Environmental Protection
Agency
Toxic Substances
Washington DC 20460
Toxic Substances
SEPA Support Document
Economic Impact Analysis
of Proposed Section 5
Notice Requirements
Appendix: Volume II
Proposed Rule Section 5
Toxic Substances Control Act
-------
EPA-560/12-80-005-B
September 1980
ECONOMIC IMPACT ANALYSIS OF PROPOSED
SECTION 5 NOTICE REQUIREMENTS
APPENDIX: VOLUME II
Contract No. 68-01-5878
Project Officer:
Sammy K. Ng
ECONOMICS AND TECHNOLOGY DIVISION
OFFICE OF TOXIC SUBSTANCES
WASHINGTON, D.C. 20460
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF PESTICIDES AND TOXIC SUBSTANCES
WASHINGTON, D.C. 20460
-------
APPENDIX E
CHEMICAL SEGMENT PROFILES
-------
INTRODUCTION
ICF Incorporated (ICF) has developed the following profiles of chemical
industry segments as part of its continuing work in analyzing the impact on
the chemical industry of the premanufacturing notice provisions of the Toxic
Substances Control Act (TSCA). These profiles were undertaken for three
reasons. First, they provided ICF with the opportunity to survey all segments
of the chemical industry that would be affected by the provisions so that the
structure, conduct, and performance of these industry segments could be
tentatively and crudely assessed. Second, they provided ICF with a mechanism
for narrowing the in-depth portion of the work to segments in which
significant amounts of innovation will probably occur. Finally, they insured
that ICF would seek only that data from the industry which was not available
in the public file and was necessary to complete the economic analysis of this
set of regulations. (Industry would be least burdened in supplying data for
this analysis.)
These profiles are organized into seven segments: inorganic chemicals;
synthetic high polymers; amphipathic compounds; elementary organics; organics,
not elsewhere classified; catalysts; and other chemical products. Within each
segment, component product profiles are provided. For those segments which
contain more than one component product profile the first page of the chapter
lists the component product summary and then provides a brief description of
the segment's general characteristics.
These profiles are based on publicly available data only. Major sources
of information are: Census of Manufactures, Kline Guide to the Chemical
Industry, 10-Ks and annual reports, trade journals, and business periodicals.
Within each profile sources are clearly noted.
Readers of these profiles will note that the length of the profiles varies
substantially. This reflects ICF's efforts to focus resources. For example,
if a component product had extremely small sales volume, was characterized by
no innovation, and was not likely to be affected by innovation in other
component products, ICF dismissed it. For sectors in which substantial
innovation is occurring (according to public sources), considerable effort was
devoted to insure that public data on this segment have been exhaustively
explored.
In addition to the principal authors of this report, the following
individuals contributed substantially to this appendix: Aaron Goldberg, Lori
Hashizume, Glenn Kautt, Kenneth Kolsky, Frank Lerman, Steven Payson, Steven
Stern, and Marguerity Voorhees.
On the next page we list the component products and segments in the order
in which they occur in this document.
-------
TABLE OF CONTENTS: APPENDIX: VOLUME II
APPENDIX E: CHEMICAL SEGMENT PROFILES
PAGE
Segment component Products
Inorganic Chemicals 1
industrial gases 4
fertilizers 18
inorganic pigments 34
all other inorganic chemicals 50
Synthetic High polymers 80
plastics and resins 83
organic fibers, non-cellulosic 98
synthetic rubber 115
Amphipathic compounds 129
surfactants 133
fatty acids and glycerine 146
soaps and detergents 158
Elementary Organic chemicals 170
petroleum refinery products 172
cyclic crudes 190
gum and wood chemicals 196
Organic Chemicals, NEC. 203
cyclic intermediates 207
miscellaneous organics 218
synthetic organic dyes and pigments.226
plasticizers 239
rubber-processing chemicals 251
Catalysts 261
Other Chemical Products 272
cellulosic man-made fibers 275
polishes and sanitary goods 285
paints and allied products 290
adhesives and sealants 300
explosives 308
printing ink 314
toilet preparations 316
carbon black 318
salts, essential oils, chemical
preparations, nee 320
-------
INORGANIC CHEMICALS
-------
E-2
Inorganic Chemicals Segment Summary
Industrial Gases
Fertilizers
Inorganic Pigments
All Other Inorganic Chemicals
Inorganic Chemicals are chemicals that are not carbon-based. As a result,
they have relatively limited bonding ability and usually cannot be used as
building blocks to form large molecules. This factor acts to lower their
structural and functional diversity.
In general, there appears to be relatively little product innovation in
the inorganic chemicals segment. _ The difficulty in forming large molecules,
referred to above, is one reason for this lack of innovation. Another reason
is that the study of inorganic chemicals is one of the oldest fields in
chemistry. Because of the relative lack of product innovation in inorganic
chemicals, inorganic chemicals markets typically exhibit the following
features:
Many important products have the status of commodity chemicals
standardized products produced on a very large scale.
Commodity chemicals tend to be produced by large companies, and
the markets are often highly concentrated. Because of the
importance of commodity chemicals in the inorganic chemicals
segment, market concentration is higher in inorganics than in
other segments of the chemical industry.
There is a great premium on process innovation in commodity
chemicals, and in inorganic chemicals in general. Even though
producers find it difficult to capture new markets through the
introduction of new products, by improving the efficiency of
their production processes manufacturers may be able to lower
costs, lower prices, and capture new markets.
Research and development expenditures tend to be concentrated in
engineering process innovations rather than in basic scientific
research.
The above
iption should not lead one to believe that there is no
•h A .. ,_• _. • !____»_ ^ * * ^ _ ^ *•. i» * * A
-------
E-3
produced in amounts too small for commercial development. In addition,
process innovation often leads to the development of new chemical
intermediates.
It may be a mistake to predict that future innovation in inorganic
chemicals will look like past innovation. In recent years an enhanced
theoretical understanding of inorganic chemistry has emerged from university
laboratories. These theoretical innovations have not yet been translated into
commercial innovations, but it is quite possible that they may be
commercialized in the future. If so, innovation in the inorganic chemical
segment could increase substantially.
-------
E-4
Industrial Gases
-------
E-5
INDUSTRIAL GASES
DESCRIPTION
The industrial gases are comprised of nine gases, many of which have been
used by the chemical industry for over 100 years.V The largest dollar
volume industrial gas is oxygen, which in 1977 accounted for 37 percent of
total dollar shipments. Following oxygen, ranked by dollar volume of
shipments, are nitrogen, acetylene, carbon dioxide, and hydrogen. Helium and
argon rank sixth and seventh, respectively, in dollar volume sales for
1978. y
Generally, industrial gases are produced in one- or two-step processes,
and are themselves later used as feedstocks for the production of other
chemicals. They may be in solid, liquid, or gaseous form; transportation and
handling considerations often determine the physical state of the industrial
gases. Transportation through pipelines is becoming an increasingly popular
method, in which case the gaseous state is desirable. For transportation in
cylinders, tank cars, or barges, the liquid or—less often—the solid state is
used.
ENGINEERING PROCESS
Industrial gases are obtained from three main sources: the air,
hydrocarbons, and the processing of other chemicals and elements—such as
calcium carbide—which yield these gases as byproducts or coproducts. The
first source, the air, requires the least complex processing. Air is
liquefied at extremely low temperatures and its components are separated,
producing hydrogen, oxygen, nitrogen, and smaller amounts of argon and other
elements which are present in traces.
Hydrocarbon processing, the second method of obtaining industrial gases,
involves treating natural gas. Argon and helium are frequently obtained in
this fashion.
Additionally, much of the industrial gas produced is obtained as a
byproduct or a coproduct of other chemical operations. The gas is drawn off
and purified, to be used later. If the industrial gas production, treatment,
and use are done in one plant or in adjacent facilities, the production is
known as "captive"'. Data on captive production and consumption are usually
not included in commerce reports, and it is estimated that overall production
data for industrial gases is, therefore, about 15 percent too low.2/
i/All industrial gases are contained in the SIC category 2813.
Z/Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed.,
Fairfield, N.J.: Charles Kline & Co., 1977).
j/Chemical Purchasing, October 1977.
-------
E-6
USES
industrial gases are used primarily in the chemical, metals, and food
industries (see Table 1 and Figure 1) . They are also used diversely in
manufacturing and are increasingly important in petroleum recovery.
The chemical industry utilizes industrial gases extensively in the
formulation of intermediate and final products Acetylene, for example, is an
important building block in the production of vinyl chloride and a ^e< °f
various plastic products. Hydrogen is used in numerous steps of petroleum
refining. The production of fertilizer also requires large quantities of
industrial gas.
The metals industry uses some industrial gases to control the degree to
which metals will or will not react. Oxygen, for example, finds its primary
use in the steel industry, where its highly reactive nature increases the
temperature and efficiency of furnace operations. Argon and helium, on the
other hand, are extremely inert; they are used when a protective, non-reactive
atmosphere is needed. Argon is used extensively in welding operations.
The food industry utilizes industrial gases for refrigeration and
freezing. Nitrogen, hydrogen, and carbon dioxide are liquefied at very low
temperatures and then circulated, cooling or freezing the areas around them.
The freeze-drying of foods, as well as the freezing of prepared foods, is a
huge and fast-growing use. Carbon dioxide is also used extensively in the
production of soft drinks.
Other applications for industrial gases include the atmosphere within
electric light bulbs and tubes (argon and neon), and anaesthetics (nitrous
oxide). Additionally, energy research has indicated huge potential for the
use of industrial gases in energy storage and transmission, as well as in
fusion and conventional fission reactions.
The petroleum industry is using increasing amounts of industrial gas,
particularly carbon dioxide, for oil well stimulation. The gas is either
applied alone or combined with water to pressurize wells and aid secondary and
tertiary oil recovery. Higher prices for oil should stimulate increased
utilization of carbon dioxide for oil stimulation and should encourage the
shipment of merchant carbon dioxide into oil fields.V
INDUSTRY STRUCTURE
The industrial gas industry is extremely concentrated. While there are
numerous production locations, only a limited number of large companies
I/Ibid.
-------
E-7
TABLE 1
MAIN USES OF INDUSTRIAL GASES
Metals
Oxygen
Argon
Helium
Nitrogen
Food
Carbon Dioxide
Nitrogen
Chemicals
Acetylene
Nitrogen
Hydrogen
Argon
Other
Argon
Helium
Hydrogen
Neon
Nitrous Oxide
-------
E-8
ACETYLENE
FIGURE 1
CONSUMPTION PATTERNS
vinyl chloride
welding & metal cutting
acrylates & acrylic acid
vinyl acetate
acetylenic acid
tetrahydrofuran
other
(24.6%)
(20.7%)
(20.7%)
(14.4%)
(6.9%)
I
(6.7%)
(6.0%)
CARBON DIOXIDE
gapitive Use
chemical raw material for urea production
(44%)
(40%)
chemical raw material for production of
methanol and sodium carbonate; inerting;
pressurizing in coal mining; and oil recovery ( 4%)
Merchant Use
oil well stimulation
refrigeration
carbonation
chemical raw material
inerting
pressurizing
miscellaneous applications
(56%)
(30%)
(11%)
( 5%)
( 3%)
( 3%)
( 1%)
( 3%)
-------
E-9
CARBON DIOXIDE (conf d.)
OXYGEN
FIGURE 1 (Continued)
CONSUMPTION PATTERNS
Steelmaking
basic oxygen process
open hearth
electric furnace
Other Steel Industry Applications
Non-Ferrous Metal Industry
Chemicals
ethylene oxide
acetylene
titanium dioxide
propylene oxide
vinyl acetate
miscellaneous chemicals
Miscellaneous Applications
(50.6%)
(39.6%)
( 9.3%)
( 1.7%)
(14.8%)
(12.0%)
(12.0%)
( 4.9%)
( 2.3%)
( 1.7%)
( 1.4%)
( 1.4%)
( 0.3%)
(10.6%)
Source: Gloria M. Lawler, ed., Chemical Origins and Markets (5th ed., Menlo
Park, CA: Chemical Information Services, Stanford Research Institute, 1977).
-------
E-10
consistently supply the market, and only a small number have large national
sales. In 1976, combined sales of the three largest producers accounted for
65 percent of total shipments. Sales of the six largest accounted for 91
percent of the totaX5./ (see Table 2) . It should be noted that because the
concentration ratio is based on the value of shipments, rather than on
production figures, industrial gases produced captively are not reflected.
Thus, there are actually many more sizeable producers than the concentration
ratio would indicate.
Part of the reason for both the large number of captive producers and the
extremely high concentration ratio is the economics of transportation involved
for industrial gases. With the exception of pipeline transport, general
shipment of industrial gases further than approximately 200 miles is not
feasible.]>/ This constraint results in a substantial number of smaller
regional producers, an incentive for captive production and consumption, and a
small number of very large volume producers who have access to a pipeline and
can thereby transport large volumes of gas over long distances.
PRICES
Pricing trends for industrial gases have not been consistent. Measured
in constant dollars, the prices of most industrial gases fell quite steadily
from 1967 to 1973 (see Table 3). In 1974, however, a significant price
increase occurred. A general trend of increasing prices has since continued
up through 1978.
Just as the pricing past was somewhat unstable, the pricing future is
uncertain as well. The biggest threat to prices is the potential for
overcapacity and overproduction.I/ it is not clear if demand for industrial
gases will increase substantially in the next few years, as some predictions
claim, if it will grow only moderately or if overcapacity will be realized and
prices will drop.
In addition to overall supply, the major factor affecting industrial gas
prices is the sharply rising cost of energy. The production of industrial
gases is extremely energy-intensive, regardless of which engineering process
is used. Thus, any industrial gas price must reflect the cost of this
important production factor.
1/Meegan, Kline Guide.
VChemical Purchasing, October 1977.
2/Ibid.
-------
E-ll
TABLE 2
MAJOR U.S. PRODUCERS OF INDUSTRIAL GASES: 1976
Rank
1
2
3
4
4
4
Company
Union Carbide
Airco
Air Products & Chemicals
Chemetron
Houston Natural Gas
Big Three Industries
Other
$ Million
$ 325
220
190
95
95
95
105
Total $l,125a/
S./U.S. Department of Commerce figure of 984 is
approximately 15 percent too low, as it does not
include the complete value of the conversion of liquid gas.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical
Industry, (3rd ed., Fairfield, NJ: Charles Kline and
Company, 1977).
-------
E-12
TABLE 3
INDEX OF AVERAGE MANUFACTURERS' PRICES OF INDUSTRIAL GASES: 1967-1976
02, High
Year Purity
Nitrogen,
High Purity Acetylene CO2
Argon, High
Hydrogen Purity Totals*/
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
100.0
99.7
91.5
91.9
89.0
75.9
73.3
83.8
108.5
101.3
Excludes CO,
100.0
100.5
92.5
84.1
76.8
68.0
68.4
73.9
94.5
88.6
100.0
102.4
98.6
104.0
124.7
122.2
146.2
195.1
292.5
284.7
100.0
90.8
77.0
74.0
64.8
66.1
62.5
73.4
77.9
84.4
100.0
94.7
105.9
119.5
128.4
119.4
142.6
180.6
181.5
172.6
100.0
117.5
111.5
107.0
71.8
64.1
60.6
75.7
109.4
101.6
100
99
94
92
87.4
75.8
72.1
87.0
108.3
103.8
Source: Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977), p. 84.
