Ethylene oxide and glycol to get tight Consumers of ethylene oxide and ethylene glycol seem destined to be an unhappy lot. For the past two years, they were unhappy because oxide and glycol supplies were tight and they couldn't get enough material to meet their demand. Now, oxide and glycol supplies are more than adequate. But consumers aren't particularly happy because the adequate supplies only reflect that their own demand is off in the face of the business slump. Next year, however, they can become unhappy again for the same old reason. Oxide and glycol supplies likely will become tight again and will remain tight for at least two years. That, at least, is how S. C. ("Chuck") Johnson sees it. Johnson, strategic product manager for ethylene oxide/glycol at Union Carbide, told a recent workshop meeting of the Chemical Industry Association at Tamiment, Pa., that he expects the ethylene oxide market to start getting snug in early 1976 and to become really tight by the end of the year. The market, he says, will remain tight at least until the end of 1977, when two huge new plants are scheduled to come on stream. Beyond 1977, Johnson says, predictions become less certain. However, he expects that a reasonable balance between supply and demand is possible if industry sees fit to continue installing new capacity as it is needed. This will be possible, he adds, only if price increases are adequate enough to cover producers' increasing costs of raw material, energy, environmental protection, and the rapidly rising costs of building new oxide units. One of the new units that is scheduled to come on stream by late 1977 is Oxirane's 800 million lb-per-year ethylene glycol plant. This plant, which the
company will build at Channelview, Tex., will be unique. It will make fiber-grade ethylene glycol directly from ethylene without going through ethylene oxide. The glycol output from this plant will mean that the equivalent of about 550 million lb of oxide from other units will be available for nonfiber markets. And these markets also will be hungry for raw material by the time the Oxirane plant comes on stream. The only other completely new unit now on the drawing boards is the 500 million lb-per-year ethylene oxide unit that Union Carbide is building at Taft, La. When this unit comes on stream, planned for early 1977, it will boost Carbide's total ethylene oxide capacity to 2.5 billion lb, making the company far and away the largest of the 12 oxide producers. Other than the new efforts of Oxirane and Carbide, only small incremental expansions are in the works for ethylene oxide. Texas Eastman put on stream a 100 million lb expansion at Longview, Tex., in April, raising its oxide capacity there to 140 million lb annually. Carbide also has a series of small expansions planned for 1975. One is a 50 million lb addition to its 600 million lb-per-year plant at Ponce, P.R. Expansions at Taft, La., and Seadrift, Tex., will bring total capacity of these two Gulf Coast locations up to 1.35 billion lb by the end of the year or early 1976. By the end of the year, then, U.S. ethylene oxide capacity, which stood at 4.77 billion lb at the end of 1974, will exceed 5 billion lb. So far, however, this new potential hasn't shown up in production statistics. Through the first three months of the year, ethylene oxide output was 925 million lb, according to the International Trade Commission. This is 3.3% below the pace set during the first quarter of 1974, and nobody seriously believes that even this much oxide is finding its
Ethylene oxide capacity is 5 billion lb Millions of lb
BASF-Wyandotte Calcasieu Chemical Celanese Dow Chemical Northern Natural Gas Olin PPG Industries Shell Chemical Sun Olin Texaco Texas Eastman Union Carbide
Location
Capacity
Geismar, La. Lake Charles, La. Clear Lake, Tex. Freeport, Tex. Plaquemine, La. Joliet, III. Bradenburg, Ky. Beaumont, Tex. Guayanilla, P.R. Geismar, La. Claymont, Del. Port Neches, Tex. Longview, Tex. Ponce, P.R. Seadrift, Tex.\ Taft, La. f
TOTAL a Includes expansions scheduled for completion thisyear.
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C&ENJune 16, 1975
265 165 300 200 400 240 110 85 300 300 110 450 140 650* 1350* 5065
Ethylene oxide growth expected to continue Production, billions of lb 6.0
5.0
4.0
3.0
2.0
0 1964
66
68
70
72
74
76
Source: Union Carbide
way to market. The explanation lies in ethylene glycol production statistics. Glycol production through the first three months is running a hefty 14% ahead of last year. But everyone knows that glycol demand isn't up 14%. Johnson explains that the excess glycol output is going into inventory. "When demand is down and you want to keep your oxide units running, you convert it to glycol and put it into inventory. That's the traditional way of storing oxide equivalents," he says. "We know that this year's glycol production isn't a reflection of the market." Next year, however, the story may be different, especially if the anticipated economic recovery actually occurs. For oxide and glycol producers, the timing and recovery rate of the textile industry is all-important because polyesters are creeping up steadily on antifreeze as the leading market for
Fiber-grade glycol will take increasing share of ethylene oxide output SHARE OF ETHYLENE OXIDE CONSUMPTION 1980 1972 1974
1968
GLYCOLS, total ~63% Antifreeze and coolants 33 Fiber-grade glycol 13 Industrial and export 8 Di-, tri-, and tetra glycols 9
67% 30 18 11 8
65% 28 21 8 8
~62% 23 23 8 8
DERIVATIVES, total Surfactants Glycol ethers Ethanolamines Others
33% 13 7 6 7
35% 11 7 6 11
38% 11 6 6 15
Source: Union Carbide
37% 13 7 7 10
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80
glycol and oxide. In 1968 fiber-grade glycol accounted for only 13% of total oxide consumption whereas antifreeze and coolants took a dominant 33%. By last year, fiber-grade glycol had in creased its share to 21% and antifreeze had dropped off to 28%. By 1979 or 1980, Johnson expects fiber-grade gly col demand to catch up with anti freeze. Both should account for 23% of oxide consumption by then. Fiber-grade glycol demand grew about 20% per year from 1968 to 1972. Johnson says that this rate may be re peated during the first half of the tex tile industry recovery. After that, how ever, he expects a sustained growth rate of only half that amount through the 1975-80 period. Meanwhile, output of antifreeze and coolant glycols is expected to grow about 3 to 4% per year. Prices will in crease, but Johnson doesn't expect this to have much of an effect on demand "when we consider the investment (our cars) we protect when we purchase the necessary gallon or so of antifreeze." Major antifreeze demand probably will continue to come from the aftermarket, which accounted for 87% of last year's 187 million gal in antifreeze sales.
