; ' POLYMERS AND COATINGS
Renewed demand brings recovery GILBERT R. PARKER, Assistant Editor, New York City
Producers are recovering from the severe economic setbacks of last year, and plastics and resins, man-made fibers, and elastomers are moving ahead at near record rates
P
olymer producers have just about recovered from the severe economic setbacks they suffered throughout the 1967 minirecession. The upswing in consumer spending that began late last year has restored strong, steady demands for synthetic polymeric materials. Producers have already worked off last year's excessive inventories and, with few exceptions, have returned to operating their plants at near-capacity levels. Supply-demand balances for most polymers are tightening. Prices are firming, and the profit outlook is encouraging. For 1969, producers are generally optimistic but have some reservations. They know that tight money caused by the recent surtax and the high discount rate will moderate the inflationary pressures on their production costs. The tight money, however, will also reduce consumers' disposable income and spending for polymeric products. Such reduced demand could create more serious problems in view of the current overcapacity and weak selling prices of certain big-volume polymers —low-density polyethylene, polyvinyl chloride, and nylon fiber. Last year, however, polymer producers completely ran afoul of the inexorable laws of supply and demand. On the supply side, growing overcapacity in these big-volume polymers jeopardized the stability of market prices. On the demand side, consumers restrained their purchases of the myriad products made with the synthetic polymers. These supply-demand imbalances signaled producers to cut back in production but did so too late. Inadvertently, producers built inventories and subsequently began a 84A
C&EN SEPT. 2, 1968
spate of price cutting that has reduced some profit structures to all-time lows. The Federal Reserve Board's index of production for synthetic polymeric* materials (1957-59 = 100) rose to 296.8 in 1967, up only 2.9% from the previous vear. The 1966 index of 288.5 was'up 12.3% from 257 in 1965. The index is a weighted average of three classes of synthetic materials: Plastics and resins rose to 345.1 in 1967 from 338.6 the previous year; man-made fibers rose to 278.3 in 1967 from 263 the previous year; and synthetic rubbers declined to 161.5 in 1967 from 166.5 the previous year. Plastics and resins C&EN's computer forecasts set this year's production of all plastics and resins at 16 billion pounds and next year's at 17.6 billion pounds. Tariff Commission production figures for the first half of this year indicate that producers are already well on their way toward these record outputs. U.S. production of all plastics and resins totaled 14.1 billion pounds last year, a gain of only 3.8% over the 13.6 billion pounds made in 1966. Last year's production gain is the weakest in the industry's history and contrasts with an average annual production growth rate of 13.7% compounded from 1960 to 1966. The big three thermoplastics—polyethylene, polyvinyl chloride, and polystyrene—accounted for nearly two thirds of last year's total plastics output. Indeed, they've become market commodities as the growing number of producers have entered the market underbidding one another in recent
years. Prices of general-purpose grades are at the threshold of yielding diminishing returns on investment; that is, further price decreases will not be offset by larger markets, economies of scale, or increased productivity. Low-density polyethylene production will total about 3.1 billion pounds this year and 3.4 billion pounds next year, according to C&EN's computer forecasts and leading producers. Production last year, however, crept ahead to only 2.69 billion pounds from 2.65 billion pounds in 1966. Overcapacity and price cutting characterize the business. Producers are plagued with about 30% overcapacity—rated at mid-1968 at about 3.6 billion pounds. General-purpose moldinggrade resin is selling at 8 1 / 2 cents a pound, far below its 12 cent list price. Marketing managers at Dow Chemical, Du Pont, and Union Carbide say they don't expect demand to catch up with supply until 1971. High-density polyethylene production will total about 1.2 billion pounds this year and 1.4 billion pounds next year. Production was hardly depressed last year and advanced smartly by 17.9% to 1.07 billion pounds from 910 million pounds in 1966. This gain compares with the 20.7% average annual production growth rate for the 1960-66 period. Supply and demand are currently well balanced and prices are firm between 17 and 20 cents a pound. Announced expansions in highdensity polyethylene suggest that producers may be building themselves into an overcapacity situation soon. By the end of next year planned installed capacity will reach 1.7 billion