-------
E-13
TABLE 4
INDUSTRIAL GAS PRODUCTION: 1973-1977
Industrial Gas
Acetylenea/
Production
Unit
Mil. cu. ft.
1977
5,972
1976 1975
7,111 6,704
1974
7,808
1973
8,2
Carbon Dioxide Short tons 2,255,814 2,063,665 1,850,318 1,804,251 1,565,506
Argon,
High Purity
Heliumb/
Hydrogen£/
Nitrogend/, e_/
Oxygend/, e/
Nitrous Oxide
Mil. cu. ft.
Mil. cu. ft.
Mil cu. ft.
Mil. cu. ft.
Mil. cu. ft.
1,000 gals
(STP)
5,925
N/A
84,506
331,545
392,984
N/A
5,107
1,339
82,100
288,868
388,446
1,940,969
4,457
1,078
73,552
252,368
352,554
1,652,298
4,688
883
81,536
243,316
389,628
1,628,271
4,325
3,205
65,169
227,160
389,436
1,281,590
a/Excludes information from railroad ships, shipyards, welding shops, and
small establishments using portable generators.
.b/U.S. Department of the Interior, Bureau of Mines.
£/Excludes amounts vented, used as fuel, etc., and amounts produced and
consumed in the manufacture of synthetic ammonia and methanol, but includes an
unspecified amount produced for sale or interplant transfer to plants
consuming this gas in the production of ammonia. Also excludes amounts
produced by the ammonia dissociation process. Also excludes amounts produced
in petroleum refineries for captive use.
^./Excludes amounts produced and consumed in the manufacture of synthetic
ammonia or ammonia derivatives.
£/Data for 1973 and 1972 include figures for high and lower purity gas.
SOURCE: U.S. Department of Commerce, Bureau of Census, Current Industrial
Reports (Washington, D.C.: Government Printing Office, 1977).
-------
E-14
INNOVATION
Most industrial gases have been used for over a century, and the industry
is generally considered to be quite mature. There have been no major product
or process innovations for a number of years, and none are expected. There
have been, however, a number of important use innovations in the past few
years, and there is a definite potential for further innovations of this type.
The most important recent use innovation involves the use of argon in the
production of stainless steel. Discovered in 1968 by Union Carbide and Joslyn
Stainless Steel, this process substantially increases the quality of stainless
steel and is becoming increasingly popular with manufacturers. It is esti-
mated that currently more than 90 percent of U.S. stainless steel is manufac-
tured by the argon-oxygen decarburization process.jy
A number of use innovations appear to have already been discovered or
hypothesized by researchers, but have not yet been put into practice. We feel
that this has occurred for one of two reasons: either the use innovation has
not yet been refined to a degree sufficient to allow widespread acceptance and
use, or it is not yet cost effective. The extent to which these potential
uses are put into practice may determine pricing trends and patterns for
industrial gases in the coming years.
An example of use innovation with a huge potential that has not yet been
exploited is helium. Among its potential uses are magnetic containment
systems for fusion reactors; high temperature gas turbines; laser-based
missile defense systems; magnetic propulsion units for new transport systems;
and low-temperature energy transmission, distribution, and storage.J/
Additionally, hydrogen may be used to store energy for motor vehicles and
stationary power plants,!£/ oxygen may be used in the treatment of
wastewater by revitalizing aerobic bacteria, and nitrogen has begun to replace
natural gas as an inert blanketing agent for metals, electronics, and chemical
processing. H/
J/Chemical & Engineering News, August 21, 1978.
I/Science, December 7, 1979, p. 1145.
l°/Chemical & Engineering News, May 15, 1978.
JLJi/Chemical & Engineering News, July 16, 1979.
-------
E-15
FOREIGN TRADE
There are virtually no imports of industrial gases. Exports, however,
have generally been increasing over the past years. Nitrogen is an exception
to this trend; its exports fell by nearly $244 million between 1976 and 1977.
Overall, during the period 1973-1977, the value of industrial gas exports
increased from $6,441,000 to $20,838,000, or by 224 percent (see Tables 5, 6).
SHIPMENTS
Total shipments of industrial gases were $1,080 million in 1977 compared
to only $572 million in 1967.i2./ constant dollar shipment forecasts are
approximately $1,300 million in 1980 and $1,850 million in 1985.
The substantial increase in the dollar volume of foreign trade and
shipments is related to both volume and price. Price increases (Table 3) have
been large for a number of industrial gases—particularly acetylene and
hydrogen. Although acetylene production fell from 8,269 million cubic feet in
1967 to 7,111 million cubic feet in 1976, the value of production was 67
percent higher in 1976.
Hydrogen experienced both price and production increases, such that the
adjusted value of production was 52 percent higher in 1977 than in 1973.
For some industrial gases, particularly nitrogen and carbon dioxide,
volume increases have been the important factor in the increased value of
shipments. From 1973 to 1977, production of nitrogen increased by 46 percent,
and production of carbon dioxide increased by 44 percent.
12/Meegan, Kline Guide, p. 81
-------
TABLE 5
U.S. EXPORTS—DOLLAR VALUE OF SHIPMENTS
Unit of
SIC Commodity Shipment 1973 1974 1975 1976 1977
281320 00 acetylene MCF 62,637 261,926 273,941 264,577 569,644
281330 00 carbon dioxide,
nitrous oxide, & ~ 1,040,447 1,131,152 1,526,283 1,866,551 2,156,015
carbon monoxide
281340 20 oxygenS/ MCF 670,266 720,028 1,682,422 2,098,415', 2,467,005
281340 40 nitrogen^/ MCF 1,074,719 1,220,582 1,448,891 2,310,414 2,066,481
281340 97 hydrogen, rare
gases, & liquid air MCF 3,592,820 5,232,779 7,761,984 10,733,842 13,398,819
£/Changed to 281360 00 in 1977 figures.
w
^/Changed to 281350 00 in 1977 figures. M
CTi
Source: U.S. Department of Commerce, U.S. Exports, FT 610, various years.
-------
E-17
TABLE 6
BALANCE OF TRADE; INDUSTRIAL GASES
(thousands of dollars)
1977 1976 1975 1974 1973 1965
Value of Exports 20,838 17,274 12,694 8,566 6,441 3,164
Value of Imports — — — — — —
Balance of Trade 20,838 17,274 12,694 8,566 6,441 3,164
Source: Totals from Table 5.
-------
FERTILIZERS
-------
E-19
FERTILIZERS
DESCRIPTION
Until recently, natural organics such as manure/ wood ash and bone meal
were used to supply nutrients necessary for plant growth. Most of these
materials have since been replaced by chemical fertilizers. The first
chemical fertilizer, superphosphate, was developed in the early 19th century,
and physical mixing of several fertilizer materials occurred in 1849. By the
early 1930s, scientists discovered ways to chemically combine multinutrient
fertilizers—ammoniating superphosphate was the first attempt at this.
Fertilizers are mainly composed of the primary nutrients needed for plant
growth: nitrogen, phosphorus, and potassium. SIC codes 2873 and 2874
encompass the nitrogenous and phosphatic fertilizer industries, respectively.
Potassium compounds fall under SIC code 2819, and mixing fertilizers are
covered by SIC code 2875. For purposes of our analysis we exclude industry
2875 because items in this category are not chemicals per se, but products
like compost, mixed fertilizers, and potting soil.
ENGINEERING PROCESS
Ammonia is the starting point for almost all nitrogen fertilizers.
Ammonium nitrate, for example, is derived by the action of ammonia vapor on
nitric acid. Ammonium sulfate, also a nitrogenous fertilizer, is derived by
one of several processes: 1) reaction with sulfuric acid, followed by
crystallization and drying, 2) neutralizing synthetic ammonia with sulfuric
acid, 3) as a byproduct of caprolactum (a chemical used to manufacture
synthetic fibers and plastics), and 4) from gypsum, by reaction with ammonia
and carbon dioxide.
Ammonia is also the starting point for a few phosphatic fertilizers. For
example, ammonium phosphate is derived by interaction between phosphoric acid
and ammonia. Diammonium phosphate and ammoniated superphosphate also contain
ammonia.
Superphosphate, the most important phosphatic fertilizer, is made by the
action of sulfuric acid on insoluble phosphate rock to form a mixture of
gypsum and calcium phosphate-monobasic.
USES
Figure 1 presents a breakdown of the uses of four inorganic fertilizer
materials: ammonia, ammonium sulfate, phosphoric acid, and urea. It is
important to note that all of these materials have non-fertilizer uses ranging
from the production of fibers, plastics, resins and elastomers, to the
treatment of water and waste. With the exception of ammonium sulfate, the
bulk of each of these materials is used as fertilizer.
-------
E-20
FIGURE 1
INORGANIC FERTILIZER CONSUMPTION PATTERNS
Fertilizers
Ammonia
Fibers, Plastics, Resins, Elastomers
Explosives and Blasting
Feeds
Miscellaneous Applications
Exports
69%
7%
3%
2%
10%
9%
Ammonium Sulfate
Pulp and Paper
Treatment of Water and Waste
Miscellaneous Applications
Exports
48%
44%
5%
3%
Phosphoric Acid
Fertilizers
Builders and Water Treatment
Livestock and Poultry Feeds
Foods, Beverages, Pet Foods, Dentifrices
Direct Acid Treatment of Metal Surfaces
Miscellaneous Applications
Exports
80%
8%
6%
2%
1%
2%
1%
Urea
Fertilizers, solid
Fertilizers, liquid
Livestock feeds
Industrial Applications
Exports
36%
29%
10%
10%
15%
Source: Gloria M. Lawler, ed., Chemical Origins and Markets (5th ed., Menlo
Park, CA: Chemical Information Services, Stanford Research Institute, 1977).
-------
E-21
INDUSTRY STRUCTURE
The fertilizer industry experienced major changes in the last 15 years as
the number of fertilizer products increased dramatically and new forms of the
final product were developed.!/ Companies intensified efforts to integrate
both vertically and horizontally. Many nitrogen producers, for example,
integrated forward to the retail level by acquiring old fertilizer outlets or
building new ones. To a large extent this vertical integration eliminated the
wholesaler..?_/ Moves of this type were made by other chemical and
petrochemical companies that were new to the fertilizer business yet concerned
about securing reliable markets for their large-scale plants.I/
Many companies also moved horizontally to acquire phosphate producers
and, in some instances, potash sources. Some phosphate producers in turn
entered into nitrogen production..!/
Severe declines in the price of fertilizer eventually led to divestitures
by many of the petrochemical companies. Of the sixteen that were once in
business only ten were still operating at the end of 1973.I/
Relatively speaking, concentration in the industry is low, with the top
four companies out of 34 accounting for only 23 percent of the business. The
top eight account for 41 percent (see Table 1).
PRICES
A summary of the Wholesale Price Index for fertilizers appears in Table 2.
From 1967 to 1973, fertilizer prices exhibited an overall decline. Moderate
increases in 1973 preceded dramatic price increases in 1974 and 1975,
particularly for ammonia, ammonium nitrate, ammonium sulfate, phosphates and
potash.j>/ prices declined somewhat in 1976 and 1977. The United States
Department of Agriculture reported farm level fertilizer prices at 181 in May
1978 (1967= 100) and at 194 in May 1979.I/ Prices for selected fertilizers
are presented in Table 3.
i/Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
.2/It is not clear that another study would substantiate this statement.
1/Meegan, Kline Guide.
i/Ibid.
I/Ibid.
I/Ibid.
I/Chemical Week, June 20, 1979.
-------
E-22
TABLE 1
MAJOR U.S. PRODUCERS OF FERTILIZERS, 1976
RANK COMPANYSALES!/
(millions of dollars)
48°
375
35°
300
30°
300
300
25°
205
200
200
190
180
180
175
165
150
150
140
130
120
120
115
110
100
100
100
100
95
90
90
70
50
50
420
1
2
3
4
4
4
4
8
9
10
10
12
13
13
15
16
17
17
19
20
21
21
23
24
25
25
25
25
29
30
30
32
33
33
—
The Williams Companies
Farmland Industries
CF Industries
American Cyanamid
W.R. Grace
Hooker Chemical
U.S. Steel
Estech
IMC
Borden
Gardinier
Kaiser Aluminum
Allied Chemical
Kerr-McGee
Chevron Chemical
Mississippi Chemical
Cominco American
Texasgulf
Royster
Beker Industries
Valley Nitrogen
Vistron
JR Simplot
First Mississippi
Amoco
Monsanto
Olin
Union Oil of California
Indian Farm Bureau
Agway
Phillips Petroleum
Terra Chemical
Nipak
Potash Co. of America
Other
Total
$6,450
Estimated sales valued at manufacturer's price.
Source: Charles Kline & Co.
-------
E-23
Higher prices were a result of increased farm demand for fertilizers and
rising production costs. Because of increases in energy prices, U.S.
fertilizer production costs have been moving up at a rate of 15 to 20 percent
annually..§/
TABLE 2
FERTILIZER PRICE INDEX
(1967 =100)
Year
1978
1977
1976
1975
1974
1973
1972
1970
1968
Fertilizer
Materials
157.4
154.7
181.3
205.1
89.2
75.2
71.9
75.9
79.4
Nitrogenates
151.0
148.2
159.4
187.6
89.6
72.6
67.2
71.5
66.8
Phosphates
,1
,3
176.
172.
217.6
240.9
85.2
75.0
75.0
79.3
103.1
Potash
154.1
159.6
172.4
156.8
110.9
100.5
98.6
97.6
100.3
Source: U.S. Department of Commerce, Wholesale Price Index, 1979.
SHIPMENTS
The U.S. fertilizer industry is highly volatile in terms of production
and shipments. Values of shipments between 1967 and 1969 declined severely as
a result of falling prices and three successive years of poor fertilizing
weather, but recovered slowly thereafter until 1972.2/ Sales were up a
considerable 8.7 percent in 1973 due to stronger unit demand and rising prices.
Inadequate supplies, predictions of shortages and rapidly escalating prices
continued to stimulate investment in fertilizer plant facilities until 1976.
Unfortunately for the fertilizer industry, farmers were just experiencing
falling prices for their farm products, and as a result of this and rising
fertilizer prices, they sharply reduced their use of fertilizers. Inventories
^/Chemical and Engineering News, February 12, 1979.
.2/Meegan, Kline Guide.