Ethylene oxide will be tight for next several years Billions of lb
1974 1975 1976 1977 1978 1979
Supply
4.26 4.4-4.5 4.5-4.7 5.0-5.1 5.4-5.5 5.8-6.0
Demand
4.26 4.45 4.81 5.19 5.61 6.05
Source: Union Carbide
Oxide requirements for other deriva tives probably will continue their his toric growth pattern. In fact, Johnson says that even higher growth rates are possible in gas processing, tertiary oil recovery, water-borne solvents, and biodegradable surfactants. He also be lieves that new uses for oxide will emerge, just as they have in the past. "We see a couple of them down the road, but I am not ready to talk about them yet," he says. Overall, Johnson says that 1975 eth ylene oxide demand is likely to be about 4.5% above 1974 levels. Then he sees a median growth of 8% per year through 1979. By then, oxide demand will hit 6.05 billion lb, he says. Supply, however, will have difficulty keeping pace with demand. In addition to only two expansions being planned, ethylene feedstock will continue to be a problem. Ethylene supply is not ex pected to grow more than 6 to 7% per year, even though demand has in creased 10 to 11% per year over the past 14 years. Even with initially high ethylene inventories, Johnson says that oxide plants will be plagued by con straints on ethylene supply.
CHECKOFF NEW PLANTS • Aromatics—Benzene, toluene, and xylene to be principal prod ucts in planned 3200 bbl-per-day petrochemical production to begin first-quarter 1976 at Corpus Christi, Tex., refinery jointly owned by Howell Corp. and Quintana Refin ery Co., both of Houston. • Oxygen—Expansion of about 270 tons per day of liquid oxygen, nitrogen, and argon planned by Union Carbide in Garfield, Utah, with completion in first-quarter 1977. Union Carbide is expanding its ethylene PLANTS COMPLETED oxide unit at Τ aft, La., complex • Catalysts—By Davison Chemi cal, division of W. R. Grace in Nor does he expect oxide units to Baltimore; doubled capacity for perform much better than 85 to 87% of Raney active metal catalysts to be nameplate capacity. "To count on completed July 1, 1975. higher operating levels would be too optimistic," he warns. In the early and • Hydrocarbon resins—By Exxon mid-1960's, ethylene oxide plants oper Chemical USA at Baton Rouge; ated at an average 90 to 95% of capaci capacity expansion of 30 million lb ty. By 1971, their operating rate was per year. down to 78 to 80% of capacity, but this rate was limited by demand. In 1972 through 1974, the oxide units were run PRICE INCREASES ning at 82 to 86% of capacity, but de mand was not the factor this time. By then, the industry had gone through an • Acrylates—1 to 2 cents per lb intensive round of expansions and even for delivered methyl, ethyl, butyl, brief shutdowns of the new, larger and 2-ethylhexyl acrylates and gla units had an exaggerated effect on out cial acrylic acid by Celanese as of put. Johnson doesn't think that cus July 1. tomers should count on much higher operating rates in the future. • Caustic soda—0.5 cent per lb The result will be tight ethylene to new fob contract price of 7.5 oxide supply starting next year and ex cents in Texas and Louisiana and tending at least through 1977. Beyond 8.5 cents in Michigan and Califor nia by Dow as of July 1. that, new oxide capacity will depend on price. The problem facing new po tential oxide producers will be to • Ethylene dichloride—1 cent achieve sufficient cash flow to cover per lb to new price of 12 cents construction costs. This cash flow must from Argo, 111., terminal by PPG be generated primarily from retained as of July 1. earnings because depreciation from older plants has been reduced almost • Formaldehyde—0.25 cent per to insignificance by inflation. lb to new delivered price of 4.25 For a basic commodity such as eth cents by Celanese as of July 1. ylene oxide, Johnson says, growth rate is a key factor in cash flow require • Methanol—2 cents per gal to ments. The higher the growth rate, the new price range of 38 to 49 cents higher the product price and return on fob various sites by Celanese as of July 1. investment companies will need to generate enough capital to support ex • Polyacetal resin—10 cents per pansion. On the other hand, the higher lb to new price of 80 cents by Du the price, the lower the growth rate. Pont as of July 1. The real challenge, he says, is to reach a proper balance between the two. In the long run, he believes that profita • Polyvinyl chloride—About 10% bility will determine investment deci restoration to new range of 21 to 23 sions for new ethylene oxide and glycol cents per lb for homopolymer by units. Diamond Shamrock as of July 1. Earl V. Anderson, C&ENNew York June 16, 1975 C&EN
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