pounds, but consumption then is estimated at not much more than 1.4 billion pounds. By the time such overcapacity appears, chances are that producers will be prepared to cut prices anyway to about 14 to 16 cents a pound. At that price level, they will move more significant amounts of resin into the potentially big-volume market for plastic milk bottles than they have so far. Last year, a total of 348.5 million pounds of all plastics went into blowmolding 3.6 billion bottles. This is a 16% gain over the 300 million pounds used in 1966. Of 1967's total, 321.1 million pounds were high- and lowdensity polyethylene and the remaining 27.4 million pounds were largely polyvinyl chloride and smaller amounts of other resins. About 35 million pounds of high-density polyethylene was used to make plastic milk bottles last year. Polyvinyl chloride production will total 2.5 billion pounds this year and 2.8 billion pounds in 1969. Last year, output declined to 2.08 billion pounds, down 3.7% from 2.16 billion pounds in 1966. As with low-density polyethylene, overcapacity and price cutting wrack the polyvinyl chloride business. As of mid-1968, installed capacity was rated at 3.4 billion pounds. General-purpose grade resin sold at 9 1 /., cents a pound, far below its 15cent list price. Leading producers don't expect supply and demand to balance until 1971. Polystyrene production will grow 12 to 14% annually over the next several years to about 1.8 billion pounds this year and more than 2 billion pounds next year. Last year, production totaled 1.58 billion pounds, up less than 1% from 1.57 billion pounds in 1966. This contrasts with an annual production growth rate of 15.9%' compounded from 1960 to 1966. Supply and demand are in reasonable balance. Growth will follow the markets where crystal and impact polystyrene are already established—packaging, appliances, light diffusers, and toys. Clearly, the avenue to higher unit profits lies outside the commodity business of producing and marketing these big-volume plastics. It lies, instead, in modifying the existing resins, developing different copolymers, and even creating new polymers that will have improved price-performance characteristics—ones that will bring higher returns to the producers and fabricators while providing greater value to the consumers. Thus, producers are enlarging their lines with specialty polymers. Some recent developments are: • Last year, Air Reduction Co,, Inc., received full Food and Drug Administration approval for use of its propyl-
• In June, Mobil Chemical began offering development quantities of a new thermoplastic—polybutylene. At the same time, BASF Corp. began offering commercial quantities of another new thermoplastic—acrylic ester-modified styrene-acrylonitrile.
ene-modified polyvinyl chloride in making blow-molded bottles and packaging film for foods. • Later in the year, Dow Chemical began marketing a chlorinated highdensity polyethylene, so joining Allied Chemical as a supplier of a more weather- and chemical-resistant material. •Early this year, Rexall Chemical started producing ethylene-vinyl acetate copolymers, thus joining Du Pont, Union Carbide, and U.S. Industrial Co. in making a tougher and more versatile film-grade resin than biaxially oriented high-density polyethylene. • In May of this year, Hooker Chemical started up the U.S.'s first twostage bulk polymerization plant to produce a more-fusible grade of polyvinyl chloride than is produced by the usual suspension polymerization method.
Man-made
fibers
Now sailing with a strong wind after last year's doldrums, producers of man-made fibers are moving ahead at near the 13% average annual production growth rate they enjoyed from 1960 to 1966. Total U.S. production of cellulosic and noncellulosic fibers will reach 4.4 billion pounds this year and 4.8 billion pounds next year, according to C&EN's computer forecasts. Last year, however, total fiber production advanced modestly to 4.03
Total plastics and resin production swings up after 1967's declines Billions of pounds
20
15 10
5
0 1965 îl
1966
1967
1968"
1969*
C&EN computer forecasts.
