MARKETS
Polyether Competition Gets Rough Industry capacity is 230 million pounds, consumption this year 71 million pounds. Balance won't be hit until 1965 Competition gets rougher by the day in the polyether business. To stay ahead of the game for the next few years, firms will need expert quarterbacking, some fast broken-field running, and a few good down-field blocks. Now that Allied Chemical has put an entry in the line-up (C&EN, July 3, page 27), the seven major producers of polyethers for urethanes have the potential to make 230 million pounds a year of products. If urethanes manage to live up to market forecasts, polyether supply and demand will slip into balance around 1965. And while demand catches up with supply, polyether producers will be walking a tightrope where one slip could be fatal. Two potential problems loom large: Temporary excess
capacity could trigger disorderly price cuts; a highly competitive market might put a squeeze on quality standards. Triple by 1965. Consumption of polyethers for urethanes should run about 71 million pounds this year. This is 37% higher than last year's estimated consumption, and 87% above demand in 1959. And growth will be no less rapid in the immediate years ahead. By 1965, polyether consumption in urethanes should soar to about 200 million pounds, almost triple the 1961 level. In flexible urethane foam, polyethers account for 65 to 70% by weight of the finished product. Polyethers have taken over almost all of the business once held by polyesters in flexible foam. This year, about
90% of the flexible foam made in this country will be based on polyethers. While polyesters will probably always be preferred in some special applications, lower cost polyethers will be used in 95 to 98% of all flexible foam turned out in 1965. Demand for flexible urethane foam should total about 105 million pounds this year. The 200 million pound mark should be reached in 1965. Although flexible foam is still a youngster, it is the most mature of urethane end uses. The consumption pattern for flexible foam is fairly well defined, and current market forecasts should prove to be reasonably accurate. Rigid urethane foam contains more isocyanate and requires more blowing agent than flexible foam does. Rigid foam formulations, therefore, call for
Demand for Polyethers for Urethane May Hit 200 Million Pounds by 1965 200
(U.S. polyether consumption, millions of pounds) For Coatings & Elastomers H H For Rigid Foam |
I For Flexible Foam
150
100
50
0 1958 Source: C&EN 34
C&EN
JULY
1959 Estimates 31,
1961
1960
1961
1963
1965
Present Capacity Is Enough to Handle 1965 Demand {Annual capacity of major producers of polyethers for urethanes in millions of pounds) UNION CARBIDE CHEMICALS Institute, W.Va. Charleston, W.Va. DOW CHEMICAL Freeport, Tex. WYANDOTTE CHEMICAL Wyandotte, Mich. Washington, N.J. ALLIED CHEMICAL, Solvay Process Division Baton Rouge, La. OLIN MATHIESON Brandenburg, Ky. JEFFERSON CHEMICAL Austin, Tex. Con roe, Tex. ATLAS CHEMICAL Wilmington, Del. Total Source:
80 60 30
20 15 15 10 230
C&EN estimates
less polyether, about 0.45 to 0.50 pound per pound of foam. Polyesters hold about half of the rigid business, but are gradually losing ground to the polyethers. By 1965, some 80 to 90% of rigid output should be based on polyethers. While polyethers are expected to continue their invasion of the rigid field, there is at least one factor that could upset the predictions. So far, polyethers cannot be used to make flame-resistant foam. If flame resistance becomes a must for foams to break into some construction applications, chances are that polyesters would have to be used to obtain the necessary resistance. Achilles' Heel. Output of rigid urethane foam was about 12 million pounds last year, should climb to about 20 million pounds in 1961. In the great forecasting game, most market researchers place 1965 demand for rigids in the neighborhood of 100 to 125 million pounds. But the forecast for rigids could well be the Achilles' heel of the urethane business. Some 10 to 20 million pounds of the 1965 market for rigid foam is expected to come from applications in construction. Here, forecasters have the unenviable job of looking at a potential market of over 1 billion pounds annually and trying to pinpoint the place for their product. Key variables such as acceptance by builders and the adoption of new building codes are tough to gage accurately.