-------
E-24
TABLE 3
FERTILIZER PRICES
SHIPMENTS AND INTERPLANT TRANSFERS
(Price per Ton)
Calendar
Year
1947
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
Anhydrous
Ammonia
62.68
80.60
84.40
85.05
89.41
89.37
84.13
75.26
70.92
72.97
69.57
69.52
71.83
70.11
68.88
68.06
67.45
63.51
54.83
41.70
34.02
33.84
34.07
35.37
42.68
92.62
148.29
106.96
106.53
Sulfuric
Acid
13.13
14.43
16.94
17.38
18.70
19.45
19.32
18.81
18.40
18.29
19.01
18.69
17.95
17.65
17.16
16.54
16.68
17.32
18.66
21.18
20.98
19.05
19.14
18.23
•18.34
23.36
32.38
31.82
33.05
Ammonium-
Nitrate
_—
—
—
__
—
54.98
55.79
51.22
44.21
55.60
43.27
48.86
49.14
51.79
48.79
54.87
50.99
50.28
45.70
36.35
32.60
48.60
48.42
51.50
61.77
83.07
116.45
120.96
133.48
Ammonium-
Nitrate
—
—
—
—
68.52
66.07
62.89
58.88
61.44
60.89
62.02
63.54
62.43
60.91
59.72
59.03
53.87
52.20
46.27
42.13
44.42
44.81
42.35
55.82
93.78
117.49
96.30
108.68
Nitrogen
Solutions
—
—
114.56
117.02
124.10
124.96
123.47
109.64
112.35
111.55
115.67
123.23
132.38
131.40
119.15
120.54
129.25
116.91
111.80
107.71
84.99
76.14
83.40
90.54
106.03
168.53
230.20
227.74
237.24
Ammonium—
Sulfate
48.52
38.01
44.48
47.38
47.47
44.92
44.92
36.71
33.16
33.12
33.12
31.97
34.34
30.54
27.63
28.41
28.01
28.34
29.96
25.93
24.53
18.09
16.55-
19.53
28.00
61.35
71.56
40.51
45.29
d/
Urea -
—
—
—
—
—
—
101.81
92.41
93.78
93.39
93.10
89.00
87.25
87.18
84.42
80.88
79.96
86.02
73.69
62.65
56.11
59.69
52.61
51.58
66.51
138.97
152.08
124.32
124.83
.
Urea ^
—
—
—
—
—
—
—
—
111.09
90.62
100.17
105.08
91.93
84.14
87.00
88.43
89.35
80.40
82.61
72.87
62.19
40.23
55.55
56.59
71.08
96.69
126.09
91.90
145.19
Phosphoric
Acid
162.21
163.91
180.38
175.72
165.50
168.75
163.15
155.10
153.82
137.80
148.70
143.65
139.99
129.95
124.74
120.01
110.77
109.41
111.69
109.53
98.30
98.69
91.87
92.62
106.60
165.36
180.77
191.34
189.16
2/Solution, fertilizer grade.
b/solid, fertilizer grade.
£/Other than coke oven.
I/Solid fertilizer.
I/Liquid fertilizer.
Source: U.S. Department of Agriculture, Agricultural Stabilization and Conservation. Service, The
Fertilizer Supply, 1978-1979.
-------
E-25
grew and oversupplies forced fertilizer prices to decline.IJ)/ The value of
shipments of fertilizers in 1968, 1969, and 1976 showed decreases in shipment
value of 11 percent, five percent, and four percent, respectively. The other
years showed gains in value (see Table 4). In 1977, shipments were estimated
to be $6,835 million, or approximately 8.3 percent of total chemical industry
sales. Table 5 breaks down the value by its components.
TABLE 4
U.S. SHIPMENTS OF FERTILIZERS 1967-1977
(millions of dollars)
Year
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976-a
1976-e
Nitrogen
compounds
$1,031
915
831
898
901
927
1,188
2,155
2,937
2,546
2,750
Phosphates
$ 542
523
421
472
452
421
443
913
1,209
1,160
1,225
Potash-a
$ 162
153
139
187
214
224
269
395
455
515
535
Mixed
Fertilizers
$1,029
1,043
943
922
970
1,094
1,287
1,916
2,116
2,200
2,325
Total
$2,770
2,634
2,334
2,479
2,537
2,678
3,194
5,390
6,754
6,452
6,835
a- includes imports for consumption.
e- estimates.
Sources: U.S. Department of Commerce, Bureau of Census, Current Industrial
Reports (Washington, D.C.: Government Printing Office, various
years); U.S. Department of Commerce, Bureau of Census, 1972
Census of Manufactures (Washington, D.C.: Government Printing
Office, 1975); U.S. Department of Interior, Bureau of Mines,
Minerals Yearbook (Washington, D.C.: Government Printing Office,
various years); U.S. International Trade Commission, Synthetic
Organic Chemicals (Washington, D.C.: Government Printing Office,
various years); and estimates by Charles Kline & Co.
Ifi/Ibid.
-------
E-26
TABLE 5
VALUE OF SHIPMENTS, 1977
(thousands of dollars)
Nitrogen compounds3-/: $2,750
Phosphates (except phosphate rock): 1,225
Potash^/: 535
Mixed Fertilizers: 2,325
a/ Includes sizeable amounts used in nonfertilizer applications.
b_/ Includes imported, potash as well as domestic shipments.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd
ed., Fairfield, N.J.: Charles Kline & Co., 1977).
The 1978 value of shipments was expected to increase approximately three
percent for nitrogen and four percent for potash.il/
The composite nature of the statistics of values of shipments can mask
some important changes in its components. For example, although it is not
totally clear from the value figures, fertilizer prices rose tremendously from
the period 1973 to 1976, and in 1976 they decreased sharply. These changes
came about because of consecutive under- and over-supply. As noted earlier,
manufacturers responded to the high prices and inadequate supplies by building
new plants; the result was a sharp increase in inventories and supplies. As a
final result, prices dropped to significantly lower levels in 1976.
The pictures that one draws on fertilizer supply are somewhat
controversial. While some sources point to real or anticipated overcapacity,
there are also predictions of shortages of some fertilizer products in 1980.
Edwin M. Wheeler, President of the Fertilizer Institute, predicted an increase
of 53 million tons in fertilizer use for the 1979-80 fertilizer year (July 1 -
June 30). Phosphorous and potash supplies are specifically predicted to be in
limited supply by spring 1980I2/ On the other hand, the Kline Guide states
that the phosphate industry is most affected by overcapacity, and that some
nitrogen overcapacity is anticipated as well.
il/U.S. Department of Commerce, 1978 U.S. Industrial Outlook
(Washington, D.C.: Government Printing Office, 1978).
Week, September 5, 1979.
-------
E-27
Future shipments of fertilizers are forecast by the Kline Guide to
increase in constant dollars by approximately 6 percent a year, reaching $7.8
billion in 1980 and $9.7 billion in 1985. The U.S. Industrial Outlook
predicts an approximate 3 percent annual real growth in value of shipments
with no significant increase in prices.
PRODUCTION AND GROWTH
Although chemical fertilizers have been in use since the early 19th
Century, real growth in fertilizer demand occurred in the post-World War II
period. During this period, there was an enormous expansion in both tonnage
of primary nutrients applied to soils and in the number and complexity of
materials containing nutrients. Domestic consumption rose from 4.1 million
tons in crop year 1950 to 20.8 million tons in crop year 1976, an increase of
more than fourfold.
The industry has undergone several major changes in recent years. In
addition to a sharp increase in the number of fertilizer products, there have
been significant changes made in the final form of fertilizer materials
(granulated solids, liquids, etc.). These new products have resulted in new
application techniques and changes to the distribution system.
Although production of selected inorganic fertilizers fluctuates from
year to year, some generalizations can be made about output during the
six-year period from 1974 to 1979.il/ Production of synthetic anhydrous
ammonia appears to have increased slightly over the six-year period from
approximately 1.2 million tons in Jauary 1974 to 1.4 million tons in October
1979. Phosphoric acid production increased substantially more than synthetic
anhydrous ammonia. January 1974 output was just above 525 thousand tons. By
October 1979, output increased to 796 thousand tons, an increase of 51
percent. Production of phosphatic fertilizer materials exhibited an overall
increase of 41 percent during the same period from 425 thousand tons in
January 1974 to more than 600 thousand tons in October 1979.
Monthly production figures of principal inorganic fertilizers from August
1977 to October 1979, are summarized in Table 6.
FOREIGN TRADE
A substantial amount of U.S.-produced fertilizer is exported to other
countries, and exports are a very important part of the U.S. fertilizer
industry, it is estimated that exports comprise 10 percent of all
conclusions are drawn from a graph appearing in the U.S.
Department of Commerce, Bureau of Census, Current Industrial Report on
Inorganic Fertilizer Material and Related Products, October 1979. Precise
values of earlier annual production were not available.
-------
E-28
shipments.14/ since 1973, the balance of trade in fertilizers has been
consistently positive, and although a severe drop occurred in 1976, the 1977
total was $351 million (see Table 7).
Phosphatic fertilizers, or phosphatics, are by far the largest dollar
volume fertilizer export. In 1977, they accounted for $595 million, or 72
percent of all fertilizer exports.
Imports are mainly comprised of nitrogenous fertilizers. The negative
balance of trade for this category—$237 million in 1977—has pulled down the
overall positive balance of trade since 1974.
Despite some decreases in the dollar volume of exports and imports,
particularly in 1975 and 1976, quantities of fertilizer exports have
consistently grown. It is projected that, as foreign markets stabilize, the
growth of exports will slow down but probably still continue to increase.
Apparent consumption!^/ of nitrogen, phosphorous and potassium
fertilizers for crop year 1977 (ended June 30) is presented in Table 8. The
apparent consumption of both nitrogenous and potassium fertilizers exceeds
domestic production. However, in aggregate, the U.S appears to produce about
2 million tons more than it consumes.
MISCELLANEOUS FACTS ABOUT THE INDUSTRY
Table 9 summarizes information on the number of establishments and
employees; value added by manufacture; value of shipments; capital
expenditures; inventories; and specialization and coverage ratios for the
phosphatic and nitrogenous fertilizers.
INNOVATION
Generally speaking, fertilizers are the result of chemical reactions or
mixtures as opposed to being basic, unchanging chemicals in the inorganic
segments of the chemical industry. From publicly available data, it is
impossible to determine how many new fertilizers, if any, are now
manufactured, however, it is possible that new chemical fertilizers may result
from an isolated chemical reaction process.
In view of the fairly recent dynamic nature of the fertilizer business—
new products and new forms—it is possible that this trend may continue,
especially as farm demand for fertilizers increases. Worldwide concern over
food shortages will also have an impact on fertilizer performance in the
coming years by creating additional demand.
ii/Meegan, Kline Guide.
il/Apparent consumption is defined as the sum of domestic production
and net imports.
-------
E-29
TABLE 6
SEASONALLY ADJUSTED PRODUCTION
SUMMARY OF PRINCIPAL INORGANIC FERTILIZERS: 1977 TO 1979
Month and Year
1979
October
September
August
July
June
May
April
March
February
January
1978
December
November
October
September
August
July
June
May
April
March
February
January
1977
December
November
October
September
August
Ammonia,
Synthetic
Anhydrous
(100%)
1,443
1,566
1,479
1,442
1,505
1,456
1,511
1,470
1,379
1,396
1,564
1,506
1,394
1,377
1,298
1,408
1,398
1,427
1,499
1,361
1,334
1,439
1,487
1,492
1,446
1,594
1,511
Ammonium
Nitrate
Original
Solution
616
594
640
627
676
633
668
678
604
647
625
590
615
563
579
560
576
594
646
677
559
621
543
601
603
653
629
Ammonium .
Sulfate =
(D)
164
144
161
167
188
170
188
(D)
(D)
134
(D)
147
159
176
186
171
175
173
159
158
159
(D)
(D)
143
130
188
Nitrogen
Solutions
(100%)
(D)
(D)
(D)
210
(D)
197
184
189
(D)
193
(D)
179
212
202
186
207
182
177
198
203
197
224
234
238
220
259
251
Nitric
Acid
(100%)
689
647
690
703
746
706
737
751
685
693
698
661
707
622
663
639
648
687
694
748
628
653
606
642
656
681
706
Phosphoric
Acid
(100%)
796
865
845
883
883
833
827
847
815
804
828
805
808
813
819
791
824
802
794
785
750
735
648
624
717
735
716
Sulf uric
Acid,
Gross
(100%)
3,383
3,467
3,489
3,592
3,466
3,483
3,488
3,437
3,411
3,133
3,256
3,361
3,452
3,419
3,429
3,236
3,318
3,367
3,204
3,203
3,143
3,240
2,659
2,703
2,979
2,963
2,904
Phosphatic
Fertilizer
Materials
(100% P2 05)
609
671
690
644
601
643
619
630
585
633
607
571
631
650
639
586
564
616
563
610
553
588
498
498
602
635
602
Note: The seasonally adjusted series shown in this table have been revised to reflect revisions to 1977.
The new seasonal factors were published in the June 1977 report. Beginning in January 1972, the data
are adjusted for report period variation. Comparable data are not available for previous years;
however, the effect of this adjustment is considered to be negligible at the total level. See
"Reporting Period Adjustment" in the text.
(D) Withheld to avoid disclosing figures for individual companies.
3/Excludes byproduct ammonium sulfate, coke oven.
Source: U.S. Department of Commerce, Bureau of Census, Current Industrial Reports: Inorganic Fertilizer
Materials and Related Products, October 1979.
-------
E-30
TABLE 7
FERTILIZERS
BALANCE OF TRADE
(thousands of dollars)
1977 1976
1975
1974 1973
1965
Value of Exports
Nitrogenous Fertilizers
Phosphatic Fertilizers
Mixing Fertilizers
Total
Value of Imports
Nitrogenous Fertilizers
Phosphatic Fertilizers
Mixing Fertilizers
Total
Balance of Trade a/
Nitrogenous Fertilizers
Phosphatic Fertilizers
Mixing Fertilizers
Total
138,000
595,008
96,908
830,716
377,975
55,739
45,012
478,726
120,168
519,746
30,284
670,198
240,380
61,562
33,949
335,891
251,371
833,580
40,695
1,125,646
279,656
77,822
69,906
427,384
167,949
626,246
53,476
847,671
205,256
73,639
104,595
383,490
100,881
269,067
34,084
404,032
95,248
39,128
22,361
156,737
64,653
55,241
12,985
132,879
29,124
15,560
11,985
56,669
-239,175 -120,212
539,269 458,184
51,896 -3,665
351,990 334,307
-28,285 -37,307 5,663 35,529
755,758 552,607 229,939 39,681
-29,211 -51,119 11,723 1,000
698,262 464,181 247,295 76,210
.a/Exports minus imports.
Source: U.S. Department of Commerce, U.S. Exports, FT 610, and U.S. Imports,
FT 210, various years.
-------
E-31
TABLE 8
SUPPLY AND CONSUMPTION OF FERTILIZERS, CROP YEAR 1977
(thousands of tons, nutrient basis)
Apparent
Production Imports Exports Consumption
Nitrogen (N)
Ammonia 4,643 592 345 4,890
Ammonium nitrate^/ 1,115 118 2 1,231
Ammonium sulfate 487 119 104 502
Urea 883 346 206 1,023
Other 3,534 252 562 3,224
Total 10,662 1,427 1,219 10,870
Phosphorous(P2Q5)
Ammonium phosphates a/ 3,587 152 1,292
Concentrated superphosphate 1,677 18 585
Normal superphosphate 371 — 1
Other 1,748 54 467
Total 7,383 224 2,345
Potassium
1*221
Potassium cfiloride 2,075 4,226 927 5,374
Potassium sulfate a/ 412 45 161 296
Other 35 24 26 33
Total 2,522 4,295 1,114 5,703
GRAND TOTAL 20,567 5,946 4,678 21,835
£./—Includes ammoniu™ nitrate and ammonium nitrate-limestone mixtures.
