Industry / Business
Shortages ahead for vinyl acetate users U.S. producers face lack of capacity, rising feedstock costs, plant breakdowns in period of sharply rising demand One of the first organics off the mark in the post-1970 business recovery, vinyl acetate ran way ahead of growth predictions to its present 1.5 billion pound-per-year production clip in the U.S. Outpacing companies' market plans by at least a year, the polymer precursor now probably brings in more than twice the $30 million in merchant sales dollars it did in 1970. But vinyl acetate also illustrates the current squeeze in the chemical business. It reflects just about every major stress that has hit the chemical industry in the past year. Problems include a capacity pinch as demand keeps climbing, sharply escalating feedstock costs, traceable largely to the natural gas shortage, plant breakdowns, a recent history of prices too weak to foster expansion planning or competitive bidding for resources, a sharp price climb that may have unpredictable effects on end-use demand, and a tantalizing export lure brought about by a worldwide shortage. The outlook this year and next is for these pressures to continue with some compensating movement. Producers predict flat or slightly falling U.S. production, lower exports to enable at least level or slightly rising (up to 6%) domestic shipments, a continued squeeze in feedstock acetic acid and ethylene, and sharply higher product prices—perhaps 14 cents per pound, 5 cents over the 1973 level, or higher. No major addition to present U.S. vinyl acetate capacity of between 1.5 and 1.6 billion pounds (even with remaining incremental increases) will come on stream until Union Carbide completes its 350 million pound-peryear plant at Texas City, Tex., in late 1975. Celanese may undertake a large expansion, however, if it can line up feedstock and if markets continue strong. The only new acetic acid plant now being planned in the entire world, according to Carbide product manager Bart D. Pattie, is a Soviet facility scheduled for 1976 or 1977. Carbide will add 50 million pounds to its ca10
C&EN March 4, 1974
pacity at Texas City by the first half of 1975, and may make similar additions to capacity at the same site later. The vinyl acetate market began getting tight in 1973's fourth quarter. Production is on allocation, according to Celanese, the largest producer. This capacity pinch has come less than a year after guarded optimism on product availability and only two years after a serious glut. Part of the explanation for these imbalances is a technology turnover. Since 1969, most vinyl acetate output has been switched from acetylenebased plants to ethylene-based plants. Doubling capacity and reducing the number of producers, the large new units created excess supply in 1970 and 1971, when production grew 10% and 16%, respectively. But after production spurted 29% in 1972 and 23% in 1973 (by Tariff Commission figures), the excess capacity evaporated. A year or two ago, demand was forecast to grow at an average of 10% per year. What surprised planners has been a sharp stepup in demand for vinyl acetate-based polymers and copolymers, which take up all the vinyl acetate produced. Both dominant end-use markets—adhesives and coatings— have expanded rapidly. For example, polyvinyl acetate, much of it with a small percentage of copolymer acrylates, has made continued headway in latexes that substitute for oil-based alkyds in paint. Carbide product manager Charles B. O'Rourke says this replacement trend, in which Carbide has a strong position, shows no sign of letting up and should insulate vinyl acetate from the effects of any prolonged decline in housing starts. Polyvinyl acetate, used largely in adhesives and paint, consumes more than half of the vinyl acetate produced. Fast-growing polyvinyl alcohol, used to make polyvinyl butyral and formal, takes upwards of 20% of vinyl acetate production (polyvinyl alcohol is made from polyvinyl acetate). Its largest use is in textile sizing. The balance of vinyl acetate production goes largely into ethylene/vinyl acetate copolymers, used in hot-melt adhesives, and to vinyl chloride/vinyl acetate copolymers, used in flooring and phonograph records. Captive use of vinyl acetate always has been large but has fallen in recent years. Merchant sales are up from 35% of total production in 1968 to what Celanese estimates as about 53% last year.
