PLASTICIZERS The Competitive Struggle Grows Keener - Chemical

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C&EN commodity survey

PLASTICIZ Plasticized products are practically everywhere—as everything from upholstery in automobiles to shower curtains for the home to plastic pants

FLOORING. One of the big uses for plasticizers is in making vinyl tile

for babies. These products would not bend or stretch if it were not for the flexibility added by plasticizers. And, under their more generic name of esters, they also serve as additives for gasoline 118

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and lubricants used in jet aircraft and in other ways. Plasticizers reflect many of the problems faced today by the chemical industry. Every knotty problem of the industry crops up in the plasticizer business. Excess capacity to make both plasticizers and their raw materials, weak prices, declining profit margins, product obsolescence, and overlapping uses are examples. Plasticizers are produced by reacting an acid (or anhydride) and an alcohol to form an ester. The following C&EN commodity survey ana-

lyzes the present and future plasticizer industry from three viewpoints: acid (or anhydride) raw materials, alcohol raw materials, and finally the plasticizers themselves. Special effort has been made to relate plasticizer demands for a raw material to other demands for the same raw material. This is particularly significant, for example, in the case of oxo alcohols. If market conditions change, an oxo producer can readily switch his operations from the production of

FLEXIBLE PLASTIC. Plasticized material is milled in Union Carbide lab

ERS

The Competitive Struggle Grows Keener

WALTER S. FEDOR Senior Associate Editor

alcohols important in making plasticizers to other products of no value in this use. For the plasticizer producer, this could wipe out a significant raw material source. Surprisingly few companies have studied the plasticizer market in all of its numerous segments. In fact, some companies have scarcely studied the market at all.

Few segments of the chemical industry can match the plasticizer business for complexity. Using essentially the same equipment, plants can make a variety of different raw materials and plasticizers. Company capacities vary anywhere from about 100 million pounds annually down to 1 million pounds. At least 75 companies are known to make and/or sell plasticizers. Over 300 of these products are available to the trade. And these do not include various hydrocarbon materials which are technically plasticizers but actually are diluents used to reduce costs. Plasticizer sellers have available to them this year a 645 million-pound market, with a projected annual growth rate of about 7% a year through 1965. This total includes other uses for these products, such as synthetic lubricants and gasoline additives, which are reported in the plasticizer tabulation of the U.S. Tariff Commission. Last year, U.S. plasticizer production was reported to be 602 million pounds. Actually, because of differences in classification, production was closer to 616 million pounds. Output is expected to rise to 825 million pounds in 1965—an increase that is good but not too remarkable considering the nation's sizable plasticizer NOV. 13, 1961 C&EN

119

PHTHALICANHYDRIDECONSUMPTION

1960 Total: 402 million pounds

1961 Total: 407 million pounds

1965 Total: 500 million pounds

Source: C&EN estimates 120

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capacity. Best estimates place U.S. capacity at between 840 million and 1.135 billion pounds a year, depending on the plasticizer made and whether the equipment is used on a full-time or part-time basis. About 75% of this capacity is for monomelic plasticizers, such as phthalate, adipate, and sebacate esters. The balance is for phosphate, polymeric, and epoxy plasticizers. In recent years, plasticizer manufacturers have had their price and profit problems. Prices for different materials range from about 20 cents a pound to over 80 cents. Prices of some of the key plasticizers have declined by 2 to 5 cents a pound this year and may go lower in the future. Price instability has occurred from time to time in the plasticizer business. However, materials moving at below list price are not always top-grade products. Some plasticizer consumers are content with "good enough" material rather than the best obtainable. Actually, an off-color di(2-ethylhexyl) phthalate, for example, should work just as well in a black vinyl as would a clear material. Competition in plasticizers and resulting price cuts have dropped average profit margins to about 2 to 2.5 cents a pound. In 1955, the margin ran about 5 cents a pound. Decreasing profits, along with periodic raw material shortages, have spurred major plasticizer producers into total integration of their operations. Now, for example, Pittsburgh Chemical, Monsanto, and Union Carbide Chemicals plan to produce both the acids and alcohols needed to make plasticizers. Others, such as Allied Chemical and Tennessee Eastman, may follow. Previously, major producers made only the acid or the alcohol needed for plasticizers. Some plasticizer producers have arranged long-term contracts with companies building new facilities to make needed raw materials. FMC plans to buy 15 million pounds a year of the phthalic anhydride to come from Carbide's proposed 50 million pound-ayear phthalic plant at Institute, W.Va. Reichhold plans to buy half the output of the proposed 30 million pound-a year oxo plant to be built jointly by Tidewater Oil and Air Products at Delaware City, Del. Integration can eventually lead to higher profit margins. However, initially, it can be an expensive step for a company. It usually costs five