Source: U.S. Department of Agriculture, Agricultural Stabilization and
Conservation Service, The Fertilizer Supply, 1978-79.
-------
TABLE 9
FERTILIZER INDUSTRY STATISTICS
All
Establishments
Yeari/ With 20
Employees
Total or more
(number) (number)
1977 Census
1976 ASM
1975 ASM
1974 ASM
1973 ASM
1972 Cerisus
1977 Census
1976 ASM
1975 ASM
1974 ASM
1973 ASM
1972 Census
119
(NA)
(NA)
(NA)
(NA)
76
92
(NA)
'(NA)
(NA)
(NA)
145
88
(NA)
(NA)
(NA)
(NA)
69
68
(NA)
(NA)
(NA)
(NA)
115
All
Employees
Payroll
Number (million
(1,000) dollars)
12.0
11.3
10.6
10.1
9.2
9.4
14.6
14.9
16.0
14.8
13.1
14.9
205.1
189.8
160.8
132.6
113.1
104.3
212.8
201.5
199.6
162.4
128.0
135.1
Production Workers
Number
(1,000)
7.7
7.4
7.1
7.1
6.3
6 .1
10.1
10.7
11.7
11.1
9.6
10.8
Hours
(mil-
lions)
16.8
16.7
15.2
14.8
13.8
13.2
21.7
22.5
24.7
24.0
20.8
23.1
Value added by Cost of
Wages Manufacture materials
(million (million (million
dollars) dollars) dollars)
INDUSTRY
126.6
115.8
98.8
84.8
74.3
64.3
INDUSTRY
139.0
130.5
135.2
111.2
88.4
91.9
Value of
shipments
(million
dollars)
Assets and
Expenditures
New
Capital
Expendi-
tures
(million
dollars)
Ratios
Gross End-of-
value of Year
fixed inven- Special-
assets tories ization
(million (million ratio
dollars) dollars) (percent)
Coverage
ratio
(percent)
2873, NITROGENOUS FERTILIZERS
1,193.0 1
1,238.6 1
1,582.4
1,141.3
500.2
447.6
2874, PHOSPHATIC
818.5 1
726.9 1
1,178.8 1
1,028.1 1
543.6
426.4
,433.8
,171.7
968.9
671.1
448.0
362.7
2,578.4
2,384.5
2,500.3
1,789.4
970.4
799.4
846.0
604.7
400.0
155.6
104.4
33.2
3,047.5
2,526.9
2,006.3
1,582.6
1,440.6
1,403.3
377.0
290.9
238.4
152.1
106.9
116.2
94
(NA)
(NA)
(NA)
(NA)
r94
72
(NA)
(NA)
(NA)
(NA)
r69
FERTILIZERS
,919.0
,696.0
,685.6
,247.9
795.6
740.9
2,663.9
2,439.1
2,746.9
2,222.4
1,357.5
1,178.9
111.8
225.6
302.2
297.7
88.3
65.8
1,810.9
1,616.0
1,492.7
1,090.9
811.8
771.5
420.2
370.6
378.8
233.3
129.8
157.8
93
(NA)
(NA)
(NA)
(NA)
89
91
(NA)
(NA)
(NA)
(NA)
92
M
I
w
to
rRevised. (NA) Not available.
^In years of Annual Survey of Manufactures (ASM), data are estimates based on a representative sample of establishments canvassed annually and may
differ from results of a complete canvass of all establishments. ASM publication shows percentage standard errors. This industry was newly defined for
1972 Census of Manufactures so no comparable data prior to 1972 exist.
Sources: U.S. Department of Commerce, Bureau of the Census, 1977 Census of Manufactures, Washington, D.C.: Government Printing Office, 1979).
-------
E-33
Of course, the argument could be made that fertilizer manufacturers, concerned
with rising production costs, will focus on process improvements instead of on
new products. At this point of our analysis, it is unclear if either trend
will materialize, and which, if any, will dominate. Industry interviews may
provide more information on fertilizer innovation.
-------
E-34
Inoganic Pigments
-------
E-35
INORGANIC PIGMENTS
OVERVIEW OF THE INORGANIC PIGMENT INDUSTRY
This section describes the chemistry of inorganic pigments and a history
of the industry's development. Later sections discuss in greater detail
processing, industry structure, and the raw materials used in production.
There are three major product categories of inorganic pigments:
• prime white pigments,
• color pigments, and
• extender pigments.
The following subsections briefly describe the production chemistry and
typical uses of pigments in each category.
Prime White Pigments
White pigments are the largest volume and dollar category, accounting for
59 percent and 63 percent of total dollar shipments of inorganic pigments in
1976 and 1977, respectively.!/ They are used for their whiteness and
opacity which are expressed either individually or in combination with other
pigments and colorants. The two most important white pigments are titanium
dioxide (TiC>2) and zinc oxide (ZnC>2) which accounted for 78.2 percent
($626.7 million) and 18.6 percent ($149.1 million), respectively, of the total
$801.5 million in sales for white pigments in 1977.Z/ Other products in
this group include white l^ad (lead sulfate or carbonate), leaded zinc oxide,
antimony oxide, lithopone (a mixture of zinc sulfate and barium sulfite) and
zinc sulfide.jl/
The metallic oxide white pigments, TiO2 and ZnC>2 (as well as other
colored metallic oxide pigments) are made in a continuous slurry process by a
reaction of the appropriate metal in the presence of acid. The metal is not
i/Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977); and U.S. Department of Commerce,
Bureau of Census, 1977 Census of Manufactures (Washington, D.C.: Government
Printing Office, 1979).
J/U.S. Department of Coiwirce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing
.I/The leaded pigments have been banned from household paints since the
early 1970s and their sales for uses in this area declined. For example, the
white lead sales volume in 1976 was less than .1 percent of all white pigment
sales and was largely for export. Source: Meegan, Kline Guide.
-------
E-36
in its elemental state, but is in an ore body or alloy form. For example,
titanium dioxide is made by reacting either rutile or ilmenite—both titanium
ores—with sulfuric acid or chlorine.I/ Only nine plants constitute the
entire industry, with plant capacities ranging from 164,000 to over 2,000,000
pounds per day.J5/
Several of the white pigments have properties that make them especially
attractive in particular applications. Zinc oxide in paint is an effective
fungicide. Additionally, it has photoconductive properties and is used to
coat reprographic papers for photocopying. Antimony oxide, because of its
relatively high cost compared to TiO2, is rarely employed as an opacifying
agent. Instead, it is used as a flame retardant in plastics.
Color Pigments
Color pigments are the second largest group by dollar sales, accounting
for 30.7 percent and 33.3 percent of the total dollar shipments of inorganic
pigments in 1976 and 1977, respectively.j>/ Among the color pigments shown
in Table 1, the chrome pigments, as a group, are the largest in dollar volume.
Chrome pigments are made by roasting chromite ore with soda ash and
lime. This yields an intermediate powder, sodium dichromate, which is then
reacted with various metals in the presence of strong acids to yield the
pigments. The larger volume colorants are produced through a continuous
process in relatively large plants. For example, the average litharge
facility produced slightly more than 50,000 pounds of pigment per day in
1977.1/
Because of the wide range of colors and physical and chemical properties,
color pigments have wide application. Chrome yellow and molybate orange
pigments are used to color plastics as well as serve as colorants in paint.
Zinc yellows and red lead are used in primers to resist corrosion. Litharge's
major use is in storage battery plates and as a glass additive. Cuprous
oxides are employed in antifouling marine paints, and cadmium sulfides and
selenides have high temperature applications. Iron oxide pigments are used in
magnetic tape coatings.
-i/In this example, as well as with other processes using acids, waste
acid disposal presents a problem. Recent environmental problems have mandated
pollution control equipment which add to processing costs.
I/Chemical Marketing Reporter;, October 16, 1978.
.§/U.S. Department of Commerce, 1977 Census of Manufactures; and Meegan,
Kline Guide.
2/U.S. Department of Commerce, 1977 Census of Manufactures.
-------
E-37
TABLE 1
SALES OF COLOR METALLIC PIGMENTS: 1976, 1977
Sales
Color Pigment (millions of dollars)
1977V
Chromes
Yellow and Orange 45 49. 7
Green 3
Oxide green 14 12.2
Molybate Orange 26 28.2
Zinc Yellow 6 4. 6
Litharge (lead monoxide) 67 67.3
Red lead (lead oxide) 11 7.8
Ceramic Colors 80 48.8
Iron oxides 46
Iron blues 9 5.6
Other colors 123 _
Total 430 447.6
— ' Meegan, Kline Guide.
-/ U.S. Department of Commerce, 1977 Census of Manufactures.
Extender Pigments
Extender pigments have little or no opacity, but are generally less
expensive to use than metallic ovides. Paper is coated with extenders to
improve gloss and "inkability". In paints, they can affect sheen, coat
thickness, and uniformity of pigment dispersion, and settling.
Most extender pigments are mined products such as kaolin, calcium
carbamate, talc and asbestos. They are sold as minerals with no chemical
processing and, therefore, are not discussed here. Other extenders, such as
precipitated silicates (sodium metasilicate, sodium orthosilicate, and sodium
sesquisilicate) , fine particle silicas and aluminum hydrates are chemically
produced. There are substantial differences in publicly reported data for
sales of extender pigments. The Kline Guide reports that an estimated one
million tons of chemically produced extender pigments were sold, valued at
$140 million in 1976. I/ m conflict, the 1977 Census of Manufactures
Ji/Meegan, Kline Guide, p. 154.
-------
E-38
reports 83,000 tons sold, valued at 37.5 million in 1977.JV There are no
other publicly available sources that confirm either number. However, the
Census data reported purchases of raw material non-metallic minerals (clay,
talc, limestone, barite, potash, etc.) of only $12.2 million. The Bureau of
Mines Minerals Yearbook (1976) reports sales of talc and kaolin alone of $8.3
million for paints, which tends to make the Census data estimates lower than
actual.
The extenders are produced by a variety of methods. One of the largest
volume extenders, aluminum hydroxide, is made by the Bayer process, reacting
bauxite ore in the presence of sodium hydroxide to form a solution from which
aluminum hydroxide is extracted. This extender is used extensively in carpet
backing where it contributes flatus retardant properties.
Another high volume extender pigment, precipitated calcium carbonate, is
made from limestone by roasting the limestone in a continuously run oven,
treating the resulting calcium oxide with a strong base to form calcium
hydroxide, and precipitating the pigment with further acid treatment. This
extender is used in paper coatings to improve brightness and "printability".
Chemically, most pigments from all categories are insoluble in inorganic
and water base solvents. In their final state, they are highly inert,
generally non-toxic except for lead pigments (and then only if ingested) and
will not react with other chemicals except strong acids or bases. As their
name implies, they are called pigments because they impart color (including
white and black) through mechanical mixing rather than through a chemical
reaction.
While pigments have many uses today, the earliest use was as a colorant.
As early as 3000 B.C., a paint industry flourished in Mesopotamia (an ancient
country northwest of the Persian Gulf), and has continued in various
configurations since that time.iO/ Initially, minerals that possessed
natural colors (typically iron oxides) were ground and mixed with a liquid or
applied as a powder. The advent of synthetic inorganic pigments occurred when
minerals were treated with acids in 1857.
The age of this industry has resulted in a steady, slow growth industry,
and, except for extender pigments, manufacturing has become very
concentrated. In 1976, the four largest producers (each with sales of over
$100 million in 1976) accounted for 54 percent of industry shipments and the
10 largest, listed in Table 2, accounted for 80 percent of the total.
1/U.S. Department of Commerce, 1977 Census of Manufactures.
iP-/Will Durant, The Story of Civilization (New York: Simon and
Schuster, 1935- ), Vol. III.
ii/Meegan, Kline Guide.
-------
E-39
TABLE 2
MAJOR U.S. PRODUCERS OF
SYNTHETIC INORGANIC PIGMENTS: 1976
Sales
Rank Company (millions of dollars)
1 DuPont 315
2 NL Industries 160
3 Glidden 120
4 New Jersey Zinc 100
5 Hercules 85
6 American Cyanamid 80
7 St. Joe 60
8 Harshaw 35
9 Asarco 30
10 Kerr-McGee 30
11 Eagle Picher 25
12 Ferro 20
Other 215
Total 1,275
Source: Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
Other uses include the plastics, paper, paper board and printing ink
industries. Table 3 shows the relative value of sales to major users of
inorganic pigments in 1977.
RAW MATERIALS
In 1977, all inorganic pigment production consumed $560.7 million in raw
materials, up from $333.1 million in 1972. Table 4 presents the major raw
material groups consumed in production in 1977, and where available, the
respective quantity, value, and per an^um price increase from 1970 to 1976 of
each group. Comparable data for earlier years is not available.
-------
E-40
Inorganic pigments serve as raw materials for many other industries, with
the largest user being paint manufacturers (more than one-third of sales in
1977) .12/
FIGURE 1
U.S. SHIPMENTS OF PAINTS AND PIGMENTS 1960-1976
Million
Gallons
Million
Dollars
Year
Paint Sales
Pigment Sales
Sources: U.S. Department of Commerce, Bureau of Census, Current Industrial
Reports (Washington, D.C.: Government Printing Office, various
years); and U.S Department of Commerce, Bureau of Census, Annual
Survey of Manufacturers (Washington, D.C.: Government Printing
Office, various years).
12/ibid.
-------
E-41
TABLE 3
MAJOR USERS OF INORGANIC PIGMENTS: 1977
Percent of Total Value
Industry Pigment Sales ($ Millions)
Paint & Allied Products 38.8 472.0
Plastics 2.5 30.03-/
Paper and Paperboard 22.4 351. 0^.'
Printing Ink 15.2 184.8
—' Actual figure probably is much larger, but data is incomplete.
Source: U.S. Department of Commerce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
The largest single raw material cost is for titanium ore. The two major
resources for Ti©2 are rutile, imported from Australia, and ilmenite, more
than 90 percent of which is produced domestically.il/ There are indications
that the Australian supply of rutile may become exhausted within 10 to 15
years, and ilmenite could substitute.il/' The ilmenite ore is converted by
the sulfate process which, as previousl" mentioned, is highly polluting, while
rutile is transformed by the less polluting chlorine process. Thus, a shift
from rutile to ilmenite would increase overall production costs by increasing
pollution control costs.
Table 5A presents the cost trends for imports of TiO2 ore. As with many
other raw materials,jL§/ there has been a rapid expansion in cost since the
mid-1970s due to increased extraction and transportation costs.
il/U.S. Department of Commerce, 1978 U.S. Industrial Outlook
(Washington, D.C.: Government Printing Office, 1978).
11/Ibid., p 123.
. Department of Commerce, 1978 U.S. Industrial Outlook; and
Chemical and Engineering News, October 16, 1978.
