INDUSTRY & BUSINESS
Polypropylene makers need more capacity Booming usage already taxes capacity; possible propylene shortage may affect price structure U.S. polypropylene producers, who have long suffered from overcapacity, now face a need to expand. Demand for polypropylene in 1970 will be about 1 billion pounds. Estimates for 1975 range between 1.7 and 2 billion pounds. These are sizable jumps from the 370 million pounds consumed last year and the 500 million pounds that may be consumed this year. They're sizable jumps also in view of the 570 million pounds of total capacity that the U.S. has today. Producers of polypropylene have been accused frequently of having built themselves too much capacity in the early sixties. It wasn't until 1964 that demand had grown to an extent that gave them a chance to operate their plants at higher than 507c of capacity. The critics of overcapacity overlooked, however, a brighter side to the polypropylene picture—its sales growth. From 1960 through 1965, consumption of polypropylene grew at an average annual rate of 60%—from 35 million pounds to 370 million last year. The rate of growth in the next five years will be slower—about 227c a year. With existing capacity, producers will be hard put to turn out the projected demand of 500 million pounds this year. Name-plate capacity is 570 million pounds. But because of the various grades and product mixes involved in producing polypropylene, true capacity is only 8 5 7 of this figure, or about 485 million pounds. Makers expand. Polypropylene makers, however, don't intend to be caught short. Alamo Industries and Rexall Chemical have already announced expansion plans—Alamo, 17 million pounds; and Rexall, 10 million pounds. Other producers are either contemplating or are already debottlenecking their plants to add more capacity. And it's a good bet that several of these companies are adding new production lines in the process. One producer says that polypropylene capacity could double without any producer breaking new ground at a plant site. In polypropylene plants, production of the resin comes from a series of parallel lines. By adding one line a producer can increase capacity by 15 to 25 million pounds a 30 C&EN MAY 30, 1966
year depending on the size of the operation. As another producer puts it, "Polypropylene plants were built with rubber walls to accommodate expansion." Carl Setterstrom, vice president of marketing at Rexall Chemicals, feels that polypropylene copolymers (such as propylene-ethylene) will be major factors in polypropylene's growth. Other producers are also bullish about the impact of copolymers, but not as much as is Mr. Setterstrom. He projects that consumption of copolymers will be about 500 million pounds in 1970. Other producers, however, fo resee a 250 to 300 million pound market for copolymers in 1970. Who will be right is anybody's guess. But even the lower estimate is a substantial increase over the 50 million pounds
consumed last year and the 70 million expected this year. Copolymers contain 90 to 987c propylene and from 2 to 107c ethylene or other olefin. Rexall says that the projected increased use of copolymers follows from their property advantages over homopolymers. In general, homopolymers are stiff, hard, and have high deflection temperatures. Copolymers give increased toughness, impact resistance, and dimensional stability, while retaining the "living hinge" effect of polypropylene. The big outlets for polypropylene have been injection molding, fiber, and film and sheeting. These will continue to be big users of the resin. Injection molding accounted for about 155 million pounds in 1965 and will increase to about 320 million pounds
Price of polypropylene may stabilize after a five-year decline Average selling price (cents per pound)
Source: U*S, Tariff Commission *Rexaii Chemicals
,
Average selling price is computed by dividing value of sales by sales in pounds
STRANDS. Operator checks solidified strands of polypropylene as they leave water bath at Shell Chemical's Woodbury plant in New Jersey
vantage of polypropylene's unique properties and thus move it into its own niche in the expanding plastics market. As a result, prices had to be lowered so that the resin could compete with polyethylene. But the price of the resin should stabilize, helped by the tight supply situation that's in the making. And polypropylene can now stand on its own merits. It now has its own specialized, high-priced uses—in fibers and films—and is increasing its penetration into the plastics market in the form of copolymer, which costs more than the homopolymer. In general, polypropylene has been selling well below its list price. Indications now are that prices in general in the polypropylene market are on the rise. Tight supply. Another factor that may affect the price of polypropylene is the tight propylene supply situation. With more and more refiners switching to hydrocracking processes, this situation may get even tighter. Hydrocracking essentially eliminates production of lower olefins and produces more paraffins than does catalytic cracking. Therefore, hydrocracking refiners will use more propylene to alkylate the paraffins to give higher octane gasoline components. In the past, the value of propylene to refiners was based on its value as polymer gasoline feedstock. However, the use of propylene for alkylate will increase its value to the refiner over polymer gasoline value. Therefore, a price increase is likely for propylene used as a chemical raw material. This tight propylene supply situation might also affect polypropylene producers' expansion plans. The deciding factor in locating future polypropylene plants might be the availability of propylene nearby.
in 1970. Usage in fibers was about 90 million pounds last year and will rise to about 250 million pounds in 1970. And film and sheet should take about 200 million pounds of the resin in 1970, compared with about 55 million pounds last year. Mr. Setterstrom says that these markets will be big for copolymers. He predicts that 180 million pounds of copolymers will go into injection molding and sheeting in 1970; fibers will consume 40 million pounds; and film 75 million pounds. Despite polypropylene's rapid growth in use, producers aren't too
happy about profits. They say that prices have deteriorated much faster than they should have. The average price for the resin fell from 41 cents a pound in 1960 to 24 cents in 1965. A spokesman for one major producer says that the price for polypropylene dropped so fast that the price now is what it should be five years from now. This same spokesman says that the major cause of the rapid price deterioration was poor marketing. When polypropylene was first introduced, producers tried to push it into markets already held by lower-priced polyethylene. They failed to take full ad-
U.S. polypropylene
Nine U.S. producers of polypropylene are operating their plants at 88% of capacity, currently 570 million pounds
Company
capacity Location
Alamo Industries 1 Avisun Dow Enjay Hercules Novamont Shell Texas Eastman Rexall2
Capacity (millions of pounds)
Houston, Tex. New Castle, Del. Torrance, Calif. Baytown, Tex. Lake Charles, La. Neal, W.Va. Woodbury, N.J. Longview, Tex. Odessa, Tex.
Total
50 100 30 80 120 40 80 30 40 570"
1 A d d i n g a n o t h e r 17 m i l l i o n p o u n d s by end of 2 year. A d d i n g a n o t h e r 10 m i l l i o n p o u n d s t h i s year.
Source:
C&EN e s t i m a t e s
U.S. polypropylene Consumption
market
U.S. polypropylene end-use breakdown
1960-66
Capacity
% Utilization
1965
1970
(%)
(%)
1960
35
170
20%
Injection molding
42%
32%
1961
58
325
18
1962
107
360
30
Blow molding Filament and fiber
1.5 25
10 20
1963
146
465
32
Film and sheet
15 3
25 3
1964
260
500
52
1965
370
525
70
1966
500
570
88
Pipe and profiles Wire coating
0.5
Miscellaneous (including exports) Total
Source: Rexall C h e m i c a l , U.S. m i s s i o n , a n d C&EN e s t i m a t e s
Tariff
3
13 100.0
7 100
ComSource:
C&EN e s t i m a t e s
M A Y 30, 1966 C & E N
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