Failure to break into industrial and home construction could mean that rigid demand will plateau in a few years. On the other hand, successful entry could cause a market explosion and create large outlets for polyethers and other urethane raw materials. In urethane coatings and elastomers, polyesters are preferred over polyethers. Consumption of polyethers in coatings and elastomers was probably less than a million pounds in 1960. Of the estimated total market for polyethers in 1965, some 200 million pounds, about 10% should be allotted to uses in coatings and elastomers. Major Seven. The polyethers used in urethane foam are derivatives of propylene oxide: oxide adducts, polypropylene glycols, and glycol adducts. The seven major suppliers that have the biggest stakes in the field are Union Carbide Chemicals, Dow, Wyandotte, Allied, Olin, Jefferson, and Atlas. While the combined capacity of these firms, some 230 million pounds a year, is more than three times current demand, the picture is not so bleak as it seems. Polyether plants turn out a range of products, and effective operating capacity is less than the rated figure because throughput will vary with the type of material being produced. A small polyether plant can be put up with relatively little investment. But it is not likely that the field will be flooded with producers. Observers point out that a captive source of propylene oxide is almost a must to compete effectively. And a propylene oxide plant is a major venture. Still, the attraction of the rapidly growing urethane field will probably lure additional firms into the raw materials picture. Nopco Chemical, now building an isocyanate plant, is considered in the trade as a prime candidate for polyether manufacture. Such a move would give Nopco a basic position on both sides of the urethane molecule. At present, Allied is the only U.S. firm that supplies all major components for urethane foams. But considering the competitive pressures building up within the industry, it is likely that other firms will round out their line by entering production of either isocyanates or polyethers. Polyethers for urethanes are priced from 23 cents a pound up to 29 cents. But the most popular materials, polypropylene glycols, ranging in molec-
ular weight from 2000 to 3000, sell for 2 3 1 / 2 cents in tank cars. So far, the price structure on polyethers has held up well. While there is little "water" in present prices, there is room for a reasonable profit, trade sources say. But what about future prices? Producers say there is no incentive to trim prices since cheaper polyethers would have little effect on urethane economics. Nevertheless, the presence of considerable excess capacity, even though markets are growing rapidly, sets up the danger that prices could be a problem. One factor that could change polyether economics is the development of a direct oxidation process to make propylene oxide. Though no one is using direct oxidation now, there is a lot of research going on. Producers are wary about unfounded price cuts that could hurt the development of the urethane industry. They point out that lower prices might force a curtailment of research, development, and technical service. This could hinder the proper development of new applications.
WEEK'S PRICE CHANGES July 24, 1961 Advances Gum rosin, water white, cwt. Nickel salts, lb.: Sulfate Chloride Carbonate Acetate Formate Oxide, black Oxide, green Fluoborate
CURRENT
PREVIOUS
$13.25
$13.00
0.30 0.397 2 0.83 0.72 0.78 0.92 0.91 0.55
0.28 0.37 0.7872 0.687 2 0.72 0.85 0.84 0.537 2
Declines Acrylonitrile, lb. Benzene, gal. Camphor, natural,
$ 0.14V 2 0.31 0.60
lb.
Coconut oil, lb. p-Cresol, lb. Linseed oil, lb. Menthol, Brazilian, lb. Tin, metal, lb. Tin, salts, lb.: Potassium stannate Sodium stannate Stannous chloride, anhyd. o-Toluidine, lb. Mercury, flasks,
76-lb. JULY
$ 0.23 0.34
o.ir/ 2
0.45 0.157 2
0.63 0.117* 0.49 0.167 2
7.10 1.157,
7.20 1.167s
0.839
0.844
0.704
0.709
1.087 0.25
1.093 0.28
1.95
1.97
31, 1961
C&EN
35