-------
E-42
TABLE 4
MAJOR RAW MATERIAL GROUPS CONSUMED: 1977
Material Group
Acids
Other Inorganic
Chemicals
Industrial Gases
Plastic Powers,
pellets & Ganules
Crude Ores;
Non-ferrous
(except titanium ore)
Ferrous
Titanium
Non-metallic minerals
All other parts,
supplies
Quantity
(tons 100QI
396.6
76.0
8.25
238.2
Value
_($ millions )
12.9
Per annum
price increse
1970 - 1976
8.8
3.9
6.5
14.0
2.0
14.2
34.1
5.2
100.2
12.2
24. 2§/
28.4b/
14.9
14.1
__
311.6
5 Phosphate rock.
b/ Chromite.
Sources: U.S. Department of Commerce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.; Government Printing Office, 1979); and U.S.
Department of Interior, Bureau of Mines, Minerals Yearbook (Washington, D.C.:
Government Printing Office, 1970 and 1976).
-------
E-43
Year
TABLE 5A
TITANIUM DIOXIDE IMPORTS AND SELECTED PRICES:
Import Value
($ millions)
1970
1971
1972
1973
1974
1975
1976
1977
1978-e
22.2
15.7
33.4
27.5
24.8
18.3
45.3
80.1
95.0
Price Per Ton
82.33
167.48
214.42
1976-1978
Amount Imported
(thousand tons)
269.6
148.1
212.3
e- estimates
Source: U.S. Department of Commerce, Bureau of the Census, U.S.
Imports, FT 210; U.S. Department of Interior, Bureau of Mines,
Minerals Yearbook (Washington, D.C.: Government Printing
Office, various years); and Mary K. Meegan, ed., Kline Guide to
the Chemical Industry (3rd ed., Fairfield, NJ: Charles Kline &
Co., 1977) .
TABLE 5B
IMPORTS, EXPORTS AND PRICES OF CHROMITE ORE:
(tons, thousands of dollars)
1971-1976
Year
Exports
1971
1972
1973
1974
1975
1976
35
20
21
18
139
124
Imports
1299
1056
931
1102
1252
1275
Average
Price/ton
25.00
22.72
30.00
33.00
82.00
107.66
Source: U.S. Department of Interior, Bureau of Mines, Minerals Yearbook
(Washington, D.C.: Government Printing Office, various years).
-------
E-44
Other metallic ores, notably chromite, are largely imported. Table 5B
indicates the import, export, and price trends in chromite ore from 1972
through 1976. These figures show a rapid price increase after 1972.
Chromite is imported mainly from the USSR, Turkey and South Africa. While
the reserves of ore from these countries are large enough to supply domestic
needs for several centuries at present consumption rates, political and
economic instability such as the recent changes in Soviet-American diplomacy,
have led to increased stockpiling. The possible impact of changes in
relationships with any of these supplier countries is hard to predict, but a
substantial lessening of supply from any one of these countries could cause a
substantial increase in raw material prices.
PRICES, PRODUCTION, AND EMPLOYMENT
With few exceptions, inorganic pigments are commodity chemicals sold in
relatively large volumes to composition specifications that are standard
throughout the industry. Because there is little differentiation in the
quality of a product, it appears that competition is based largely on price
and, as a result, prices in this mature segment tend to approach costs, with
producers relying on reductions of processing costs to increase margins.
While data on the identity of the producers and aggregate amounts of products
sold are publicly available, the relative profit margins and overall
contribution to profits is not available for any single producer.
Increases in raw material prices, largely due to higher extraction,
processing and transportation costs that are directly or indirectly linked to
energy costs have, in recent years, put; upward price pressure on all inorganic
pigment products. Table 6 examines the price indices trends of several major
inorganic pigments between 1967 and 1976. While there is year to year
variation from 1967 to 1973, all prices rose sharply in the three years
following 1973, reflecting sharp increases in energy costs. The average per
annum price increase between 1970 and 1976 was 11.5 percent.
As indicated in Table 4, the majority of raw materials used underwent
price increases greater than 11.5 percent between 1970 and 1976, indicating
there could be an overall reduction in profit margins. This margin squeeze
can be examined in greater detail by looking at the trends in the amount of
value added each year. Also, trends in the real value of shipments indicate
industry growth and the effects on capacity utilization. Finally, trends in
the relative costs of materials, labor, and value added will indicate the
total cost situation that the industry faces.
-------
E-45
Titanium dioxide
Zinc oxide
Chrome yellow
and orange
Litharge
Iron oxidesa/
Red lead
Iron blues
Calcium
carbonate^'
AVERAGE
TABLE 6
INDICES OF AVERAGE MANUFACTURERS' PRICES OF
SELECTED INORGANIC PIGMENTS: 1967-1976
(1967=100)
1967 1968 1969 1970 1971 1972 1973 1974 1975 1976
100.0 100.0 100.0 97.3 88.8 93.5 99.8 132.3 143.8 163.6
100.0 99.6 107.6 98.9 115.5 123.8 126.4 223.8 260.3 248.0
100.0 102.2 103.0 109.3 113.2 111.0 109.7 160.5 183.1 197.8
100.0 102.2 103.0 109.3 113.2 111.0 109.7 160.5 183.1 197.8
100.0 101.6 103.8 96.5 105.3 111.9 125.3 193.9 227.6 254.2
100.0 103.8 106.4 114.0 105.6 107.3 114.9 155.0 147.7 169.0
100.0 101.0 98.9 103.0 111.9 135.3 139.7 168.0 187.1 209.0
100.0 104.1 102.8 104.6 110.0 114.8 116.7 142.6 155.6 172.2
100.0 101.1 103.2 101.1 98.4 102.6 108.8 153.5 165.2 194.4
^/Excludes natural iron oxides.
^/Precipitated grades only.
Source: Calculated from data of U.S. Department of Commerce, Bureau of
Census, Current Industrial Reports (Washington, D.C. Government
Printing Office, various years); and U.S. Department of interior,
Bureau of Mines, Minerals Yearbook, (Washington, D.C.: Government
Printing Office, various years).
-------
E-46
Table 7 illustrates the trends in payroll costs and value added both as a
percent of shipments, and in material costs. The table indicates that new
value added, which includes profits, has steadily declined. Table 8 examines
the dollar volume of shipments, showing the relative stagnation of industry
sales. The maturity and stability of the industry has resulted in little net
change in the amount of labor employed. Also, there has been little real
increase in overall average value added per production worker. Table 9 shows
trends in employment and value added per production manhour from 1972 through
1978.
TABLE 7
TRENDS IN EMPLOYMENT AND MATERIALS EXPENDITURE
IN THE INORGANIC PIGMENTS SEGMENT: 1967-1977
Year
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
Source:
Material
(Percent of Shipment)
Payroll Value Added
55.8
55.2
55.5
54.0
49.6
50.1
49.3
45.5
43.4
42.8
42.6
, ed. ,
8. 7
8.3
10.3
10.2
11.4
11.0
12.8
12.8
11.8
11.1
11.5
Kline Guide
44.9
45.3
47.4
49.7
48.0
50.0
52.1
55.9
57.1
57.6
58.4
to the Chemical Industry
(3rd ed., Fairfield, NJ: Charles Kline & Co., 1977).
-------
Year
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
E-47
TABLE 8
SALES OF INORGANIC PIGMENTS IN CURRENT AND CONSTANT
DOLLARS FOR 1967-1977
Shipments
($ Millions)
1256.0
1292.5
988.9
1188.6
890.2
796.9
666.0
646.0
657.7
624.0
549.3
Shipments
(1972 $ millions)!/
894.6
973.2
782.4
1016.8
843.8
796.9
689.4
698.4
758.4
755.7
695.1
5/ Adjusted using GNP deflator, 1972 index.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd
ed., Fairfield, NJ: Charles Kline & Co., 1977).
TABLE 9
PRODUCTION WORKER EMPLOYMENT AND AVERAGE VALUE-ADDED: 1972-1978
Value Added Per
Production Production Manhour
Year Employees (constant 1972 dollars)**/
1972 9,000 21.00
1973 9,600 19.66
1974 11,000 22.07
1975 10,300 18.56
1976 10,600 19.67
1977 10,500 23.89
1978 11,000 18.55
a/ Adjusted using GNP deflator, 1972 index.
Source: U.S. Department of Commerce, 1978 U.S. Industrial Outlook,
(Washington D.C.: Government Printing Office, 1978)
-------
E-48
Forecasts by several sources do not predict significant changes in these
trends.
COMPETITION
Sales of the inorganic pigments industry are relatively concentrated,
with a small number of producers accounting for a large percentage of total
sales. As previously discussed, the top 10 producers of inorganic pigments
accounted for 80 percent of shipments. This fact, coupled with the large
overall amount of pigments shipped, means that the 10 producers mentioned in
Table 2 shipped an average of 4,110 tons per day in 1978.il/ The large
capital investment necessary to achieve these volumes has created an effective
barrier to entry for new domestic competitors. For example, in 1975,
Kerr-McGee started construction of a synthetic rutile plant which was
completed in 1976. The plant's design capacity is 110,000 tons/year, and it
was built with an estimated $90 - 100 million dollars. !§/ with a total
industry volume of 750,000 tons of titanium dioxide in 1979, Kerr-McGee's
large investment captured less than 15 percent of the market.
However, foreign competitors have placed increasing competitive pressure
on domestic producers by lowering their prices. Subsidization by their
respective governments in the form of reduced taxes, tariffs, and secured
loans; access to plentiful raw materials; and less restrictive environmental
constraints have combined to give many new entrants the ability to gain market
share. 19/
As a result, imports of inorganic pigments have been growing more rapidly
than exports, resulting in wider trade deficits. Table 10 illustrates this
trend, which is expected to continue.
While the chemical industry as a whole is a leader in R&D spending
compared to all manufacturing, there are very few new annual product additions
in the inorganic pigment segment. No publicly available data indicates the
amounts of money spent annually for R&D in this segment. Since approximately
90 percent of total annual expenditures in the overall chemical industry is
ii/U.S. Department of Commerce, 1978 U.S. Industrial Outlook; and
Chemical and Engineering News, October 16, 1978.
12/U..S. Department of Commerce, 1978 U.S. Industrial Outlook.
M/ICF estimates from data in SEC 10-K reports for 1974, 1975, 1976.
The resulting capital cost per pound of rutile, assuming a 20 year plant life,
is 23tf per pound, while the market price is 59& per pound. Source: Chemical
Engineering News, July 16, 1979.
i2/U.S. Department of Commerce, 1978 U.S. Industrial Outlook.
-------
E-49
TABLE 10
U.S. IMPORTS AND EXPORTS OF
SYNTHETIC INORGANIC PIGMENTS: 1969-1976
(millions of dollars)
Year Imports Exports Trade Balance
1969 46 37 - 9
1970 46 43 - 3
1971 59 46 -13
1972 46 39 - 7
1973 77 62 -15
1974 100 93 - 7
1975 68 60 - 8
1976 124 87 -37
Source: Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd
ed., Farifield, NJ: Charles Kline & Co., 1977).
for applied or development research, it is reasonable to expect that the
majority of R&D expenditures for the pigment industry is on process
applications..±£/
Rising raw material, energy, and pollution control costs imply that most
of future R&D efforts will be toward reducing these costs through more
efficient and less polluting processes. Because of the capital intensity of
these high volume processes, radical changes in processes probably do not
occur as often as minor changes.
Organic pigments face similar rising raw material and energy costs..21/
Thus, changes in market share are unlikely to occur by substitution with
organic products or by improved production techniques, but may result from
price competition with competitors.
^/National Science Foundation, Graduate Science Education; Student
Support and Post Doctoral, Publication number 74-318, Fall 1973.
.2i/Discussed in detail in the profile on Organic Dyes and Pigments.
-------
E-50
All Other Inorganic Chemicals
-------
E-51
ALL OTHER INORGANIC CHEMICALS
DESCRIPTION
The all other inorganic chemicals segment of the chemical industry
includes alkalies and chlorine; aluminum, potassium and sodium compounds; and
inorganic acids. By Standard Industrial Classification (SIC) code, this
segment is comprised of the "281" industries except for industrial gases
(2813), inorganic pigments (2816), and chemical catalytic preparations (28198)
In general, inorganic chemicals are produced from minerals. They are
usually solid, non-combustible, and soluble in water.
ENGINEERING PROCESS
The engineering processes used to manufacture inorganic chemicals vary.
For example, some chlor-alkalies may be produced by the electrolysis of brine
or by chemical or thermal reaction. Others, such as caustic soda, are
byproducts or coproducts of some other chemical's production.i/ Rapidly
escalating costs of synthetic soda ash production have all but eliminated
facilities using the Solvay method of saturating brine with ammonia and carbon
dioxide gas to make soda ash..2./ New soda ash plants now produce the
chemical more cheaply from a natural source—trona ore. The trona process
involves calcination of a sodium carbonate/sodium bicarbonate mixture to
convert the bicarbonate portion of the trona into carbonate.
The production of inorganic acids utilizes entirely different processes
from those used to manufacture the chlor-alkalies and sodium compounds.
Nitric acid results from the oxidation of ammonia with a platinum catalyst.
Sulfuric acid, derived from sulfur, pyrites, sulfide smelter gases, and
hydrogen sulfide, are produced in several ways. The "Cat-ox" procedure, a
proprietary catalytic oxidation process, removes sulfur dioxide and fly ash
from stack gases and converts the sulfur dioxide to sulfuric acid. The widely
used contact process involves the oxidation of sulfur dioxide with air by
contact with a vanadium pentoxide catalyst. This process yields sulfur
trioxide which is then absorbed in high strength sulfuric acid to yield a
product of 98 to 100 percent acid.
i/The oroduction of chlorine and caustic soda is highly interrelated.
Electrolytic processes yield both chemicals in a fixed ratio of 1.1 tons of
caustic per ton of chlorine gas.
2/In 1974 there were six giant Solvay process facilities with an annual
aggregate output of four million tons of soda ash. By mid-1979, only one, a
900,000 ton unit owned by Allied Chemical, remained in operation (Business
Week, April 16, 1979).
-------
E-52
USES
Most of the inorganic chemicals produced today date back to the late
eighteenth century and have well established end uses. They are employed
primarily as processing aids in the manufacture of chemical and non-chemical
products. In most cases, they do not appear as final products.
Many inorganic chemicals are used to produce organic chemicals as well as
other inorganics. Numerous other industries rely on inorganics: pulp and
paper, aluminum, rayon/cellophane, petroleum, detergents, water treatment,
Pharmaceuticals, etc. Except for chlorine and a few others, inorganics are
not used extensively in synthetic products such as plastics and fibers.
Figure 1 presents a breakdown of end uses for five chlor-alkalies
(chlorine, potassium hydroxide, sodium bicarbonate, sodium carbonate, and
sodium hydroxide) and three other inorganics (calcium chloride, hydrofluoric
acid and sulfuric acid).
Almost two-thirds of chlorine is consumed in the production of organic
chemicals. The remainder is utilized in pulp and paper production, inorganic
chemical production, and sanitizing processes. Chlorine is one of the most
important chemicals used as a raw material in producing polyvinyl chloride
(PVC) and other plastics as well as solvents, intermediates and bleaches. The
demand for end-products like PVC determines to a large extent chlorine's
volume of sales. Demand for PVC is sensitive to the housing and automotive
markets; thus, chlorine as an intermediate in PVC is sensitive to these
markets as well as to overall changes in the economy.