to six times more to build an acid or alcohol plant than an esterification plant. After payoff—or during it, depending on the number of payout years—a fully integrated company can withstand some pretty tough competition. At the same time, integration may force some of the marginal producers out of the business and thus make market conditions more stable. New facilities, however, will add to the developing surplus of major acids and alcohols for making plasticizers. Next year, the capacity for phthalic anhydride will be twice the demand. Isooctyl alcohol, 2-ethylhexanol, and other C 8 alcohol capacities should be between two and three times bigger than consumption. And, as plasticizer producers go basic, some raw material suppliers might decide to become plasticizer manufacturers themselves. Enjay, for example, has already begun marketing plasticizers. Obviously, the struggle for plasticizer markets in the future promises to be lively. Major Acid Raw

Materials

Phthalic anhydride is the most important plasticizer acid. Others include adipic, sebacic, azelaic, and fatty acids such as oleic and stearic. These or other acids are not likely to pose any supply problems for plasticizer producers in the foreseeable future. Phthalic anhydride capacity was 503 million pounds in 1960 and is slated to reach 841 million in 1962 (C&EN, March 27, pages 142-44). Most recent additions to the phthalic picture, besides Union Carbide, are Oronite Chemical, which will build a 30 million pound-a-year plant at Perth Amboy, N.J., and Allied, which has given the go-ahead on a 25 million pound-a-year plant at Los Angeles. Sherwin-Williams will expand its Kensington, 111., plant to a capacity of 20 million pounds annually. Consumption of phthalic should reach about 402 million pounds this year and increase 20% by 1965. Plasticizers account for 40% of the phthalic consumed now, and little change is expected over the next several years. On the average, a phthalate plasticizer contains 45% phthalic anhydride. But the percentage varies from 77% for dimethyl phthalate to 39% for dioctyl and diisooctyl phthalates. Aside from plasticizers, alkyd resins and polyesters are the other major out-

... by far the most impotant lets for p h t h a l i c a n h y d r i d e . In t h e past, alkyds w e r e t h e p r i m e use for p h t h a l i c , b u t this year plasticizers will likely t a k e t h e t o p r u n g . Alkyd m a n u facture h a s r e a c h e d its g r o w t h p e a k , a n d f u t u r e increases s h o u l d b e m o d e s t . A b o u t 160 million p o u n d s of p h t h a l i c a n h y d r i d e w a s u s e d to m a k e alkyds last year, a n d 1965's c o n s u m p t i o n m a y differ only slightly. L a s t m o n t h , p h t h a l i c ' s price d r o p p e d to 1 5 1 / 2 cents a p o u n d (flake, b a g s ) a n d 15 cents ( m o l t e n , b u l k ) . Two m o n t h s earlier, it h a d b e e n l o w e r e d to 18 a n d Yl1/2 cents. In t h e futurem o r e r e d u c t i o n s m a y b e m a d e , particularly b y 1 9 6 5 . H o w e v e r , p r e s e n t conditions do not favor further r e d u c tions n o w . P h t h a l i c p l a n t s are r u n n i n g at a b o u t 8 0 % of capacity. N a p h t h a l e n e , t h e p r i m e r a w material, is c u r r e n t l y in short s u p p l y . As of M a y , 4 6 . 3 million p o u n d s w a s i m p o r t e d at prices r a n g ing from 11 to 17 cents a p o u n d , comp a r e d to 6 cents a p o u n d for d o m e s t i c naphthalene. T h e s u p p l y p i c t u r e will c h a n g e as

