• Long-term growth in demand for agricultural chemicals also will be about 3 to 3.5%. This year, demand will be up 3.8% to 71 million tons. • For all product groups, growth rates next year will.be lower than this year. In 1980 (an economic recovery year), de mand again will increase substantially. Torkelsen's estimates are based on the assumption that real gross national product will grow 4.4%, 4.2%, and 4.8%, respectively, in 1978, 1979, and 1980. Beyond 1980, GNP growth should be lower, on the order of 3 to 3.5% per year. Consumer durables and private invest ment will play a significant role in this growth. It's possible, according to Torkelsen, that inflation can be brought down to the 4 to 5% level during the early 1980's. Whatever the growth rate, Torkelsen doesn't expect it to be smooth. One pos sibility: the government will overstimulate the economy to maximize re-election prospects in 1980. This, of course, will be followed by an economic contraction in 1981 or 1982. Despite this agreement on the chemical industry's growth prospects, its profit ability forecast is not so rosy. Semegran believes that pretax margins in 1978 probably will decline about 1.5% from last year. This year's earnings will be slightly below last year's, he says, even though many firms may report slightly improved results. This, he explains, will be because winter weather, plant mishaps, and the dollar's sharp devaluation distorted last year's earnings. An economic slowdown in 1979 could reduce earnings again, says Semegran. And a strong profit recovery in 1980 is likely to be a "false prophet" for the next five years. If the industry continues with its present business practices, returns on equity will slowly erode, jump a bit in 1980, then erode again through 1985. In dustry reinvestment rates could decline almost as far as they did between 1968 and 1971. However, Semegran says, by the time they reach the 5 to 6% level, the in dustry's spending program is likely to be reduced sharply. "Why spend money on new plants when you can earn more in long-term bonds?," he asks, Semegran stresses that his forecast low returns on investment are "self-regulat ing" and that the trend toward decaying profits can be reversed. But chemical companies will have to ask themselves if that next plant is really necessary and if their present overhead is really justified, he points out. Fortunately, Semegran's scenario de scribes what could happen—not neces sarily what will happen—to chemical in dustry profits. Torkelsen already sees signs that the industry is lowering its rate of plant expansions and increasing oper ating rates. The industry still practices what he calls "self-destructive" pricing policies. But, Torkelsen adds, higher op erating rates could lead to pricing policies that will yield a better return on invest ment. D 14
C&EN March 27, 1978
Propylene surplus not as large as forecast
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Future propylene surpluses are the gen erally accepted gospel in the olefins in dustry nowadays. But those surpluses may not turn out to be as great as many projections indicate, says Hugh H. Tobin. Many complicated and interrelated fac tors are developing that could keep pro pylene surpluses at a minimum, he says. Tobin', olefins products specialist at Gulf Oil Chemicals, emphasized at a recent Chemical Marketing & Economics Divi sion symposium, that a lot of uncertainty exists about future propylene supply and demand. For propylene, competition starts in feedstocks, continues through production, and doesn't end until its de rivatives eventually reach their end mar kets. Nevertheless, Tobin expects propylene consumption to grow "very well" through 1985, although excess capacity may keep profits down. Consumption of propylene is expected to increase an average of 6.8% annually between 1976 and 1980, he says. After that, its growth rate probably will taper off to about 6.2% through 1985. Coupling an estimated 1980 demand of 15.5 billion lb with a potential supply of 24.3 billion lb, propylene could find itself with an apparent surplus of 8.8 billion lb in 1980. But that surplus could end up being more apparent than real. Tobin says that propylene demand likely will grow faster than ethylene demand. And with ethylene units operating at relatively low rates, propylene availability will be re duced. Other factors could help to keep pro pylene supply lower than anticipated and Tobin uses last year's experience to ex plain how. Simply comparing 1977 pro pylene capacity (18 billion lb) with de mand (11.9 billion lb) gives an exagger ated picture of propylene oversupply, he says. A correction has to be made for ethylene plant operating rates, which averaged only about 80% of capacity last year. In addition, Tobin says that some production units are geographically iso lated from the market and supply the market only intermittently. Some of this production has to be backed out of the supply picture. And some propylene units were on a standby basis and not operating last year. If these factors are pumped into the supply-demand balance, propylene overcapacity last year was only 1.8 billion lb and not the apparent 6.1 billion lb, says Tobin. That's only 10% above rated ca pacity, which is about normal for the in dustry. These figures indicate that 1977 was a generally snug year for propylene, which, he adds, was actually the case. Starting this year, however, the pro pylene supply situation starts changing.
