene probably reached 2.2 billion to 2.3 billion lb, up about 3% from 1973. Operating capacity averaged a little more than 2.5 billion lb for the year. Hence, with output representing more than 90% of capacity, there was little opportunity for any greater growth in sales. This year capacity will not be the factor limiting growth. Earlier this month Hercules, the largest polypropylene producer, formally dedicated the first 200 million lb-a-year unit to make polypropylene at its plant in the Bayport Industrial District near Houston. Actual production at a very low rate had begun late in December. In about April, Hercules hopes to start up a second 200 million lb-a-year unit at the plant. Assuming all goes well, these two units could produce 300 million lb of polypropylene during 1975. Counting this new Hercules polypropylene capacity, domestic year-end capacity will be a little more than 2.9 billion lb. If the economy recovers in 1975, sales of polypropylene could be up some 200 million lb to about 2.4 billion lb. And if actual production in 1975 is allowed to exceed sales to build back depleted inventories more than has been possible in the fourth quarter of 1974, total production for the year may be more than 2.5 billion lb. To achieve this level of production, operations would still come close to 90% of capacity for the year. Polypropylene sales for 11 months of 1974 were 2.102 billion lb, according to a just-released estimate of the Society of the Plastics Industry. Production for the same period, SPI estimates, totaled 2.104 billion lb. These almost identical 12
C&EN Jan. 27, 1975
sales and production numbers indicate clearly the problems polypropylene producers must have had during the year with inventory limitations to sales. Inventories certainly were drawn down around midyear nearly to "unworkable" levels, according to a consultant to the industry. Sales of polypropylene undoubtedly fell off during the fourth quarter of 1974, while at the same time production eased. Charles A. Grant, Hercules' general manager of polymers, puts the average production rate for November and December at about 85% of capacity. He expects an upturn in this rate in January. If sales dropped below production late in 1974, then inventory buildup has begun. Even so, inventories still are probably below the level of six weeks' production volume, which Robert Stover of Hercules says is an optimum working level. Such an inventory amounts to a little more than 300 million lb. But somewhat larger inventories will be needed to allow producers to offer the various grades and properties necessary to gain the new markets potentially available because of polypropylene's relatively low cost. For example, some 400 million lb of high-density polyethylene sales could be replaced by polypropylene largely because of a cost advantage but also because of property
advantages. Another 800 million lb potential market for polypropylene could be captured from acrylonitrile-butadiene-styrene polymers and polystyrenes. Still another 100 million lb might be captured from polyvinyl chloride markets. At a total of some 1.3 billion lb, these exceed half of the estimate for 1975 production of polypropylene. The cost advantage of propylene monomer over ethylene now runs about 20%—8 cents per lb against 10 cents per lb. This price differential for raw materials might change slightly, Grant says. However, as costs of hydrocarbons increase whatever the cause— propylene probably will retain its fractional advantage. Also, because energy costs for making propylene are low, the polymer likely will gain end use at the expense of some metals. Polypropylene producers already have begun to tap some new markets. One that has begun to grow sharply recently is pipe. Pipe, which falls in the category of extrusions other than thin films, could be a major reason for this category's posting a sales gain of 23% last year over 1973, according to SPI figures. Also, although working from a small base of a little more than 20 million lb, blow-molding consumption of polypropylene was up more than 50% last year, largely because of development of bottle markets. D
Dispute settlements may hurt Battelle Battelle Memorial Institute has settled two long-standing disputes with government agencies. The settlements, says Dr. Sherwood L. Fawcett, president of the Columbus, Ohio-based R&D organization, "represent a significant turning point for Battelle." One dispute, with the Internal Revenue Service, was over Battelle's status as a tax-exempt organization. The dispute had been going on since 1961. The settlement: Battelle is now subject to federal income taxes. In addition, it has paid 1RS $46.8 million to discharge its liability for income taxes through 1973. By paying federal taxes, Fawcett says, Battelle "avoids restrictions imposed on tax-exempt organizations as well as the uncertainties of future revisions in tax law." The second dispute involved Gordon Battelle's will (which established Battelle Memorial Institute). One rather vaguely worded clause provided that Battelle trustees would distribute part of the institute's business income to "charitable institutions, needy enterprises, or persons," in such a way as to "do the greatest good for humanity." Over the years, Battelle has given some $7 million to outside charity. But most of the institute's earnings were plowed back into the institute. Quite a few Ohioans thought that more of Battelle's income should go to the community at large. To that end, the Ohio attorney general filed suit in 1970, asking the
court to clarify the controversial clause of Gordon Battelle's will. The settlement—subject to court approval—sets Battelle's past obligations to outside charities at $80 million. Of that amount, $36.5 million will help build a convention center in Columbus. Various "worthy charitable enterprises" will receive $21 million; $8 million will be funneled to the Battelle Energy Program; $7.5 million will go to Battelle's Academy for Contemporary Problems, which will become separate from Battelle. The proposed settlement also establishes complex formulas and procedures for future distributions. Beginning in 1975, Battelle must give from 5 to 100% of its net "business income" (from R&D), depending on the amount, and a flat 25% of its "nonbusiness income" (from investments, patents, and other sources). Beginning in 1978, Battelle must give at least $100,000 to outside charities, regardless of its net income. According to Fawcett, the two settlements will leave Battelle with an estimated net worth of $147 million, including an investment portfolio of $28 million. Over the past seven years, research and education programs and capital expansions have required about $20 million a year from the portfolio. "It is obvious," Fawcett says, "that we will have to curtail these programs as well as equipment and facility expann sion in the future. "