acid used in making plasticizers

is phthalic anhydride

m o r e p e t r o l e u m firms build p e t r o n a p h t h a l e n e facilities. In A u g u s t , Texaco said it w o u l d build a 100 million p o u n d - a - y e a r plant, a n d in S e p t e m b e r , Cities Service a n n o u n c e d plans for a 50 million p o u n d - a - y e a r plant. A s h l a n d Oil & Refining s t a r t e d p r o d u c t i o n of p e t r o n a p h t h a l e n e earlier this year, a n d Sun Oil, T i d e w a t e r , a n d M o n s a n t o should h a v e facilities on s t r e a m in 1962. All told, t h e r e are plans n o w for s o m e 6 5 0 million p o u n d s of p e t r o l e u m - d e r i v e d n a p h t h a lene, i n c l u d i n g a p r o p o s e d 5 0 million p o u n d - a - y e a r p l a n t of C o m m o n w e a l t h Oil Refining in P u e r t o Rico. Currently, t h e nation's effective ca-

New Text Although cost of raw materials for making dioctyl phthalate has declined, so have profit margins

Cost of raw materials (phthalic anhydride and 2-ethylhexanol) per pound of dioctyl phthalate produced

The price of dioctyl phthalate (DOP), the industry's most important plasticizer, continues to drop. This is one of the main reasons for the decreasing profit margin on this product. On the graph, the second from the top line shows the generally declining cost of the raw materials for making a pound of DOP. It has been computed on the basis that one pound of DOP is made by reacting 0.4 pound of phthalic anhydride with 0.7 pound of 2-ethylhexanol. To determine the actual profit margin on dioctyl phthalate, other costs (labor, selling, shipping, and so on), which usually total about 3 cents per pound of DOP, should be added to the raw material cost

p a c i t y for coke o v e n - d e r i v e d n a p h t h a lene is r a t e d at 5 0 0 million p o u n d s a year. This year, a b o u t 4 2 0 million p o u n d s of n a p h t h a l e n e should come from coke ovens. But availability from this source should decline in t h e future as t h e a m o u n t of coke used to m a k e a ton of steel decreases. But regardless of t h e source, m o r e t h a n e n o u g h n a p h t h a l e n e will certainly b e a r o u n d to h a n d l e n e e d s for p h t h a l i c a n h y d r i d e for m a n y years to c o m e . Next year, for e x a m p l e , t h e r e will b e at least 682 million p o u n d s of U . S . c a p a c i t y to m a k e o-xylene, t h u s a d d ing to t h e p h t h a l i c r a w material supply. In addition, p l e n t y of adipic acid will b e available for m a k i n g plasticizers in t h e c o m i n g years. Capacity n o w is 4 6 0 million p o u n d s annually, with D u Pont and Chemstrand the major producers. Monsanto and Allied also m a k e t h e acid, a n d R o h m & H a a s will b u i l d a 2 5 million p o u n d a-year p l a n t at Louisville, Ky., to go on s t r e a m in 1962. A d i p i c acid c o n s u m p t i o n r e a c h e d an e s t i m a t e d 3 8 0 million p o u n d s in 1960. All b u t 4 0 million p o u n d s of this w e n t into c a p t i v e use. C o n s u m p tion should climb to 4 2 5 million p o u n d s this year a n d to 5 0 7 million in 1 9 6 5 . N y l o n 66 is t h e major outlet for adipic acid, c o n s u m i n g s o m e 340 million p o u n d s in 1960. This year's c o n s u m p t i o n should rise b y 6 to 7%. F u t u r e n e e d s for adipic acid in making nylon d e p e n d on t h e " b a t t l e of t h e n y l o n s " b e t w e e n t h e 66 a n d 6 t y p e s . A p p a r e n t l y , it is safe to a s s u m e a c o n t i n u e d g r o w t h of nylon 66. T h i s will m e a n a n e e d for 4 5 0 million p o u n d s of adipic acid in 1965. Plasticizer demands for adipic should total 20 million p o u n d s this year a n d climb to 2 4 million in 1965. S y n t h e t i c lubricants should r e q u i r e 6 million p o u n d s then—essentially t h e s a m e a m o u n t t h a t will b e u s e d in 1 9 6 1 . A p o t e n t i a l g r o w t h area for adipic acid is in m a k i n g polyesters for u r e t h a n e foams. This year, polyesters NOV.