Soda ash is used in virtually every industry from dishwa; .dng detergents
to fiberglass insulation. Fifty percent of all soda ash is consumed by the
glass industry; therefore, soda ash, like chlorine, is quite sensitive to the
construction and automotive markets. Other major alkalies are also affected
by changing economic conditions, but to a lesser degree than chlorine and
soda.3/
INDUSTRY STRUCTURE
In general, the inorganic chemicals industry does not attract a large
number of producers due to the maturity of its products and moderate rates of
growth. Prior to 1974 inorganic chemicals kept pace with GNP, but industry
experts believe that in the future inorganics will grow at a rate slightly
less than the gross national product (GNP).!/
I/Chemical Purchasing, October 1979.
I/George M. Tapps and William T, Hewitt, "Industry Outlook for Inorganic
Chemicals," Chemical Engineering, June 6, 1977.
-------
E-53
CHLORINE
POTASSIUM HYDROXIDE
FIGURE 1
USES OF INORGANIC CHEMICALS
Organic chemicals
vinyl chloride
chlorethane solvents
propylene oxide
pesticides
fluorocarbons
Pulp and paper
Inorganic chemicals
60.0%
13.0%
11.0%
Sanitization of potable and waste water in
municipal waterworks and sewage plants 5.0%
Potassium carbonate
Soaps
Tetrapotassium pyrophosphate
Other potassium chemicals
Liquid fertilizers
Dyestuffs
Herbicides
Miscellaneous applications
Exports
28.0%
18.0%
18.0%
10.0%
8.0%
5.0%
4.0%
5.5%
3.5%
-------
E-54
SODIUM BICARBONATE
FIGURE 1
USES OF INORGANIC CHEMICALS
(continued)
Food (baking powder) industry 33.0%
Rubber and industrial chemicals 20.0%
Pharmaceutical 15.0%
Fire extinguishers 10.0%
Soaps, detergents, animal, feeds,
textile, paper, leather, and exports 12.0%
SODIUM CARBONATE (caustic soda)
Glass 51.0%
Chemicals 22.0%
Pulp and paper 6.0%
Soap and detergents 5.0%
Water treatment 3.0%
Miscellaneous applications 6.0%
Exports 7. o%
-------
E-55
SODIUM HYDROXIDE
FIGURE 1
USES OF INORGANIC CHEMICALS
(continued)
Chemical and metal processing 46.0%
(other than aluminum)
Paper and pulp manufacture 16.0%
Petroleum, textile, soap, food industries 12.0%
Aluminum processing 5.0%
Rayon and cellophane production 4.0%
Miscellaneous applications 7.0%
Exports 10.0%
HYDROFLUORIC ACID
Fluorocarbons
Aluminum smelting:
aluminum fluoride
synthetic cryolite
Gasoline alkylation catalyst
Stainless steel pickling
Fluoride salts
Uranium isotope separation
Miscellaneous applications
41.0%
37.0%
25.0%
12.0%
4.0%
3.0%
3.0%
2.0%
10.0%
-------
E-56
FIGURE 1
USER OF INORGANIC CHEMICALS
(continued)
CALCIUM CHLORIDE
SULFURIC ACID
Dust control
Deicing highways
Industrial processing
Concrete treatment
Oil well drilling
Tire ballasting
Miscellaneous applications
Exports
27.0%
26.0%
21.0%
10.0%
5.0%
3.0%
4.0%
4.0%
Phosphate fertilizers
Other fertilizers
Ammonium sulfate
Petroleum refining
Titanium dioxide
Alcohols
Hydrofluoric1 acid
Copper leaching
Miscellaneous applications
52.0%
3.0%
6.0%
5.0%
4.0%
4.0%
3.0%
3.0%
20.0%
Source: Gloria M. Lawler, ed., Chemical Origins and Markets (5th ed.,
Menlo Park, CA: Chemical Information Services, Stanford
Research Institute, 1977).
-------
E-57
Compared to organics, the inorganics industry has a smaller number of
producers and a higher concentration of sales among larger companies. The top
four chlor-alkali firms accounted for 72 percent of shipments in 1972, and for
other industrial inorganics, the top four accounted for almost 35 percent of
shipments.^/
Specifically, eight companies produce about 75 percent of U.S. chlorine;
the remainder is produced by 23 companies. The soda ash industry is also
highly concentrated. In 1977 seven companies produced soda ash, but with
recent closings of synthetic ash plants, only five producers may remain. In
1977 there were almost 70 producers of sulfuric acid, with the five largest
sharing 30 percent of the market. One phosphoric acid company held a 12
percent share of industry capacity. The top five producers of phosphoric acid
are estimated to have 40 percent of the total market, which has 30 producers
all together. In contrast to these industries, there are no dominant
producers of nitric acid. Five producers have 38 percent of industry capacity
while 41 smaller firms share the remaining 62 percent.j>/
Of the 100 leading U.S. chemical producers, 64 manufacture basic and
intermediate inorganics.!/ Fourteen of the 64 produce only sulfur (11 are
petroleum companies, three are agricultural chemical producers). The
remaining are either considered true chemical companies with more than 50
percent of sales in chemicals, or long-time producers of chemicals.JV
Several large chemical companies appear to concentrate in inorganics
instead of organics: Diamond Shamrock, FMC Corporation, Freeport Minerals,
Kerr-McGee, NL Industries, Occidental Petroleum through its Hooker subsidiary,
Olin, PPG, and Stauffer Chemical. Other major producers of inorganics are
Allied Chemical, American Cyanamid, BASF Wyandotte, Dow Chemical, DuPont,
Monsanto, Pennwalt and Union Carbide.jV
.§/Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
.§/Tapps and Williams, "Industry Outlook for Inorganic Chemicals."
2/Eighty-one out of the 100 engage in the production of basic and
intermediate organic chemicals.
1/Meegan, Kline Guide.
I/Ibid.
-------
E-58
SHIPMENTS
Inorganic chemicals represented 9 percent, or about $9 billion, of the
total shipments of all chemicals in 1976.IP./ In 1977, shipments of alkalies
and chlorine by primary manufacturers totaled almost $1.7 billion, three
percent below the 1976 total. Shipments of inorganic chemicals other than
chlor-alkalies, pigments and fertiliser chemicals, totaled $6.5 billion.
Inorganic acids, other than nitric and sulfuric acid, contributed $369 million
or 6 percent of this total, and aluminum oxide, exclusive of natural alumina,
contributed $827 million or 13 percent. Other aluminum compounds constituted
$314 million or five percent, and potassium and sodium compounds (except
bleaches, alkalies and alums) constituted $1.4 billion or 22 percent (refer to
Table 1). Other products contributing to the $6.5 billion figure are chemical
catalytic preparations; chemical reaaents; and compounds of antimony, arsenic,
barium, bismuth, cadmium, and calcium, chromium, cobalt, copper, manganese,
mercury, and nickel, phosphorus and other less common elements.ii/
PRICES
In general, before 1973 the average price of many inorganic chemicals
rose more slowly than the costs of labor and energy. The price of
chlor-alkalies began climbing in 1974 after price decontrol and continued to
rise through 1977.i?/ Price increases were attributed largely to higher
costs of labor, fuel and electric power, and raw materials.
The magnitude of price increases in this period varied. Between 1973 and
1976, the price of native sulfur jumped 221 percent while the price of
aluminum sulfate increased by 58 percent.il/ These increases were due
largely to shortages in the supply of these products.
The price of liquid chlorine rose dramatically in 1974 from $74 per ton
on January 4, 1974 to $140 by year-end, an increase of 87 percent. Caustic
soda also experienced a sharp increase from $76 per ton to $120, a rise of
M/Tapps and Williams, "Industry Outlook for Inorganic Chemicals."
i±/U.S. Department of Commerce, Bureau of Census, Current Industrial
Reports; Inorganic Chemicals (Washington, D.C.: Government Printing Office,
1977) .
i^/Meegan, Kline Guide.
il/U.S. Department of Commerce, 1978 U.S. Industrial Outlook
(Washington, D.C.: Government Printing Office, 1978).
-------
TABLE 1
INORGANIC CHEMICALS
VALUE OF SHIPMENTS INCLUDING INTERPLANT TRANSFERS
(thousands of dollars)
SIC Code
Product
1977
1976
1975
1974
1973
2812
28121
28122
28123
2819
28193
28194
28194-11
28194
28195-11
28196
28197
Alkalies and Chlorine
Chlorine
Sodium carbonate
(soda ash)
Sodium hydroxide
(caustic soda)
Inorganic chemicals,
NEC , total
Sulfuric acid
Inorganic acids, except
nitric and sulfuric
Boric acid
Hydrochloric acid
Aluminum oxide, except
natural alumina
Other aluminum compounds
Potassium and sodium com-
1,681,442
501,275
144,700
973,229
6,543,384
404,587
369,271
45,043
111,732
827,520
314,556
1,728,676
524,741
155,315
982,836
5,941,573
380,323
295,935
31,355
68,123
749,636
287,117
1,562,478
442,193
165,941
890,883
5,017,522
368,723
231,682
23,451
50,142
590,051
233,827
1,191,878
333,238
157,534
663,505
4,791,198
320,452
214,294
14,159
45,372
618,926
220,108
855,718
238,774
131,028
452,636
3,644,127
241,535
174,343
13,344
41,622
453,160
183,256
pounds (except bleaches,
alkalies, and alums)
1,419,754 1,323,357 1,161,658 962,209 730,696
Ui
VD
Source: U.S. Department of Commerce, Bureau of Census, Current Industrial Reports; Inorganic Chemicals,
1977.
-------
E-60
58 percent.il/ These increases were due to shortages in the supply of these
products.
According to one source, the price of soda ash was stable between 1955
and 1969 at $31 per ton, freight on board (F.O.B.) producing point. In 1970
the price moved to $33 and, after price decontrol in 1974, prices spiraled to
$75 per ton in the East and $51 in the West. In August 1977 a firm price of
$55 per ton for dense bulk ash was established.^/ Price increases were
attributed to high production costs and water pollution regulations. The
leveling-off of prices after 1977 represents somewhat the shift to natural
soda ash and more efficient production technologies.
Table 2 summarizes the Wholesale Price Index for various inorganic
chemicals. Most of the chlor-alkalies have doubled in price since 1967.
Other inorganic chemicals have increased in price by as little as 13 percent
(calcium phosphate) or as much as 162 percent (sodium tripolyphosphate).
PRODUCTION AND GROWTH
With the exception of synthetic soda ash, caustic soda and smaller-volume
inorganics, production of chlor-alkalies and other inorganics has been
increasing steadily since 1973 (refer to Table 3). However, in aggregate,
most of the markets are operating under capacity. Table 4 presents annual
production and capacity figures for high-volume inorganics. None were being
produced at full-capacity in 1977 and 1978.
Chlorine production, for example, was at 76.5 percent of capacity in
December 1977. The reason behind this is that chlorine producers overbuilt
plants before demand growth fell way below forecasts, and producers have
continued to push up capacity each year faster than production has
grown.i§/ improvement in capacity use occurred in 1978; the Chlorine
Institute listed capacity use at 82.5 percent by year end. However, new
capacity that came on stream in 1979, olus a slowdown in the U.S. economy, was
expected to lower the operating rate to less than 80 percent in 1979. Low
profitability in the chlorine industry will likely dampen future plant
investments and provide industry with a chance to return to higher operating
rates after 1980. In addition, some existing capacity may be shut down as
ll/lbid.
Ui/Chemical Purchasing, June 1978; and U.S. Department of Commerce, 1978
U.S. Industrial Outlook.
jJ?/Chemical and Engineering News, February 26, 1979.
-------
E-61
TABLE 2
INORGANIC CHEMICALS
WHOLESALE PRICE INDEX
(1967=100)
1978
Basic Inorganic Chemicals
Alkalies and Chlorine
Chlorine Liquid
Potassium Hydroxide
Sodium Carbonate
Sodium Hydroxide
Other Inorganic Chemicals
Aluminum Fluoride
Aluminum Hydroxide
Aluminum Oxide
Aluminum Sulfate
Calcium Carbide
Calcium Oxide
Calcium Phosphate
Hydrochloric Acid
Hydrofluoric Acid
Hydrogen Peroxide
Nitric Acid 42 degrees BE
Sodium Hydrosulfite
Sodium Metasilicate
Sodium Silicates
Sodium Sulfate, Anhydrous
Sodium Tripolyphosphate
Sulfuric Acid (contact) 66 BE
3/This is the figure for all chlorine.
b/This figure is for all sodium sulfate.
N/A - Not available.
1977
1976
1975
1974
1974
1973
1971
1970
193.0
202.1
207.6
200.4
183.9
212.4
190.5
141.3
123.0
146.7
190.3
129.2
201.2
113.1
177.0
151.5
115.5
175.5
116.6
169.8
196.5
207.9
261.9
166.1
ine.
I £_ 1.A
187.2
204.4
211.7
193.5
179.9
216.9
181.3
138.0
118.2
135.9
173.7
120.3
187.3
112.8
152.8
139.9
116.9
185.0
105.8
152.5'
170.8
243.1
153.6
164.0
j.ca te •
ce, Wholesale
177.3
202.8
200.9
188.3
153.1
229.5
168.1
125.4
105.1
109.0
157.1
117.0
170.2
104.2
128.9
140.1
102.7
180.3
111.9
N/A
162.2
227.4
N/A
164.7
154
.0
165.5
167
164
132
179
149
100
101
107
124
104
147
.8
.7
.8
.6
.8
.0
.7
.5
.5
.0
.7
N/A
130
117
99
166
104
102
124
180
216
147
Price Index,
.0
.7
.2
.6
.2
.1
.5
.0
.9
.9
1979
101.0
100.1
N/A
101.1
103.3
98.2
101.3
N/A
N/A
N/A
98.2
N/A
N/A
N/A
101.1
99.9
100.0
97.5
N/A
N/A
100.8
101.9
100.0
102.9
110
114
111
123
114
117
110
100
100
113
134
100
113
104
86
143
84
106
115
.3
.6
.!§/
.1
.5
.7
.2
.0
.0
.2
.1
.0
.4
.9
.7
.6
.1
.4
.6
N/A
146
100
121
118
.2
.0^
.3
.8
107
114
' 111
123
114
117
106
100
100
113
123
100
114
100
86
143
94
106
109
.9
.4
.1
.1
.5
.7
.9
.0
.0
.2
.4
.0
.3
.0
.7
.6
.1
.4
.9
N/A
134
' 100
114
111
.7
.0
.4
.9
107.0
112.5
111.1
118.0
106.4
117.7
105.8
N/A
N/A
110.4
123.4
100.0
110.2
111.1
106.7
130.8
94.1
106.4
109.9
N/A
123.2
100.0
111.6
111.9
115.3
114.6
119.1
128.0
106.4
114.7
118.5
N/A
N/A
N/A
136.0
117.6
111.3
111.6
116.7
103.3
84.4
100.0
117.6
N/A
125.0
100.0
94.7
144.5
-------
E-62
TABLE 3
QUANTITY OF PRODUCTION
(thousands of short tons)
Product Class Chemical
28121
28121
28122
28122
28123
28124
28193
28194
28194
28194
28194
28195
28196
28196
28196
28196
28196
28197
28197
28197
28197
28197
28197
28197
28197
28197
28197
28199
28199
28199
28199
28199
28199
Source:
11
15
51
21
11
40
51
61
11
17
25
27
51
55
13
16
18
21
24
27
29
30
38
61
04
10
12
13
74
75
Chlorine gas
Chlorine liquid
Synthetic soda ash
Natural soda ash
Caustic soda
Caustic potash
Sulfuric acid
Boric acid (boracic)
Hydrochloric acid
Hydrocyanic acid
Hydrofluoric, anhydrous
Aluminum oxide, except
natural alumina
Aluminum Chloride,
anhydrous
Aluminum hydroxide,
tethydrate
Aluminum fluoride,
technical
Commercial aluminum
sulfate
Iron free aluminum
sulfate
Potassium iodide
Potassium sulfate
Pyrophosphate
Sodium (metal)
Sodium borate
Sodium chlorate
Sodium hydrosulfide
Sodium hydrosulfite
Tripolyphosphate
High purity sulfate
Barium carbonate,
precipitated
Isolated bromine
Calcium carbide
Calcium carbonate,
precipitated
Sulfur, recovered
elemental (long ton)
Sulfur dioxide
U.S. Department of Commerce,
1977
10,573
6,341
1,812
6,278
10,933
301
35,821
177
2,721
198
179
5,948
45
N/A
148
1,255
123
.8
494
41
159
N/A
218
20
64
717
741
35
164
252
175
3,567
153
Bureau of
1976
10,378
6,091
2,344
5,216
10,516
252
33,300
135
2,542
182
182
5,720
34
488
142
1,202
174
'.
