News of the Week profits decreased in the fourth quarter, and at 12 of them sales growth was larger than earnings growth. (When sales climb faster than earnings, profit margins naturally fall.) It was only because of large profit increases among a few companies— notably the fertilizer and fiber producers—that profit margins for the group stayed level. However, even these big profit runups could not help the averages for the full year. For 1980, earnings for 10 of the companies declined and sales growth for a full 13 was greater than earnings growth. The biggest earnings gain for the fourth quarter reported thus far was at Monsanto, which was coming off a disastrous fourth quarter in 1979 that continued into 1980. In fourth-quarter 1980, however, Monsanto's earnings before nonrecurring items were $38.6 million, compared to $18.2 million in fourth-quarter 1979. However, if nonrecurring items are included in Monsanto's results for fourth-quarter 1980, the company had a massive loss of $69.4 million. Other big gainers in fourth-quarter earnings include Texasgulf, with an 83% gain; PPG Industries, up 49%; First Mississippi and Freeport Minerals, each with a 48% increase; and Celanese, with a 44% gain. •
Arco Chemical delays entry into isocyanates Capacity to make polymeric isocyanates will not be increasing so fast as expected. Arco Chemical is postponing construction of a unit to make these intermediates used mainly in manufacture of urethane foams. The Arco unit, to have been built at the company's Channelview, Tex., plant, was to have a design capacity of 150 million lb per year of the polymeric isocyanates or various mixtures containing methylene diisocyanate (MDI) and its dimers, trimers, and polymers. Initially expected on stream by October 1981, the timing may have slipped even before the announcement last week of the postponement. This unit was to be Arco Chemical's entrance into polymeric isocyanates. The company had developed and tested in a pilot plant some proprietary technology different from that used currently by producers in the U.S. A company spokesman says one reason for the postponement is that the company wants to "pursue an 6
C&EN Feb. 2, 1981
improved version of its proprietary new process." (Another reason is adequate near-term supply of polymeric isocyanates.) Apparently the delay will allow more development on other technology that will eliminate the need for a selenium-containing catalyst used in a reaction of nitrobenzene, carbon monoxide, and an alcohol in part of the processing to MDI. Industry sources believe that Arco Chemical technology as planned for the new unit doesn't use phosgene as do other commercial processes. Except for some Japanese technology, MDI is made by reacting aniline and formaldehyde to make diphenylmethane diamine. This intermediate is then reacted with phosgene to make MDI. Avoiding poisonous phosgene reduces risks in processing, sources explain. Arco Chemicals is a producer, through Oxirane, of propylene oxide, which is made into polypropylene glycols used as the other component of urethane foams and other fabricated forms. One of Arco's two propylene oxide units is at Channelview; the other is at nearby Bayport, Tex. These plants originally were built by Oxirane when that company was a 50-50 joint venture of Atlantic Richfield and Halcon International. Last summer, Halcon sold its half share of the Oxirane companies to Atlantic Richfield, parent of Arco Chemical (C&EN, June 23,1980, page 11). The move to making MDI would be a logical one for Arco in that it would be able to offer both major components of polyurethanes. •
Reaction to oil decontrol is mixed President Ronald Reagan's decision to remove immediately all federal controls from crude oil and petroleum products drew quick and diverse responses from those companies affected by the move. Oil companies praised the action, chemical firms seemed nonchalant, and some small refiners feared for their future. The elimination of remaining petroleum controls frees the 25% of domestic crude oil production that was still bound by the nine-year-old regulations. Prices for this oil are expected to rise about $4.00 per bbl to reach a price of about $38 per bbl. Price controls on gasoline and propane were lifted as well. One program lost as well is the crude oil entitlement plan that required refineries using
price-controlled domestic oil to pay a subsidy to refiners using higherpriced imported oil. The gasoline allocation program, which most people admit was not working anyway, also was dropped. The chemical industry does not seem particularly concerned about the move. It appears to believe that the small rise in feedstock prices will have little effect. A Monsanto spokesman says that markets for petrochemicals have been weak recently anyway and higher-priced feedstocks—naphtha and ethylene from crude oil and propane from natural gas liquids— probably will serve only to cut a little further into profit margins for those products. But this is a short-term effect, he says, and the decontrol will contribute to the long-term health of petrochemicals. Similarly, Dow Chemical comments that there has been some weakening in the price of propane recently and that these markets were quiet after the President's announcement. The same thing happened when butane prices were decontrolled earlier, a spokesman says. In general, the chemical companies state they have supported removal of price controls for some time. The reasons given for shifting the date for decontrol from the original Sept. 30 to the present is to speed the search for new oil and to stimulate conservation, according to Reagan. And oil companies have soundly praised the action, saying the return to an open market system will help assure future supplies. Still, some spokesmen say that the industry already is trying everything it knows to raise domestic production, and that decontrol won't affect that aspect very much. It is hinted by some that the government sees early decontrol as a source of revenue. The decontrol is expected to add about $6 billion to oil company revenues based on current prices. But, with the 1980 windfall profits tax in effect, about 80% of this will go to the government. Energy Department officials expect a net gain of $2 billion to $4 billion from the action. Small independent oil refiners are most concerned about the President's decision. Many of these have depended on a government allocation program (which is now gone) that required oil companies to supply them with crude oil. Without this government protection, a spokesman for the refiners says, as many as 70 small refiners could be wiped out within six months. •