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... oleic and stearic acids, produced by 14

companies, are derived from inedible tallow

are expected to take 9 million pounds of adipic, and this figure should rise to 15 million in four years. This increase assumes that polyesters will continue to maintain their share of the growing urethane foam market. Miscellaneous outlets, such as alkyd resins and food and pharmaceutical applications, take 10 million pounds now and should account for about 12 million pounds in 1965. Fatty Acids and Other Acids Potential sources of fatty acids for plasticizers seem almost inexhaustible. Oleic, stearic, and palmitic acids are made from animal fats (palmitic acid also comes from cottonseed oil). Laurie acid is produced from coconut oil, and ricinoleic acid is made from castor oil. Total consumption of fats and oils in the U.S. last year was 9.8 billion pounds. About 1.2 billion pounds of this was split to make 568 million pounds of fatty acids—a 2% increase over 1959's production. Only 27 million pounds was used to make plasticizers. The major uses for these acids are in protective coatings, soaps, surfactants, and various intermediates. Oleic and stearic are the fatty acids most widely used in making plasticizers. They are produced by splitting inedible tallow, followed by distillation and pressing (solvent crystallization) to remove the unsaturated oleic acids from the saturated stearic and other acids. Fourteen companies today make commercial oleic and stearic acids. Their total effective capacity is estimated at between 392 and 465 million pounds a year. Emery Industries, the major producer of oleic and stearic acids, can make 120 to 130 million pounds annually. 122

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FATTY ACIDS. Some plasticizers are made in part from fatty acids. At Emery Industries, this solvent crystallization unit separates stearic and oleic acids

Capacity is not being used fully today. Oleic acid production was 85 million pounds last year, a slight decrease from the previous year. Output has averaged about 83 million pounds a year for the past nine years —going from a low of 74 million to a high of 93 million during that period. Assuming that 1965 is a good year, oleic acid's output then will probably be 85 to 90 million pounds. The major uses for oleic acid include chemical intermediates, which take about 40% of production, and soaps and surface active agents, which take about 30%.

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In 1962, Millions of Pounds

Chemstrand Pensacola, Fla. Du Pont Belle, W.Va. 1 Orange, Tex. J Monsanto Luling, La. Allied Chemical National Aniline Division Hopewell, Va. Rohm & Haas* Louisville, K y . Total * Due on stream in 1962, Source: C&EN

estimates

Oleic acid sells for 16V 4 cents a pound. Commercial stearic acid sells for 1 6 3 / 4 to 18V 2 cents a pound. Production of stearic acid was 57 million pounds last year—about 2 million pounds less than 1959's output.. About 55 to 60 million pounds is expected to be made in 1965. Like oleic acid, stearic's major uses are in making intermediates, soaps, and surfactants. Another major use is as a lubricant in the rubber industry, an outlet which accounts for about 25% of stearic's consumption. For the past several years, fatty

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