465
40
146
N/A
199
21
60
724
766
36
156
244
142
3,138
162
Census,
1975
9,167
5,317
2,802
4,353
9,634
236
32,360
133
2,009
151
213
5,057
27
421
130
1,141
252
7 .5
456
41
.144
N/A
173
24
50
770
796
26
143
253
202
2,969
146
1974
10,753
5,852
3,507
4,048
11,188
208
33,936
140
2,470
176
261
6,950
37
532
169
1,252
232
1,
430
40
173
587
203
30
56
903
783
40
155
324
267
2,632
130
Current Industrial
1973
10,402
5,426
3,813
3,707
10,734
220
31,949
144
2,534
161
249
6,751
37
607
140
1,227
230
.2 1.1
463
45
177
603
204
28
49
967
907
48
N/A
290
242
2,416
110
Reports:
Inorganic Chemicals, 1977.
-------
E-63
TABLE 4
INORGANIC CHEMICALS
ANNUAL PRODUCTION AND CAPACITY
(thousands of short tons)-
Product
Ammonia, anhydrous
Caustic soda
Chlorine
Nitric acid
Phosphoric acid, wet
Potash^
Soda ash
Sodium chlorate
Sodium sulfate
Sodium phosphates
Sulfur, frasch
Sulfuric acid
Annual
1/1/77
18,750
13,895
13,400
10,497
8,650
11,500
10,315
264
1,443
1,499
7,900
47,177
Capacity
1/1/78
22,462
14,704
14,042
10,370
8,740
11,999
10,590
285
1,640
1,400
8,350
49,210
1976
16,450
10,160
9,040
7,790
7,350
7,975
7,124
196
923
890
6,365
32,350
Production
1977
17,295
11,975
10,692
7,866
7,330
9,000
7,938
211
1,261
881
5,911
34,304
1978
19,093
12,514
11,173
8,141
7,110
9,405
8,176
226
1,299
855
6,136
36,019
^/Sulfur figures in thousands of long tons.
^/Figures for U.S. and Canada.
Source: Chemical Marketing Reporter, January 2, 1978.
-------
E-64
some companies attempt to balance the tradeoff between economies of plant size
and increasing overhead costs, such as those due to environmental
regulations. !V
Caustic soda also has a dismal capacity record (see Table 5) .
As noted earlier, the production of chlorine and caustic soda is highly
interrelated: electrolytic processes yield both at * fixed ratio of 1.1 tons
of caustic soda per ton of chlorine gas. In effect, caustic soda growth has
been forced by vigorous attempts at chlorine caustic plants to meet chlorine
demand. The result is a parallel increase in caustic output whether the
market wants it or not. At present, demand for caustic is slack: aluminum
production has been sluggish and labor disputes in the U.S. pulp and paper
industry have helped reduce caustic demand because of uncertainties about
production. To compound matters, demand for caustic soda appears to be
elastic, as soda ash is a substitute for caustic. !§./ This means that
caustic producers are limited in the amount by which they can raise prices to
cover costs.
In contrast to the chlorine and caustic soda markets, supplies of soda ash
are very tight at consuming points. Operating rates are also much higher for
soda ash (see Table 6) .
The tightness in supply is due partly to transportation difficulties
(e.g., freight car unavailability and adverse weather conditions). Delivery
became a critical factor in the supply of soda ash when plant sites were
shifted from old synthetic plants in the East to natural ore deposits in the
West. With approximately 70 percent of domestic soda ash production consumed
east of the Mississippi, i§/ transportation was destined to become a
constraining factor. In addition to these transportation difficulties, over
one million tons of synthetic soda ash capacity w^s shut down, which tightened
supplies even further. Although forecasts for 1980 were not available at this
writing, production of soda ash was expected to rise a modest three to four
percent in 1979. 10/
For other inorganic chemicals, future production trends and growth rates
rest largely on end-product market conditions. Sulfuric acid's largest use,
for example, is in the production of phosphoric acid for subsequent use in
phosphatic fertilizers. About two-thirds of all phosphoric acid is used to
this end; therefore, the market for phosphatic fertilizers determines to a
JLZ/Chemical Purchasing, October 1979.
Wibid.
Ij/Chemical Purchasing, June 1978.
ZQ/Chemical and Engineering News, February 26, 1979.
-------
E-65
TABLE 5
CAUSTIC SODA
PRODUCTION AND CAPACITY
(thousands of tons)
Year Production
Average
Annual Capacity
1979 E
1978 E
1977
1976
1975
1974
1973
11,685
11,290
10,933
10,516
9,635
11,189
10,734
16,400
15,860
14,685
13,665
13,035
12,140
11,210
Operating Rate
71.3%
71.2%
74.5%
77.0%
73.9%
92.2%
95.8%
E- estimated.
Source: Chemical Purchasing, April 1979.
(From information provided by the Chemical Research
Group of the First Boston Corporation.)
TABLE 6
SODA ASH
PRODUCTION AND CAPACITY
(thousands of tons)
Year
Production
Average
Annual Capacity
1979 E
1978 E
1977
1976
1975
1974
1973
8,595
8,380
8,040
7,560
7,130
7,566
7,535
9,595
9,535
9,880
9,705
8,760
8,390
8,260
E- estimated.
Operating Rate
89.6%
87.9%
81.4%
77.9%
81.4%
90.2%
91.2%
Source: Chemical Purchasing, April 1979.
(From information provided by the Chemical Research
Group of the First Boston Corporation.)
-------
E-66
large extent the fate of the sulfuric acid industry .
Sodium sulfate serves as another example of how production is tied to end
markets; the bulk of sodium sulfate production goes to the pulp and paper
industry- Recently, increased environmental pressure forced the industry to
recover and recycle some of the material lost in the production process. As a
result, use of sodium sulfate by the pulp and paper industry is expected to
decline.
FOREIGN TRADE
The inorganic chemicals business to a large extent depends upon foreign
trade. In 1975, 15.4 percent of the total shipments of inorganic chemicals
was exported. 22/ At a disaggregated level, however, exports in many cases
appear to be relatively small. For example, trade in many of the basic
inorganic chemicals like sulfuric acid, hydrochloric acid, phosphates, and
potassium and sodium compounds is often small. .2V Trading partners often
prefer to import or produce basic mineral products like potash and phosphate
rock and then produce inorganic chemicals themselves .
A comparison between the value of exports (Table 7) and the value of
domestic shipments (Table 8) shows that in 1977 the U.S. exported less than 9
percent of its inorganic acids , 11 percent of its chlor-alkalies, and 17
percent of its potassium and sodium compounds. 24/
Caustic soda and sodium carbonate are the major items in chlor-alkali
exports. The bulk of caustic soda exports goes to countries in which
subsidiaries of U.S. aluminum companies operate (caustic soda is an
intermediate in aluminum production) and also to Canada, Mexico, Brazil and
Argentina.
Table 11 suggests that the United States has been able to maintain a
positive balance of trade in chlor-alkalies and potassium and sodium
jl/ Chemical and Engineering News, March 27, 1978.
.22/Meegan, Kline Guide.
Zl/U.S. Department of Commerce, 1978 U.S. Industrial Outlook. (Note:
It is unclear whether "small" refers to volume or value.)
a detailed breakdown of export and import values by product
class, see Tables 9 and 10.
-------
E-67
TABLE 7
INORGANIC CHEMICALS: VALUE OF EXPORTS
(thousands of dollars)
Chemical Product & SIC Code 1977 1976 1975 1974 1973 1965
o, Chl°rine 185,120 159,703 210,286 152,374 81,401 35,118
SIC 281.2
31'815 2
Potassium and Sodium Compounds
/
cTooo 963,831 920,412 676,660 543,781 535,933 147,991
SIC zo-Ly 5, 6, y
Source: U.S. Department of Commerce, U.S. Exports, FT 610.
TABLE 8
INORGANIC CHEMICALS: VALUE OF IMPORTS
(thousands of dollars)
Chemical Product & SIC Code 1977 1976 3975 1974 1973 1965
Chl°rine 35,377 25,375 29,255 26,280 13,984 3,243
71'369 59'368 32'090 25'535 20f366 2'583
Potassium and Sodium Compounds 48 182 42 855 35l055 34i381 23,55613,769
SIC 2819 7
CT 1» 058, 791 993,967 1,091,623 506,400 393,433 64,833
SIC 28J.9 5, 6, "
Source: U.S. Department of Commerce, U.S. Imports, FT 210.
-------
E-68
Description of Chemical
Alkalies and Chlorine
Chlorine
Sodium Carbonate
(Soda ash) — except natural
Sodium Bicarbonate
Sodium Hydroxide — Solid
Sodium Hydroxide — Liquid
Potassium Hydroxide
Alkalies, NEC
Inorganic Acids
Sulfuric Acid (Oleum)
Boric Acid
Hydrochloric and Chloro-
sulfonic Acids
Chromium Oxides, Anhydrides
etc., except pigment grades
Inorganic Acids, NEC
Potassium and Sodium Compounds
SIC Code
2812
2812
2812
2812
2812
2812
2812
2812
2819
2819
2819
2819
2819
2819
2819
10
20
20
30
30
40
40
30
40
40
40
40
00
20
40
20
40
10
97
00
10
25
40
97
TABLE 9
VALUE OF EXPORTS
(dollars)
1977 1976
185,120,453
11,048,429
52,943,416
3,152,771
5,918,615
107,261,839
3,558,971
1,236,412
31,815,221
2,295,744
12,957,553
1,963,956
7,411,400
7,186,568
247,054,724
159
5
47
3
13
87
2
26
1
12
1
5
4-
218
,702,909
,183,292
,003,527
,077,876
,064,022
,654,443
,811,020
908,729
,194,273
,910,434
,362,932
,706,296
,518,399
>696,212
,398,762
1975
210,285,923
4,020,559
45,822,262
2,469,777
39,384,733
116,208,665
2,094,751
285,176
24,726,975
4,762,872
11,460,994
1,510,860
3,997,752
2,974,497
230,538,582
1974
152,374,345
3,196,982
34,156,479
2,084,113
33,981,255
76,020,902
1,602,888
1,331,726
20,557,732
3,022,909
8,773,999
1,519,436
3,630,209
3,611,179
184,111,842
1973
81,400
1,390
16,064
2,156
17,614
42,445
1,220
508
15,478
754
9,343
880
2,687
1,813
123,268
,986
,767
,159
,719
,515
,594
,714
,518
,834
,046
,732
,752
,131
,173
,467
1965
35,117,844
2,353,556
9,029,526
N/A
10,953,692
12,056,168
665,613
52,289
8,612,110
439,937
2,947,099
N/A
N/A
5,225,074
79,059,594
Potassium Compounds
Sodium Sulfate—Crude
and Refined
Sodium Borates—Refined
Sodium Cyanide
2819 70 22 2,801,225 3,635,573 6,144,006 3,250,046 2,048,535 415,140
2819 70 23 64,633,664 49,156,150 42,486,333 33,836,394 19,353,562 13,975,248
2819 70 25 5,749,446 4,052,833 2,939,410 3,931,924 2,155,671 1,289,489
-------
E-69
Description of Chemical SIC Code
Potassium and Sodium Compounds (continued)
Sodium Hydrosulfite
Sodium Phosphate — Mono-.
Di-, Meta-, Pyro-
Sodium Compounds, NEC
Other Inorganic Chemicals, NEC
Aluminum Oxide
Aluminum Hydroxide
Aluminum Sulfate
Aluminum Compounds, NEC
Calcium Carbonate, Precipi-
tated, except pigment grades
Calcium Chloride
Dicalcium Phosphate
Activated Carbon
Sodium Bichromate and Chromate
Bleaching Compounds, NEC
Inorganic
Elemental Phosphorus
Tin Oxides
Chemicals & Chemical Elements,
NEC (Including Special
Nuclear Material) — Inorganic
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819^
2819
2819
Source: U.S. Department of Commerce,
70
70
70
50
60
60
60
9c
9c
9c
9c
9c
9c
9c
9c
9c
U.S
35
40
79
00
15
20
97
11
13
17
20
24
55
58
81
97
1977
4,460
13,891
38,236
963,830
94,208
9,104
889
17,575
4,052
3,383
9,549
12,941
7,975
22,369
20,722
453
760,604
TABLE 9
VALUE OF EXPORTS
(dollars)
(continued)
1976
,926
,524
,067
,733
,776
,504
,789
,126
,482
,075
,970
,413
,766
,563
,041
,601
,627
2,472,075
12,700,839
26,344,222
920,412,051
122,299,994
7,935,036
1,568,521
21,028,815
735,017
2,578,448
7,611,636
13,050,858
6,397,863
19,046,344
30,387,005
466,867
687,305,647
2
14
25
676
96
5
2
16
2
6
13
4
15
36
476
. Exports of Domestic Merchandise
1975
,975,421
,527,904
,021,569
,660,312
,087,101
,694,056
,897,072
,307,074
704,917
,313,555
,269,534
,307,134
,569,124
,148,132
,659,382
511,907
,191,324
, 1978.
