EPDM:
THE CHEMICAL WORLD THIS WEEK
mercial Solvents' better second-half showing when earnings were up 25% over the year-earlier period after dropping 4 5 % in the first quarter. Hercules did not do so well in the second quarter. Earnings fell 10% from the second quarter of last year, after showing a 2% year-to-year gain in die first quarter of this year. The company attributes much of the decline to unexpectedly heavy startup expenses and some softness in olefin fiber sales. The less ebullient growth in manmade fiber production and shipments this year is reflected in American Enka's returns. For the first quarter, earnings were up 17%. But in the second quarter they just equaled the year-earlier three-month period. Du Pont has also slipped into a pattern of very modest earnings growth level. After gaining 19% for all of 1968 over 1967, first-quarter earnings were up but 3 % and second-quarter earnings but 4%. W. R. Grace seems to be the major chemical company in the most earnings trouble this year. The poor fertilizer season, continued lower earnings on the Grace Line, and poor results in Peru have combined to drop earnings 35% behind the 1968 pace at the half.
LPG:
Renewed Interest Chemical company purchasing offices welcome suppliers of liquefied petroleum gases (ethane, propane, and butane) this summer more than at any time in the past year. New requirements and renewal of contracts for current use spur this fresh interest in LPG. Nearly all LPG going to make chemicals is consumed on the Gulf Coast. Most of this is cracked to make olefins—ethylene, propylene, and butadiene—in this order of production as chemicals. Reasons for the renewed interest in LPG are couched in careful words by company managements. But one thing is clear—demand for ethylene derivatives has increased rapidly this past spring, forcing plant operators to run their cracking units nearer to capacity than they had hoped. The results: better-than-expected reductions in top-heavy LPG inventories, thoughts toward adding new ethylene capacity sooner than anticipated, and efforts to get new contract commitments before prices increase. Du Pont confirms that its purchasing department has been making inquiries regarding new LPG supplies. It says 8 C&EN JULY 28, 1969
Goodrich Enters
Monsanto ethylene plant Another look at LPG
that this, however, is merely a routine market check for 25,000 42-gallon barrels per day, and part of a longrange study of its future raw materials supply position. Du Pont has no comment on possible use of this relatively large quantity of LPG. The company points out that sites for new plants or expansions at existing plants will not be firmly selected until raw materials are available. About 700 million pounds per year of ethylene can be made from 25,000 barrels per day of a typical ethanepropane mix (30-70) in cracking plants now operating. The yield of ethylene can be increased in varying degrees by changes in operating conditions or by use of a higher ethane content in the feed, with lower yields of propylene and other heavier olefins, as well as aromatics resulting. Du Pont has a relatively new ethylene unit at Orange, Tex., whose capacity is a nominal 750 million pounds per year. The company may be finding that its ethylene capacity now is more limited than it anticipated, and that it will need this much more capacity soon. Other major chemical companies who produce ethylene on the Gulf Coast also are rumored to be looking for more LPG. Some new LPG purchases will replace existing contracts as they expire, and some will go to fill needs caused by incremental expansions over recent years. More of an unknown than potential uses is how much of the interest in buying LPG comes from efforts by purchasers and potential purchasers of ethylene to keep the future price in the 3 to 3.5 cent-per-pound range, or lower. If merchant ethylene producers don't hold the price line, goes the thinking, then buyers will build captive capacity with the raw material now committed.
B. F. Goodrich has finally made its long-expected move into the EPDM ( ethylene-propylene-diene monomer ) market. After more than 10 years of research and development and five years of joint effort with Italy's Montecatini-Edison, the rubber company's chemical division has started marketing the highly resistant rubber. But BFG Chemical won't be producing EPDM until it can build facilities, construction plans for which are being made for the Orange, Tex., plant site of Ameripol, Inc., a wholly owned BFG subsidiary formerly called Goodrich-Gulf Chemicals Co. Until the company can produce its own EPDM, it will sell product made to BFG specifications by MonteEd. Company president T. B. Nantz says the company is "more than pleased with the quality of product which Montecatini is sending" and believes "their current production rate will be sufficient to meet our customers' demands until we get the Orange plant built and on stream." BFG Chemical has released no figures for its planned EPDM facilities at Orange. However, speaking last month to the Southwest Chemical Association, Edward J. Broadbeck, of Copolymer Rubber & Chemical, projected that BFG's then-rumored EPDM capacity would be 55 million pounds per year by 1972 (C&EN, June 23, page 2 6 ) . U.S. producers of EPDM are Copolymer, Du Pont, Enjay, and Uniroyal, with a combined annual capacity of 225 million pounds. Although
Enjay EPDM plant A demand increase
these producers are operating b e b w full capacity, Mr. Broadbeck predicts that by year's end output will be approaching capacity. BFG Chemical estimates that U.S. consumption of EPDM, excluding exports, will increase to 600 million pounds by 1975. In making its move into the EPDM market, BFG has apparently solved some of the problems it has had in its decade of EPDM history with polymerization and with selecting a third diene monomer to combine with ethylene and propylene. BFG Chemical doesn't say what third monomer it is using, but one EPDM industry spokesman speculates that the company is going with ethylidene norbornene, as have most other U.S. producers. Hexadiene and dicyclopentadiene are also used to some extent by other producers as a third monomer. The rubber industry expects demand for EPDM rubbers to increase because of their ability to accept high loading and because of their improved resistance to heat, ozone, and weathering when compared with natural rubber and styrene-butadiene rubber.