Source: U.S. Tariff Commission
Thermosetting resins Production, millions of pounds 1965
1966
1967
Low
Alkyd Coumarone-indene Epoxy Phenolic Polyester Urea and melamine
586 324 111 922 399 621
666 335 140 1047 470 718
586 290 132 99G 490 645
670 370 149 1080 539 746
1968»
Medium
674 378 154 1111 555 774
High
1969»
Low
Medium
692 686 408 371 160 161 1145 1145 568 600 816 786
High
702 731 395 438 168 178 1187 1236 623 647 830 889
Thermoplastic resins Cellulosics Polyethylene Low density High density Polypropylene Polystyrene Polyvinyl chloride Styrene, all types
170
187
172
2263
2648
785 374
910 554
2689 1073
1369 1820 2033
1572 2164 2385
648 1583 2084 2365
186
189
194
3084 3174 3314 1205 1240 1288
704
720
727
1681 1893 2167 2452 2540 2672 2676 2764 2873
192
197
203
3363 3530 3754 1358 1425 1511
822
849
875
1758 2025 2351 2665 2816 3019 2921 3060 3233
α C&EN computer forecasts. Source: U.S. Tariff Commission SEPT. 2, 1968 C&EN
85A
billion pounds, up only 2.5% from 3.92 billion pounds in 1966. Some fibers were up, some down. Of the cellulosic fibers, acetates advanced 5% to 476 million pounds and rayon fell 14% to 912 million pounds. Of the noncellulosics, acrylic advanced 10% to 398 million pounds; nylon fell 1% to 1.05 billion pounds; polypropylene advanced 17% to 117 million pounds; and polyester advanced 33% «to 670 million pounds. Throughout the first half of this year, the supply-demand balance for all fibers tightened as a result of the upswing in consumer spending for textile products. Last year, however, total mill sales of all textiles, including natural fibers, fell to $19 billion from $19.5 billion in 1966. As a result of the increased demand, producers have been operating their fiber plants all out. Shipments for the first five months of this year show substantial gains over those for the same period in 1967, which were, of course, at depressed levels. Acetates are up by 5%; rayon by 2 5 % ; acrylic
by 4 5 % ; nylon by 24%; polypropylene by 73%; and polyester by 6 3 % . With such outstanding production gains on record and with prices up from last year's lows, fiber producers consider themselves well out of 1967's market disruptions. Indeed, in firsthalf earnings statements, the presidents of Du Pont, Monsanto, and American Enka attributed their corporate earnings improvements largely to the record sales and firm selling prices of all man-made fibers. Rayon producers are closely following their production figures this year to determine whether -their business will take an upturn from the declines of the past two years. Latest figures hint that it might. Total rayon production plateaued at a record high of 1.08 billion pounds in 1965 and subsequently fell to 912 million pounds in 1967. Although producers naturally are bullish about their future, the production figures of recent years indicate they shouldn't be. There are other signs, too, that the rayon business is not the most viable
Total production of synthetic fibers shows modest gain over 1967's setback Millions of pounds
6000
4000
2000
1965
1966
1967
1968*
1969*
* C&EN computer forecasts. Source: Textile Economics Bureau
Cellulosic fibers 1965
Acetate Rayon
1966
445
454
1082
1065
Production, millions of pounds 1967 1968" Low Medium High
Low
476 912
488 772
474 845
496 931
526 1058
1969° Medium High
519 881
560 1047
Noncellulosic fibers Acrylic Nylon Olefin ic Polyester Textile glass
368 937 66 380 282
353
398
419
441
467
455
486
525
1066
1052
1091
1171
1269
1158
1263
1397
101 505 332
117 670 309
137 760 353
141 792 361
141 810 372
168 945 383
170 963 398
172 969 420
«C&EN computer forecasts. Source: Textile Economics Bureau 86A
C&EN SEPT. 2, 1968
one in today's fiber industry. Last year, Celanese shut down its rayon plant in Rome, Ga., and left the business. Earlier this year, FMC's Avisco Division, a leading rayon producer, announced plans to quintuple its polyester output to 200 million pounds a year. Rayon filament fell to a low of 309 million pounds in 1967, down from 635 million pounds in 1955. Since half of all rayon filament goes into tire cords, this decline represents markets lost to nylon and polyester. The tire cord market for 1968 passenger car tires: Of 45 million original equipment tires, 75% are built with rayon cord, 19% with polyester, and 6% with nylon. Of 150 million replacement tires, 30% are built with rayon, 12% with polyester, and 60% with nylon. Rayon producers have offset the declines in filament over the years with strong gains in staple for the apparel and home furnishings markets. Last year, production of staple totaled 603 million pounds, up from 337 million pounds in 1955. Last year's output of staple is less than the 659 million pounds in 1966 and the 648 million pounds in 1965. Since last fall's short cotton crop, rayon producers have penetrated a few of cotton's markets—durable-press blends with polyester, vinyl fabric backing, and medical-surgical products—but none of great consequence. This year, the cotton crop is estimated at about 12 million bales, up from 1967's 7.6 million bales, the lowest on record since 1895. Although the outlook is clearly for continued growth among other fibers, producers are still concerned about the strong tide of textile imports. Last year the U.S., for the second consecutive year, was a net importer of manmade fibers and products. Imports of 334 million pounds and exports of 308 million pounds gave a trade deficit of 26 million pounds. This deficit compares to the larger one in 1966 of 37 million pounds. Fiber producers continue urging that the Government impose controls on all textile imports on an all-fiber basis. Now, only cotton imports are regulated through the GATT Long Term Cotton Textile Arrangement (LTA) extended last September for another three years. A number of fiber developments have come to the fore this year that bear on the premise that producers have voiced in one place or another in recent years. That is, the new fibers of the future will be variants and modifications of existing polymeric structures. This premise prompts the question: Have polymer producers come to the end of the line in creating new generic fibers?
