ORGANIC CHEMICALS
Recovery brings moderate growth JOHN J. ELSBREE, Assistant Editor, Washington, D.C.
Demand for many organic chemicals picked up in the first half and will likely hold steady during the remainder of the year for an overall increase in sales of about 6% this year
T
he first half of 1968 has been a recovery period for some of the organics business. Recovery, because last year failed to live up to previous expectations; demand for many basic and intermediate organics did not remain brisk last year. Thus, numerous people in the industry found themselves dealing with softening prices and overcapacity. Textiles and related chemical products were in particularly bad shape. For the chemical companies in Fortune's 500 list, the median sales gain was 5.2% last year from 1966, a sharp drop from the more usual 10% gain and 1966's 11.5% gain over 1965. So far, the industry looks considerably stronger this year; first-quarter and first-half performance, with a few exceptions, was good. Whether second-half production will hold up is uncertain. Unanswered now are questions about the effectiveness of the income surtax in curbing inflation and aiding, for example, the construction industry's financial woes. The forecasts here, however, assume a reasonably good second half; that is, one that matches or exceeds first-half performance. Some industry people, however, are not very hopeful for next year. One for instance, who asks to be nameless, thinks the indicators point to next year being a poorer year than this year—at least the first half may bring a downturn. Basics "Aromatics pricing has been a real scramble this past year." So says one industry spokesman. He notes that the first break came about midyear 1967, and prices have eroded since. 92A C&EN SEPT. 2, 1968
He adds that business has been better in the first half of 1968 than his company had expected, however, despite price instability. It's certainly no great news that benzene prices are soft, for instance, or that overcapacity exists. At midyear, though, benzene prices began to firm as the demand for styrène and cyclohexane exerted itself on the benzene market. In the first quarter this year benzene production was down about 25% from first-quarter 1967—1.62 billion pounds against 2.16 billion pounds. The trend of the first quarter continued into the second: The Tariff Commission reported production of about 530 million pounds in April, less than in any one of the first three months of this year. Unless production picks up considerably during the remainder of the year— and that looks unlikely—it won't be a very exciting year for benzene producers. The notices were mixed for benzene derivatives. Cyclohexane production was down about 6 1 / 2 % in 1967 from 1966, and synthetic phenol was down about 8%. These losses last year were offset somewhat by production gains in styrene (about 3%). Maleic anhydride just about held its own: 168.58 million pounds in 1966 vs. 168.54 million pounds in 1967. In the first quarter of this year styrene was moving even stronger; as against first-quarter 1967, it grew from 796 million to 870 million pounds for a 9% increase. Phenol picked up in the first part of this year for a standoff in the first five month's production: 532 million pounds both last year and this year. The really big gain in the first quarter, however, was cyclohexane; it grew by
20% and moved strongly into the second quarter. In April about 170 million pounds were produced, against an average monthly production in the first quarter of 168 million pounds. Toluene prices are also soft and don't appear likely to firm very soon, although production in the first quarter of this year was up from the first quarter last year by about 8%. Xylenes are holding their own very nicely now, in line with a strong demand for phthalic anhydride and dimethyl terephthalate. First-quarter production of xylenes this year was up about 22%, from 699 million to 851 million pounds. Naphthalene just about held even in the first quarter this year. Firstquarter production as reported by Tariff was 204 million pounds last year and 200 million pounds this year. Overcapacity and undercapacity exist in the acyclic group of basics. A few years ago ethylene demand was pushing capacity, but only about 70% of present capacity is needed to meet present demand. Last year was pretty much a lost year for growth in ethylene since its major established use failed to expand: There wasn't any expansion in ethylene oxide, which usually accounts for about 20% of ethylene output. Additionally, there was very little growth in styrene and ethanol. 1,2Dichloroethane and polyethylene both underwent good growth. 1,2-Dichloroethane and polyethylene, both of which grew well, really kept ethylene going in 1967. Because the three intermediates—styrene, ethanol, and ethylene oxide—that account for about 50% of the ethylene produced showed little growth, overall growth for ethylene was held to about
Overall production of organic chemicals continues trend as output again rises by about 10% Acyclic I
Cyclic C
Total I
PRODUCTION Billions of pounds
5% last year. This year's first-quarter figures, however, hold some promise for a better year in ethylene. Styrene production, as mentioned, was up in first-quarter 1968, and ethylene oxide, down slightly in the first quarter, picked up in April to bring oxide ahead by about 2% for the first third of this year (1967, 748.9 million pounds; 1968, 762.3 million pounds, prelimi nary Tariff figures). Acetylene producers foresee failgrowth for their product this year. Air Reduction Co., for one, figures on in creased sales this year for its calcium carbide acetylene, citing its economics of size and flexibility for its particu lar markets—neoprene and vinyl ace tate, for example. Propylene supplies, tight last year, remain so this year, as expected. Pro ducers are maximizing propylene out put and prices are rising. Probably hardest hit are acrylonitrile and poly propylene producers since boosted de mand for these products generally isn't covered by contract-supplied propyl ene.
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