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INDUSTRIAL A N D ENGINEERING CHEMISTRY
VoL 15, No. 1
Heavy Chemicals in Commerce in 1922 By D. H. Killeffer 50
EAST4 1 s ~ ST., NEWYORR,N. Y.
INANCIAL conditions at home and abroad and the continued uncertainty of the tariff situation were ruling factors in the market for heavy chemicals during the past year. Beginning in May, 1920, the general movement toward the liquidation of stocks by all concerned continued with growing impetus well on into 1921 and more slowly into 1922. At the time of the presidential election in 1920 and again immediately preceding the inauguration of President Harding, there was developed a passing feeling of hopefulness that there would be a sudden change in the situation. As subsequent developments showed, fundamental unsoundness prevented such an occurrence. By January, 1922, the greater proportion of stored stocks had been passed into consuming channels and had ceased to form quite so depressing an influence in commercial affairs. However, their place had been taken by continuous heavy imports of low-priced foreign material, and sellers in all lines were facing an almost identical situation. Prices had been forced to levels which made profits either inconsiderable or negative by this influx of foreign goods below American costs. Promised action on measures of protection was delayed time and again. Importers thrived on the low value of German exchange. Not only were chemical raw materials imported, but to an even greater degree the finished products of other industries into which these enter. Everyone connected with the industry, whether as a producer or consumer of its products, suffered acutely during the first half of the year.
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ELECTROLYTIC ALKALIINDUSTRY In the midst of this anomalous situation surprising inconsistencies developed, not the least remarkable of which was in the electrolytic alkali industry. Demand for caustic soda in all world markets was quite surprisingly active and makers had difficulty in keeping up with it on the limited scale on which they were operating. American caustic soda was even sold in quantity to German consumers through the Berlin and Hamburg markets in competition with the German product. I n sharp contrast to this activity was that of bleaching powder and other chlorine products which are necessary by-products of the industry. German bleaching powder was sold in the New York market at as much as 25 to 30 per cent below the minimum prices named by makers here. Accumulations of chlorine, hydrochloric acid, and bleaching powder caused grave concern in this country, especially in view of the continued heavy imports. This situation, in part at least, has led to extensive work on new uses for these products, and has resulted in their use to some extent in the petroleum industry. The first commercial plant for refining petroleum distillates by means of bleaching powder has very recently been put into operation. Financially, the industry has been strengthened through its long period of liquidation by the gradual elimination of most of those “fly-by-night” firms which were formed suddenly during and after the war to take advantage of the easy profits of the bull market then existing. This has not in any sense been through the freezing out of small firms by large ones, but has been essentially the elimination of a purely speculative element after the reason for its existence ceased fo exist. Although the financial status of even the strongest
firms was not as secure as might have been desired through the stress period, yet the industry as a whole has been unquestionably strengthened by the removal of these highly disturbing influences. Consumers, who had been forced by the prevailing organization of business to trade through middle men who added nothing to the value of the goods handled, are now able to place their business directly with producers and thus avoid an unnecessary profit to sellers and cost to themselves. Inflation of demand beyond its actual proportions by the appearance of a single order to buy in the hands of many middle men and inflation of stocks by the similar multiple appearance of orders to sell had been largely done away with before the beginning of 1922. The extreme uncertainty of the market under the influence of this re-selling element may well be illustrated by a case in point. At one time during 1921 an order came into the New York market from one of the large soap makers in the Middle West for a carload of caustic potash and potassium carbonate. This particular order was sent by the buyer to eight firms who had previously supplied him with these products but none of whom were primary producers. It so happened that the order was large enough to virtually wipe out stocks then in the hands of the only seller who could supply but who had not received the order. Immediately inquiries began to come in to this holder from all sides, and his natural reaction was to raise his price. When this was done the buyer refused to place the order and what had been an apparently active market collapsed in an hour. Such inflation was evident in the market throughout the period of anxious buying during and after the war. I n no less a degree has it been noted in the fren~iedselling of the past three years.