Merchant sales in the U.S. hovered between $25 million and $30 million a year from 1965 to 1970 but have risen sharply since. Tariff Commission figures indicate they totaled $37 million in 1971. Last year, merchant sales reached about $48 million. Total vinyl acetate sales in 1973 got a large boost from exports. Carbide's O'Rourke estimates that vinyl acetate
Vinyl acetate may level out this year and next... Millions of pounds
1500
pp»»!
••••
1200
900
600
300
1965
1967
1969
1971
1973
1975·
a Industry estimate. Source: Tariff Commission
.. but capacity won't increase much either Millions of pounds
Borden Celanese
Geismar, La, 150 Bay City, Tex.; Clear Lake, Tex. 650
Du Pont Laporte, Tex. 350 National Starch & Chemical Long Mott, Tex. 60
Union Carbide U.S. Industrial Chemicals TOTAL
Texas City, Tex. 350 a Laporte, Tex.
375 1935
a Due on stream in late 1975, this plant represents the only domestic capacity expansion now in the works.
exports tripled between 1970 and 1973, reaching close to 300 million pounds. The reason is that spot prices abroad were as high as 80 cents per pound and current European contract prices are about 17 cents per pound. The export incentive may lessen this year as U.S. prices rise, but Mr. O'Rourke thinks that foreign buyers might still soak up 350 million pounds this year if they can get it. For that matter, a source at Celanese says that U.S. demand for vinyl acetate would remain unchanged even if prices doubled. As it is, the price in the eastern U.S. has jumped 25% to about 12 cents per pound this year. One price factor in vinyl acetate's favor, a number of marketers point out, is that the cost of vinyl acetate usually accounts for just a small fraction of the cost of its end products. Despite higher prices, vinyl acetate remains a low-value ethylene derivative, Mr. O'Rourke notes. This puts vinyl acetate producers at a disadvantage in bidding for feedstocks, and will continue to do so until its price has reached equilibrium with other derivatives. Although the price of vinyl acetate has recovered since 1968, it's still below the 14.5- to 17.5-cent range of the early 1960's. Feedstock availability is one of vinyl acetate producers' key worries at present. The recent price boost merely passes along higher feedstock costs, Celanese claims. Vinyl acetate lies squarely in the path of the natural gas crunch, since natural gas is a basic raw material for acetic acid and ethylene. Alternative gas-based fractions, such as ethane and butane, can be used for making acetic acid. Celanese has at least two options in this regard. Industry sources believe that Borden and National Starch & Chemical, small vinyl acetate producers with fewer options, were unable to run their plants at capacity in 1973 for lack of raw materials. Plant equipment breakdowns hit some producers last year, too. Celanese lost a month's output at one of its vinyl acetate plants last fall for this reason. How long vinyl acetate plants can produce at their current flat-out pace without further breakdowns is uncertain. Another question nagging market analysts is how consumers of such end products as house paint will react to higher prices. If they should react by painting less frequently, for example, the current growth in demand for vinyl acetate might be curbed. Marketers confess bafflement as to the answer to this question since elasticity of demand on price upswings generally has not mattered much in recent years in the chemical industry. Marketers will be paying close attention to end-product buyers' reactions in 1974 and 1975, lest a dependable plus factor for vinyl acetate joins the present load of negatives.