The answer appeared to be yes when Du Pont introduced its new fiber, trademarked Qiana in June. Although perpetuating strict secrecy about what is now remembered as fiber Y, Du Pont's vice president Dr. Wallace Gordon did admit: "The building blocks of the new fiber are the same as those in the original nylon. Thus, we refer to the fiber by the generic term nylon." Essentially, Du Pont's new fiber is a modified polyamide. In July, however, Japan's Nippon Rayon commercialized a new generic fiber, trademarked Α-Tell. The com pany identifies it as polyethylene oxybenzoate and openly discusses its chemistry. It is polymerized from p-hydroxybenzoic acid and ethylene oxide to form a polymer with alternat ing linkages of ester and ether. Nip pon Rayon claims the same advantages for Α-Tell as Du Pont does for Qiana: the esthetics of silk and wash-andwear properties of other synthetics. Those producers taking the modified-polymer approach know that they cannot secure impregnable composi-
Last year U.S. remained a net importer of man-made fibers and products for the second consecutive year Millions of pounds
400
300
200
100
1963
1965
1964 Imports
Source: Textile Economics Bureau
tion-of-matter patents to protect their fiber developments. There are simply too many variations and molecular ma nipulations with which competitors can circumvent any such patents. Nor can they fully protect themselves with process patents, which can often be more valuable to competitors than to owners. Thus our formal system of patent protection breaks down. It leaves the fiber producers, as it does many others, with only two recourses in their patent strategy. One is to not apply for any patents at all to avoid disclosing any information. The other is to accumu late so many related patents that com petitors are left bewildered in their patent searches. In either case, se crecy is the name of the game.
Thousands of long tons
4500
3000
1500
1965
1966
1967
1968"
1969"
C&EN computer forecasts.
Source: U.S. Department of Commerce
Elastomers and rubbers 1965
1966
Production, thousands of long tons 1967 1968 1969" Low Medium High Low Medium
Butyl rubber 101 103 114 115 Neoprene 139 145 147 159 Stereoelastomers 219 272 307 342 Styrene-butadiene Ν-type, including latex 58 70 62 70 S-type, including latex 1262 1336 1244 1352 Natural, new supply 566 587 550 441 α
C&EN computer forecasts. Source: U.S. Department of Commerce
1967
Exports
Production of synthetic elastomers advances slowly
a
1966
117 160 360 72 1353 550
Elastomers High
123 169 387
124 170 412
126 172 440
75 75 1373 1380 660 404
77 1389 507
80 1404 609
119 163 381
Last year U.S. production of syn thetic rubber declined to 1,911,553 long tons, down 3.0% from a record high of 1,969,973 long tons in 1966. Likewise, synthetic rubber consump tion fell to 1,630,622 long tons in 1967, down 2 . 1 % from 1,666,057 long tons in 1966. These declines are largely attribut able to the rubber industry strike from mid-April to mid-July last year. They contrast with the 5.4% annual pro duction and consumption growth rates compounded from 1960 to 1966. SEPT. 2, 1968 C&EN
87A
Paint, varnish, and lacquer sales grow moderately Millions of dollars
3000
2000
1000
Irlrlrlrfl 1965
1966
I Industrial sales a
1967
Trade sales
1968