EFFECT OF TARIFF The tariff as passed and the long period of uncertainty preceding its passage have operated as depressing influences, but have not been as generally potent in the situation as other factors. I n contrast to the organic industry, the inorganic group, generally designated as “heavy chemicals,” lends itself readily to quantity production, at which America naturally excels, and for this reason it is not illogical that the tariff should occupy a position of somewhat secondary importance in the influences controlling the heavy chemical market. Marked exceptions to this general rule are to be noted in those cases where Germany, in particular, is able to provide her own raw materials, as in the manufacture of compounds of potash and barium. I n potash the lack of duty, especially on the crude salts, is operating as a very serious obstacle to expansion and even to continued operation of existing plants. Barium salts received protection to some extent, but it is believed by many makers of these compounds that even the advanced rate of duty as compared to the Underwood rate will not be sufficient to insure continued operation in the face of many other disturbing elements. The depressing effect of the uncertainty of the tariff was well illustrated by the general upward movement of prices after the final passage of the bill. No other upward movement has assumed such broad proportions since that which followed the war and the rapidly increasing foreign trade
INDUSTRIAL A N D ENGINEERING CHEMISTRY
January, 1923
which that brought about. This movement was so sudden and sellers were so poorly prepared to cope with the demand which caused it, that conditions became immediately congested and forced even further advances than the actual demand justified. However, this feature is being cleared away and the trend toward normal business is developing rapidly. CASEOF ARSENICTRIOXIDE One of the most interesting features of the heavy chemical market during the past year has been the behavior of arsenic trioxide. Production in this country has been always closely dependent on the output of copper from which it is a byproduct,, and on this account it has been necessary to import large quantities to eke out domestic supplies for use in insecticides. Recently, experiments have been completed under the supervision of the Department of Agriculture which have led to the recommendation of calcium arsenate as a means of destroying the cotton boll weevil. This opened an entirely new field for the consumption of arsenicals, which bids fair to eclipse all others and has caused widespread speculation in this product during the previous buying season -i. e., the winter of 1921-1922. Unfortunately, the financial condition of the farmers generally prevented the realization of the hopes of the speculators, and it is only now that prices are reacting normally to this influence.
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CYANIDES One of the most interesting recent commercial developments was in the field of cyanides. The manufacture of a low-grade cyanide from cyanamide of sufficient purity for most metallurgical operations has been put on a commercial scale, and has resulted in quite a saving to operators of cyaniding plants in the West.
PRESENT OUTLOOK HOPEFUL I n general, however, the year has been notable for the actual accomplishment of the long-expected turn in prices from a general decline to an average advance. Improvement in the financial condition of industry as a whole has been closely reflected in improvement in the chemical market. Buyers may be considered to have actually acquired the confidence so long lacking and so necessary to improved business. This confidence certainly is not as great as may be expected to grow from the present beginning, but nevertheless it is sufficiently well developed to lead to a decidedly more comfortable feeling throughout the trade. As yet few buyers are anticipating their wants for years ahead, but certainly they are anticipating for months now where they were formerly content to cover requirements in terms of weeks or even days. Certainly, there can be no room now for the widespread pessimism that characterized the situation of a year ago.
Commercial Developments in t h e Organic Chemical Industry, 1922 By Elvin H. Killheffer’ NBWPORT CHEMICAL WORKS, PASSAIC, N. J.
THE TARIFF REVIEW of the year 1922 by any organic chemical manufacturer leads inevitably to a consideration of the tariff and its making, which has been the largest single controlling factor, and will undoubtedly continue to be so for a considerable time to come. As everyone knows, the tayiff was certainly a very long time in the making, but after a number of years of uncertainty as to what its final form would be, a tariff bill was a t last passed, and whether it be good or bad, it will nevertheless mark a point from which will be noted either progress or the lack of it in the organic chemical industry in America. 1922 will, therefore, be remembered as a milestone for the dyestuff , and, in fact, the entire synthetic organic chemical industry in America. As everyone who is at all conversant with the subject knows, the first milestone of the industry was the situation created by the war. Supplies of dyes and medicines formerly imported were absolute essentials if our progress was to continue. New plants for the production of these materials came into being all over the country, and the cost of their erection was a decidedly secondary consideration. The materials they were to produce could easily be sold at a high enough price to offset for the time being the disadvantages of improper and uneconomical installations. Then the war ended. With it also ended that phase of the situation that made almost anything possible. It was realized that we must produce as good products as any country in the world and at reasonable prices. This naturally meant that the feverish
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Vice President.
development that had gone on before in an attempt to keep pace with the demand must cease immediately, and that in the future only such processes could be adopted and those installations made which after careful study and consideration showed a t least a reasonable chance of being economically sound. With this changed condition some of the earlier manufacturers, who had entered the field simply because of the attractive profits available a t the time, realized that they could scarcely continue unless by an entire reorganization of their plants, and so they quietly dropped out of the picture. Others tried to continue, only to lose everything they had previously made, and more besides. Those manufacturers who had gone into the thing more seriously in the first place, gave very serious thought as to the (‘how” of remaining in business and continuing to occupy a place in American industrial life. While making every effort to increase their efficiencies within their organizations, it was at once realized that some governmental protection also was needed if they were to stay in business long enough to reach a place where they could be really competitive with an industry so long established and so highly coordinated and organized as that of the Germans and the Swiss. As a result, much time and thought were spent in trying to devise some form of tariff protection which would foster the organic chemical industry, but which a t the same time would not be an onerous burden on other and more important industries which the newer one served. With this thought in mind, it was naturally very difficult