Tobin thinks that an additional 1.4 billion lb of excess propylene capacity will be come available, which will bpost propyl ene's apparent surplus from last year's 6.1 billion lb to 7.5 billion lb. Some of this excess propylene will come from ethylene units, even though they are expected to be operating at only an aver age 75% of capacity. In addition, Amoco Chemicals' standby unit at Whiting, Ind., has re-entered the market. Tobin doesn't quantify propylene's future real surplus, but he expects it to get worse in 1979 and 1980. Apparent surplus figures indicate the trend. Propylene's apparent surplus next year will be about 9.5 billion lb, then taper off to 8.8 billion and 8.0 billion lb, respectively, in 1980 and 1981. According to Tobin, what makes esti mating real propylene surplus difficult is that the industry has a tendency to cor rect itself. Some of this correction may start taking place this year and certainly in the next few years as both the produc tion and consumption ends of the pro pylene industry maneuver to control and take advantage of the situation as it de velops. "This self-correcting tendency," says Tobin, "is what makes forecasts wrong and forecasters gray!" In the final analysis, propylene's future depends upon economics—its own and that of its competitors. These are almost impossible to project, says Tobin, but one factor worth considering is the future of so-called "low cost" propylene from re fineries. This material may not be so low cost when it is upgraded to a purity level
Propylene consumption will grow nicely . . . Propylene consumption (billions of lb) 1977 1978 1980
Derivative
3.02 2.04 1.64 1.52 1.03 1.11
Polypropylene Acrylonltrlle Propylene oxide Isopropanol Cumene Butyraldehyde (oxo alcohol) Acrylic acid Others TOTAL
3.55 4.45 2.09 2.30 1.75 1.97 1.58 1.71 1.23 1.39 1.16 1.25
.36 .26 .31 1.87 1.94 2.10 12.49 13.61 15.53
. . . but capacity will increase faster Grade
Polymer Chemical Refinery TOTAL
Propylene capacity (billions of lb) 1978 1980
1977
5.27 7.87 4.90 18.04
Source: Gulf Oil Chemicals
6.85 8.54 4.60 19.99
7.60 1 1.66 5.02 24.28
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FluorineContaining Free Radicals Kinetics and Dynamics of Reactions ACS Symposium Series No. 66 John W. Root, Editor University of California, Davis Based on a symposium sponsored by the Division of Physical Chemistry of the American Chemical Society. Until recently, research on the physical chemistry of fluorinecontaining radicals has been quite limited. The free fluorine atom is remarkably reactive and undergoes a number of rapid and highly exothermic bimolecular reactions. The kinetics research on fluorine radical reactions is being pursued presently at an unparalleled level of sophistication. Fluorine radical chemistry has provided the common framework for a major portion of the research revolving around such techniques as chemiluminescence, molecular beam, and fast atom kinetics research. CONTENTS Elementary Reaction Kinetics of F Atoms · Reactions of Radioactive 18F · Thermal Hydrogen Abstraction · Addition of F-Containing Radicals to Olefins · Reactions of CF, CHF, and CF2 Radicals · Ion-Molecule Reactions · Crossed Molecular Beam Studies · Molecular Beam Studies with F+ Ions · Energy Disposal in Reactions of Fluorine · Potential Energy Surfaces for F-H Systems · Thermochemistry of Fluorocarbon Radicals · Chemistry of High Energy Atomic Fluorine · ESR Studies of F-Containing Radicals · Inorganic F-Containing Free Radicals
423 pages (1978) clothbound $28.00 LC 77-2667 ISBN 0-8412-0399-7 SIS/American Chemical Society 1155 16th St., N.W./Wash., D.C. 20036 Please send copies of SS 66 Fluorine-Containing Free Radicals at $28.00 per copy. D Check enclosed for $ D Bill me. Postpaid in U.S. and Canada, plus 75 cents elsewhere. Name Address City
