Business
Plastics monomers settle into slower growth With increasing maturity of plastics industry, styrene, vinyl chloride, and propylene oxide have reached end of double-digit growth rate Maturity seems the key this year among producers of large-volume monomers, the organic building blocks from which come most high-value synthetic polymers such as plastics. Most people concerned with the manufacture and sale of these monomers reluctantly admit that the days of double-digit annual growth rates are over, probably forever. Some persons, however, still pin higher hopes on activities in their product development laboratories. What is happening to the monomer business is well illustrated by the change in three of the largest-volume monomers—styrene, vinyl chloride, and propylene oxide. For practical purposes, all output of styrene and vinyl chloride becomes part of polymers. A large part of propylene oxide production also goes into polymers. Because of monomers' large or total dependence on polymers, mostly plastics, it is the markets for plastics that control the outlook for such monomers. As it happens, the plastics industry has matured in the decade of the 1970's and with it most monomers. No one in the complex larger industry of monomers, polymers, modifiers, plasticizers, and a host of other related chemical products will deprecate the plastics business. But they admit that the easy selling is gone. On the plus side, people in plastics claim that products are of far higher quality now than a decade ago. They can cite statistics showing good near- and long-term business outlooks, including profit levels generally as good as or better than those in any other comparably sized part of the chemical industry. They also can cite instances where innovation, service, and other nonchemical factors are needed to maintain the inroads that these materials have gained. The transportation segment of the economy provides a host of good examples. Plastics, such as polystyrene, polyvinyl chloride, polyurethanes, and unsaturated polyesters, all are finding an important role in meeting fuel economy standards in motor vehicles by saving weight. These plastics have densities less than metals and frequently are stronger on a comparable weight basis. Of course,
Oxirane's new Texas unit adds large block of styrene/propylene oxide capacity plastics require much work by fabricators to ensure a place in a car or truck. They also need work by polymer and monomer manufacturers to further develop properties such as strength, heat and light resistance, and even creak resistance to compete with metals. But on the negative side, because plastics are largely petroleum-based, their big cost advantage over metal and wood has shrunk sharply. For example, now an auto component of polyurethane actually could cost more than one of metal. Even so, the polyurethane component may be used anyway because of advantages such as oxidation resistance. Overall, although the jump in cost of petroleum hardly can be a full reason, the end of double-digit growth for plastics coincides neatly with the three- to fivefold jump in world crude oil costs over recent years. The rise in raw materials prices probably reinforces the drop in plastics growth due to market size and saturation. What this all means to plastics producers and, in turn, to monomer producers comes clear in forecasts for growth rates. None of the big monomers will increase production this year more than 8% over last year. Yet, even five years ago producers confidently could expect some 12 to 15% growth annually. But what does an 8% growth for 1977 mean to producers? Nothing small. It represents 500 million lb of styrene, $100 million roughly. For perspective, consider that the posted price of styrene was the same 25 years ago as it is now. Then total production was estimated at 700 million lb. Neglecting a threefold inflation, the
total sales value of styrene in 1952 was not much more than the gain in sales volume expected this year. Vinyl chloride, which had a great recovery in 1976 from the recession, will have a modest growth in production during 1977—perhaps 5.5%. If the gain in production is 300 million lb and the price remains level, vinyl chloride producers will have an added income of more than $40 million this year. A similar case can be made for propylene oxide. The value of the gain here could be $20 million. Most of this income will go to pay production costs, including raw materials. But some will remain as return on investment. Most of this will go for interest, but most monomer producers will find a bit left. Of the bit left, a not insignificant amount will go for innovation. Next year some very small new uses of polystyrene will require a tiny share of production as a result of this year's product development. For styrene, these innovations will mean that the growth in styrene demand in a few years will be 600 million lb on top of a previous year's production of 8 billion to 9 billion lb, industry sources estimate. Although this means that the growth rate will sag to less than 7% a year, no one concerned with styrene should be all that upset. For details on the present and nearterm market situation for styrene, vinyl chloride, and propylene oxide, see the following pages. Bruce F. Greek, C&EN Houston Aug. 15, 1977C&EN
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