Laboratory chemicals supply tightens Supplies of laboratory chemicals are feeling much the same pinch that is now widespread throughout industrial chemical markets. Some suppliers of lab reagents and solvents claim that their own suppliers have cut back deliveries of such key solvents as acetone and benzene by as much as 60 to 70%. Acids and bases are likewise tight. Fisher Scientific, for one, says it is receiving "substantially less" acetone and isopropanol than it was getting a year ago. David A. O'Connell, purchasing manager for Fisher's chemical operations, adds that benzene deliveries, too, are running well below last year's levels, that Fisher is getting only 80% of the methanol it bought last year, and that acetic acid is back ordered from suppliers by about two months. Fisher also is receiving only about 80% of its chlorine and caustic soda needs, Mr. O'Connell complains, and even then deliveries are about four to six weeks behind schedule. One result is that Fisher is curtailing shipments of lab solvents in 55-gallon drums to ensure that it has enough to take care of its customers for pint, quart, and gallon quantities. If solvents supplies don't increase, Mr. O'Connell fears, Fisher either may not be able to accept orders for quantities greater than what it sold in 1973 or will be forced to allocate deliveries to its customers. Similarly, MC&B Manufacturing Chemists says that its suppliers have cut back deliveries of solvents to 60% of what it was getting last year "across the board," with acetone and isopropanol in tightest supply. To stretch supplies, MC&B has stopped packaging in five-gallon cans, says senior vice president Charles H. Campbell. Mr. Campbell also notes that the prices it pays for material have jumped by as much as 100% (for acetic acid, for instance), with 50 to 75% increases being common. MC&B now quotes prices to its customers only at the time of delivery because bulk prices are changing day to day. Mr. Campbell hopes that priorities for petrochemicals set by the Federal Energy Office will help ease the supply situation somewhat. And he feels that the recent relaxation of price controls on organic chemicals may help even more by providing an incentive to producers to make more product available. Although lab chemical suppliers generally paint a dark picture, at least some major users of laboratory reagents and solvents claim they are finding ways to cope with shortages at least so far. Hoffmann-La Roche and Merck both admit that they are having to scramble to get adequate supplies but claim that they are managing to get by at present. Ciba-Geigy Pharma-
ceuticals says it is having difficulty finding methanol, ethanol, isopropanol, and benzene and is taking anything it can get. Hercules says that its field laboratories have had problems obtaining solvents, particularly acetone and benzene, since last July. But it has worked out the problem by purchasing solvents in bulk and breaking them down into smaller containers for distribution to the labs.
Man-made fiber output hits new high Production of man-made fibers hit new highs last year, both in the U.S. and worldwide. U.S. output of all such fibers totaled 8.35 billion pounds, an increase of 14% from the year before, according to the Textile Economics Bureau. The only real weak spot was rayon, down 7% from 1972's level to 895 million pounds. Production of rayon staple and tow dropped only slightly to just under 700 million pounds, but industrial and textile rayon yarns slumped by 21% to 198 million pounds, only half what was produced a decade ago. On the other hand, 462 million pounds of cellulose acetate fiber was made in 1973, up 8%, following a decline of 10% in 1972. And strong gains were made across the board for the noncellulosics: polyester up 24% to 2.9 billion pounds; nylon up 10% to 2.17 billion pounds; acrylics up 19% to 742 million pounds; olefin yarn and monofilaments up 22% to 424 million pounds. Textile glass fiber output increased 20% to 689 million pounds. Capacity limitations and feedstock shortages may be stunting further near-term growth for the noncellulosics, however. Polyester production in last year's fourth quarter was 15% ahead of a year ago but essentially unchanged since the first quarter. And fourth-quarter nylon output, up 5% from a year earlier, also changed little during the course of 1973. Also heartening to U.S. fiber producers was a marked drop in imports of man-made fibers last year. Although imports of rayon and acetate edged up 5% to 65 million pounds, imports of noncellulosics were off by 23% to 254 million pounds. Noncellulosic imports had hit a peak of 329 million pounds in 1971 and 1972, after having climbed rapidly from just 100 million in 1969. Meanwhile, U.S. exports of noncellulosics rose to an all-time high of 360 million pounds, up 38% from 1972. Worldwide, man-made fiber output totaled 24.65 billion pounds, the Textile Economics Bureau estimates, 13% higher than in 1972. Outside the U.S., production of rayon and acetate climbed 5% to 6.74 billion pounds; production of noncellulosic fibers (other than olefins and textile glass) was up 19% to 10.73 billion pounds. March 4, 1974 C&EN
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