State
Zip
suitable for use in the chemical industry. Refinery propylene primarily is used to make gasoline alkylate and polymer gasoline or it is burned as fuel. Normally, it is recovered from refinery unit off-gases at concentrations of 60 to 70%. Although this propylene can be used to produce such chemicals as cumene, isopropanol, nonene 5 dodecene, and heptane, chemical-grade propylene typically recovered from steam crackers ranges from 90 to 98% purity. The future cost of gasoline will influence propylene's outlook. Refinery-grade propylene always has set the floor on propylene price, says Tobin, and is directly related to the cost of gasoline and its alkylate component. Whatever the cost of refinery propylene, Tobin expects more of it in the future. Gasoline demand likely will peak around 1980 and fluid catalytic cracking capacity likely will peak along with it. But this doesn't necessarily mean that propylene from fluid cat crackers also will peak. As the volume of unleaded gasoline increases, fluid cat crackers will be operated at more severe conditions to produce higher-octane gasoline. Along with this higher-octane gasoline will come more propylene and butylènes unless new catalyst technology is able to control light olefins output or balance olefins and isobutane production. Tobin's guess: More propylene will be generated from fluid cat crackers through 1985. Developments in gasoline alkylate also will compound propylene's οver supply situation. Because butylène alkylate has a higher octane number, it will be preferentially alkylated ahead of propylene to boost gasoline octane. This, says Tobin, will tend to release additional propylene for other uses. Obviously, the biggest impact on propylene availability will come from new olefins capacity based on liquids cracking, which will grow sharply through 1985. But the coproduct butadiene and butylènes produced in these liquid crackers also adds to propylene's oversupply situation. What they will do, says Tobin, is reduce the volume of refinery-derived butylène being dehydrogenated to butadiene. The butylène that no longer is used to make butadiene probably will be diverted to gasoline alkylate. The net effect, Tobin points out, will be to increase propylene availability. On the demand side, polypropylene will be among the fastest growing outlets for propylene through 1985. By then, its propylene appetite will reach 6.86 billion lb—almost one third of total propylene demand—compared to 3.55 billion lb this year. There seems little doubt, says Tobin, that excess propylene will be available for the next several years. Just how much of an excess there will be depends on how effective the industry's self-correcting measures turn out to be. Meanwhile, ethylene supply also will exceed demand. "It is going to be an interesting next few years in the olefins industry," he says. D
IT POURS A T - 3 0 °F. IT BOILS AT 600° F. IT'S NEW FROM GULF:
DXE (dixylylethane) CH3
I CH3 ^
S
\ ^ C H
Mol. Wt. Sp. Gr. Pour Pt. Boil Pt. Flash Pt.
3
238 0.978 -30°F 600°F 325°F
Gulfs new DXE is a versatile molecule which offers many unique possibilities, such as: • A heat transfer fluid • Electrical insulation fluid • Synthetic fluid additive • Chemical intermediate • High boiling solvent For information, write C E. Turtle, Gulf Specialty Chemicals, P.O. Box 3766, Houston Texas 77001. Or call (713) 750-3233.
Gulf Specialty Chemicals Gulf Oil Chemicals Company A division of Gulf Oil Corporation
March 27, 1978 C&EN
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