OIL IMPORTS:
For and Against If the Federal Government alters or eliminates the mandatory oil import program to please petrochemical producers, it will be killing the goose that lays the golden egg, say eight U.S. oil companies. The eight—Ashland Oil, Atlantic Richfield, Cities Service, Marathon Oil, Mobil Oil, Standard Oil (Ind.), Standard Oil (Ohio), and Union Oil—claim that an uncontrolled influx of cheap foreign crude will discourage exploration for new oil reserves within the U.S. and possibly place the nation at the mercy of foreign governments. Furthermore, according to the eight, there is a "basic contradiction" in the chemical companies' position (C&EN, June 30, page 22). They hope to continue to benefit from the fruits of the oil import control in the form of continued low-cost domestic feedstock while increasing their "already inequitable share" in the very incentives which make these feedstocks available, they claim. U.S. petrochemical makers do not, in fact, want naphtha-rich foreign crude as a raw material, the eight say, but prefer gas liquids-rich U.S. production. "With few exceptions/' the oil companies add, "chemical companies do not use their [import] licenses to import petrochemical feedstocks. Instead, they import crude oil which they trade for domestic raw materials such as ethane and propane." The oil producers claim that in-
creased competition in world petrochemical markets—and the resulting leveling off of the U.S. favorable balance of trade in petrochemicals which petrochemical makers bemoan— is not a problem that can be solved by changes in oil import controls. Their counterargument states, in essence, that economic revival in Europe and Japan, the conversion of these nations from coal- to oil-based economies, and the high profitability of petrochemicals are factors that have increased competition from abroad. However true, none of these arguments are new. In fact, the booklet in which they were most recently set forth states that its existence came about as a result of "current reexamination of the conclusions of a study conducted by the Stanford Research Institute in 1967." SRI informed the eight that its conclusions "for both the present and the future are unchanged." Meanwhile, in Washington last week, the Chemco Group of integrated petrochemical makers was hard at work building a case for the execution of the goose before Sen. Philip A. Hart's Antitrust and Monopoly Subcommittee, which is looking into competition in the petroleum industry. After listening to the Chemco Group's testimony, the Michigan senator remarked to the industry executives, "I'm glad I'm on your side." The Chemco Group had one major complaint: It is an unintended and unnecessary victim of the oil import program. It has one basic recommendation: Drop the quota restrictions on petroleum raw materials imported for chemical production. Kenneth H. Hannan, vice chairman of the board of Union Carbide, served as spokesman for the nine Chemco members—Celanese, Dow, Du Pont, Eastman Kodak, Monsanto, National Distillers and Chemical, Olin Mathieson Chemical, Publicker Industries, and Union Carbide. Hannan said that the U.S. petrochemical industry needs the freedom to choose its raw materials from anywhere in the world at competitive prices to ensure a viable domestic industry competitive with foreign producers. The Chemco Group would have the controls rolled back accompanied by effective measures to control flow of by-products from chemical production into fuel and energy markets; allowing some companies the right to import on continued quotas or other government action if these companies so wanted; eliminating the quotas on a specific timetable; and implementing as quickly as possible an import-for-export program and expanded petrochemical quotas.
These changes could be put into effect without adverse effects on other interests, Hannan said, because the needs of the petrochemical industry are relatively small—700,000 barrels out of a total U.S. demand for petroleum and natural gas liquid of 14 million barrels per day. Use of foreign feedstocks would rise gradually, and the program would make the petrochemical industry an even better customer of the U.S. petroleum industry. The Chemco Group included in supporting its position arguments used for years: • Petrochemical contribution to U.S. balance of trade. By 1980 the petrochemical industry's contribution could hit $2.8 billion, fully $1 billion more than under the present quota system. • National security. A strong petrochemical industry is essential to U.S.
Sen. Philip Hart Glad to take sides
defense, but industry facilities are bunched together near feedstock supplies. • Expected uneconomic prices for domestic feedstocks vs. lower-priced foreign raw materials. Price disparity between domestic and foreign raw materials will widen, making it difficult to compete in both foreign and domestic markets. Subcommittee economist John M. Blair speculated that perhaps the petrochemical firms are giving too much concern to foreign competitors when on the domestic scene oil companies are making sizable inroads into petrochemicals business. Hannan replied that if petrochemical firms had access to the foreign feedstocks they want they would not be concerned about the oil companies. JULY 28, 1969 C&EN 9