1974
3,633,984
13,103,394
27,215,939
543,781,466
72,378,253
4,947,419
1,807,486
16,838,625
1,541,445
1,699,039
6,864,360
14,034,970
3,283,553
13,676,569
20,075,306
443,398
386,191,043
1973
1,513,111
6,496,936
17,738,114
535,932,682
63,179,884
3,897,565
642,181
14,095,970
1,088,076
2,224,715
4,752,759
8,650,971
3,373,582
12,997,778
12,255,716
401,935
408,371,550
1965
603,109
4,620,956
9,313,476
147,990,612
25,106,093
2,208,745
500,705
4,115,258
N/A
N/A
N/A
3,520,050
862,285
2,617,715
N/A
281,834
108,777,927
-------
TABLE 10
VALUE OF IMPORTS
(dollars)
Description of Chemical
Alkalies and Chlorine
Chlorine
Sodium Carbonate, Calcined
Sodium Bicarbonate
Sodium Hydroxide
potassium Hydroxide
Potassium Bicarbonate and
Carbonate and Sodium
Carbonate, Hydrated
Inorganic Acids
Sulfuric Acid
Boric Acid
Hydrochloric Acid
Hydrofluoric Acid
SIC Code
2812
2812
2812
2812
2812
2812
2812
28193
2819
2819
2819
2819
10
20
20
30
40
40
30
40
40
40
00
20
40
00
10
98
28194
00
10
20
30
1977
35,377,265
11,806,888
148,097
454,521
21,291,616
372,506
1,303,637
71,368,688
8,075,372
5,588,041
4,305,560
44,890,463
1976
25,374
10,737
2
153
13,338
288
854
59,367
'7,974
14
3,131
40,975
,779
,459
,246
,388
,948
,021
,717
,672
,642
,201
,187
,644
1975
29,255,181
8,903,595
341,078
78,580
16,141,054
2,721,108
1,069,766
32,089,870
5,339,227
59,339
2,327,345
20,336,992
1974
26,279,814
7,293,932
3,258,345
330,930
13,742,628
752,379
901,600
25,535,390
7,826,004
176,074
2,409,772
12,080,281
1973
13,983,732
3,327,434
756,101
260,120
8,870,759
295,177
474,141
20,365,767
5,260,180
3,015
2,940,878
9,823,468
1965
3,243,
2,394,
N/A
276,
336,
193,
41,
2,582,
667,
222
782
911 I/
101
585
843
705
124
1,616
W
820,943' ~J
O
14,166
Arsenic Aold, Tungstic Acid
and Inorganic Acids, NES
2819 40 98
8,509,252
7,271,998
4,026,967
3,043,259
2,338,226
1,078,856
^/Includes Sodium Carbonate and Bicarbonate.
-------
TABLE 10
VALUE OF IMPORTS
(dollars)
(continued)
Description of Chemical
Potassium and Sodium Compounds
Potassium Iodide
Potassium Nitrate
Potassium Compounds, NES
Sodium Borate, Other
than Crude
Sodium Cyanide
Sodium Chlorate
Sodium Hydrosulfite
Sodium Phosphate and
Pyrophosphates
Sodium Silicate
Sodium Silicofluoride
Sodium Sulfate, Crude or
Salt Cake
Sodium Sulfate, Anhydrous
Sodium Sulfide
Sodium Compounds, NES
Sodium Sulfate, Crystal-
1 i r» «s«4 .-.•- r>1-1iil"mm P-» 1 *-
SIC Code
28197
2819 70 05
2819 70 10
2819 70 19
2819 70 23
2819 70 25
2819 70 30
2819 70 35
2819 70 40
2819 70 45
2819 70 50
2819 70 55
2819 70 60
2819 70 70
2819 70 89
2819 70 65
1977
48,481
183
154
7,772
23
4,761
11,036
3
243
142
394
5,936
6,697
5
11,126
,981
,378
,985
,332
,375
,485
,262
,094
,650
,917
,467
,324
,753
,025
,934
1976
42,854
120
38
6,951
3
3,482
4,305
39
165
26
609
11,592
6,959
141
8,417
,936
,927
,282
,601
,744
,715
,321
,787
,439
,750
,926
,364
,707
,346
,027
,
1975
35,055,183
108,720
196,671
6,547,943
2,625
2,971,464
3,259,894
66,305
3,111,227
11,666
1,023,343
8,304,796
4,318,562
113,542
5,018,425
1974
34,380
137
31
8,047
109
2,704
3,258
61
906
11
796
7,132
3,220
119
7,816
29
,997
,031
,358
,093
,564
,132
,285
,970 *
,721
,253
,356
,557
,254
,196
,061
,166
1973
23,555
91
97
4,852
1,729
3,226
8
2,094
4
445
4,054
1,601
5,348
2
,573
,820
,020
,002
—
,476
,395
,892
,394
,156
,593
,032
,526 ~~
—
,067
,200
1965
13,769,331
300
154,675
2,343,667
—
2,625,203
334,831
22,261
125,510
223,319
426,295
4,521,280
242,646
—
2,749,082
262
H
Aluminum Hydroxide and
Oxide or Alumina
2819 50 00
511,350,880
404,058,338
370,038,900
270,616,984
209,329,453
15,941,087
-------
TABLE 10
VALUE OF IMPORTS
(dollars)
(continued)
SIC Code
1977
1976
1975
1974
1973
1965
Other Inorganic Chemicals,
NEC
Aluminum Sulfate
Sodium Aluminate
Cryolite or kryolith
Aluminum compounds , NES ,
Including Ammonium
Antimony Compounds
Arsenic Compounds
Barium Compounds,
Precipitated
Barium Compounds, NES
Bismuth Compounds
Bromine
Calcium Carbide
Calcium Carbonate,
Precipitated
Calcium Chloride
Calcium Cyanide
Calcium Hypochlorite
Dicalcium Phosphate
Calcium Compounds, NES
2819 5,6,9
2819 60 20
2819 60 30
2819 60 40
2819 60 98
2819 9c 01
2819 9c 02
2819 9c 03
2819 9C 05
2819 9C 06
2819 9c 07
2819 9c 09
2819 9c 11
2819 9c 13
2819 9c 15
2819 9c 16
2819 9C 17
2819 9c 19
1,058,790,812
1,586,010
11,196
4,311,771
5,388,897
12,769
2,658,596
1,393,921
2,896,267
44,200
102,059
1,258,809
1,205,686
1,073,342
340,409
306,983
8,771
10,505,889
993,966,8-30
1,220,491
1,368
4,332,140
4,539,962
9,640
1,733,113
422,857
1,932,862
35,382
23,520
926,319
551,095
681,462
441,903
682,856
181,140
7,254,689
1,091,623,273
911,107
6,050
9,057,929
2,220,708
5,965
4,516,400
110,861
2,272,683
47,897
1,248
1,037,010
242,426
597,758
375,228
897,912
45,592
11,328,203
506,400,065
751,694
~
6,968,721
2,631,624
24,739
2,504,503
1,723,063
8,912,055
182,570
796,956
518,697
450,520
155,727
373,879
148,334
1,342,544
10,675,590
393,432,810
704,931
29,002
5,103,646
4,019,253
147,977
2,149,384
1,603,186
3,543,139
40,957
—
740,495
332,063
316,507
585,411
209,079
174,659
7,215,927
64,833,104
335,217
88,450
2,008,551
783,316
214,591
1,280,608
53,452 H
329,833 *°
25,338
—
728,381
164,188
99,751
1,462,639
N/A
N/A
2,549,156
-------
TABLE 10
VALUE OF IMPORTS
(dollars)
(continued)
Description of Chemical
SIC Code
1977
1976
1975
1974
1973
1965
Other Inorganic Chemicals,
NEC (continued)
Potassium Chromate and
Bichromate
Sodium Chromate and Dichromate
Cobalt Oxide, Sulfate and
Compounds, NES
Copper or Cupric Oxide
Cuprous Oxide
Copper Sulfate
Copper Cyanide, Iodide, and
Compounds, NES
Gold Compounds
Hydrogen Peroxide
Iodine
Iron Sulfate
Iron Compunds, NES
Lead Nitrate
Lead Compounds, NES
Magnesium Sulfate
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
2819
9c
9c
9c
9c
9c
9c
9c
9c
9c
9c
9c
9c
9c
9c
9c
22
24
26
27
28
29
31
33
35
36
37
38
40
42
43
4,699
62,903
2,720,375
869,568
759,340
1,213,319
450,457
19,553
2,731,063
13,949,953
334,586
1,490,549
112,568
168,630
1,387,720
4
240
931
748
364
537
241
85
3,305
13,870
144
2,138
140
86
1,095
,597
,929
,864
,631
,261
,248
,271
,770
,349
,615
,196
,635
,256
,430
,762
24,622
373,699
852,658
526,520
805,274
192,541
699,883
20,078
415,529
11,792,956
58,213
823,461
110,115
61,140
1,070,557
344,955
1,253,593
4,526,531
—
1,455,535
295,695
468,452
7,411
800,196
14,929,787
119,127
1,139,745
164,675
61,062
701,557
2,495
244,665
2,751,663
24,612
751,427
304,379
302,484
—
1,013,280
10,622,960
76,605
258,959
37,700
99,722
962,338
11
3,204
1,173
,553
,887
,276
N/A
489
131
245
29
414
2,478
,742
,449
,621 M
u>
,400
,089
,477
N/A
191
45
11
597
,301
,072
,201
,914
-------
TABLE 10
VALUE OF IMPORTS
(dollars)
(continued)
Description oE Chemical
SIC Code
1977
1976
1975
1974
1973
1965
Other Inorganic Chemicals,
NEC (continued)
Magnesium Oxide, Carbonate,
Chloride, and Compounds, NES
Manganese SulEate
Manganese Borate and
Compounds, NES
Mercury Compounds
Molybdenum Compounds and
Sodium Molybdate
Nickel Sulfate
Nickel Chloride, Oxide, and
Compounds, NES
Phosphorus
Phosphorous Oxychloride
Phosphorous Trichloride
Phosphorous Compounds, NES
Platinum Compounds
Selenium Compounds
Silver Compounds
2819 9c 45
2819 9c 46
2819 9c 48
2819 9c 51
2819 9c 53
2819 9c 54
2819 9c 56
2819 9c 58
2819 9c 59
2819 9c 60
2819 9c 62
2819 9c 64
2819 9c 67
2819 9c 70
1,684,433 1,154,599
18,890 15,671
3,652,404 2,372,754
87,549 57,659
95,808 256,345
559,332 815,026
17,265,643 22,291,'903
1,461,751 1,633,674 1,615,145
467,960 367,639 781,048,
37,017 50,485 70,474
984,354 707,786 1,350,632
352,000 1,668,385 2,068
687,178 377,888 464,401
4,402,109 419,248 2,569,602
725,679
1,300
841,561
35,476
230,627
254,391
15,212,029
1,214,227
128,293
243,422
609,152
59,645
510,012
656,168
1,410,354
3,768
1,724,543
51,247
322,003
58,814
15,230,055
744,692
N/A
N/A
303,854
67,344
961,752
78,567
920,613 418,600
8,585 7,136
1,286,545 241,636
30,530 85,118
614,066 553,259
177,208 65,949
13,442,975 14,990,241
293,368 H
1
N/A ^
N/A
74,038
3,857
131,733
153,251
Strontium Carbonate, Nitrate,
Oxide, and Compounds, NES
2819 9c 72
556,828 2,039,260
1,124,687 2,433,630 1,301,727
2,490
-------
TABLE 10
VALUE OF IMPORTS
(dollars)
(continued)
Description of Chemical
SIC Code
1977
1976
1975
1974
1973
sulfite, and Compounds, NES
Lime chlorinated with not more
than 40% of Available Chlorine
Other Elements and Inorganic
Compounds, NES
2819 9c 89
2819 9c 95
2819 9c 98
919,
67,329
653,226
59,051
781,001 2,305,596
29,058
49,873
843,424
24,826
517,099
82,904
442,221,370 496,427,804 207,105,995 135,191,499 113,272,708 10,928,642
1965
Other Inorganic Chemicals,
NEC (continued)
Sulfur Dioxide
Thallium Compounds
Tin Tetrachloride
Tin Dichloride
Tin Compounds, NES
Titanium Compounds.
Tungsten Compounds
Zinc Chloride
Zinc Sulfate
Zinc Arsenate, Cyanide, Hydro-
2819
2819
2819
2819
2819
2819
2819
2819
2819
OQl Q
9c
9c
9c
9c
9c
9c
9c
9c
9c
Or-
74
78
79
80
82
84
85
86
87
aa
4,086
483
1
249
1,187
813
2,921
1,032
1,762
ai a
,295
,463
,170
,577
,180
,771
,039
,355
,703
z.f.f.
2,840
16
132
1,040
1,067
2,219
700
1,614
ZC.1
,400
,833
--
,435
,930
,438
,764
,861
,815
ooe
2,389,830
8,636
—
91,362
732,383
1,206,432
1,725,696
517,778
1,065,180
"7Di nm
2,225,276
4,308
—
291,181
866,555
497,660
1,563,215
1,263,859
2,439,138
i ir»c CQC
2,024,195
4,030
—
81,424
546,145
372,680
1,392,146
535,803
698,621
O A -3 A tA
104,345
9,210
N/A
N/A
355,983
211,933
22,932
185,886
304,954 W
Ul
m i nort
Source: U.S. Department of Commerce, U.S. Imports for Consumption and General Imports, 1978.
-------
E-76
TABLE 11
INORGANIC CHEMICALS
BALANCE OF TRADE: EXPORTS-IMPORTS
(thousands of dollars)
Chemical Product & SIC Code 1977 1976 1975 1974 1973 1965
Alkalies and Chlorine
SIC 2812 149,743 134,328 181,031 126,094 67,417 31,875
Inorganic Acids
SIC 2819 3, 4 -39,554 -33,174 -7,363 -4,977 -4,887 6,029
Potassium ana Sodium compounds
SIC 2819 7 198,873 175,544 195,484 149,731 99,712 65,291
Other inorganic chemicals, NEC
SIC 2819 5, 6, 9 -94,960 -73,555 -414,963 37,381 142,500 83,158
Source: Calculated from Tables 9 and 10.
-------
TABLE 12
ECONOMIC INDICATORS
All
Establishments
All
Employees
Production Workers
YearS./ With 20
Employees Payroll
Total or more Number (million Number
(number) (number) (1,000) dollars) (1,000)
1977 Census
1976 ASM
1975 ASM
1974 ASM
1973 ASM
1972 Census
1971 ASM
1970 ASM
1969 ASM
1968 ASM
1967 Census
1966 ASM
1965 ASM
1964 ASM
1963 Census
(N/A) Not
48
(N/A)
(N/A)
(N/A)
(N/A)
48
(N/A)
(N/A)
(N/A)
(N/A)
44
(N/A)
(N/A)
(N/A)
38
32
(N/A)
(N/A)
(N/A)
(N/A)
39
(N/A)
(N/A)
(N/A)
(N/A)
40
(N/A)
(N/A)
(N/A)
37
11.8
13.3
14.1
13.7
13.3
13.3
13.7
14.7
15.9
16.9
19.2
19.9
20.0
19.9
19.7
215.4
209.2
203.5
182.5
164.6
152.0
142.4
141.3
143.0
140.7
155.7
154.0
148.2
145.3
138.2
7.9
8.8
9.8
9.9
9.7
9.6
9.9
10.5
11.2
11.8
12.8
13.4
13.5
13.8
13.5
Value Added
Value added by Cost of
Hours Wages Manufacture materials
(mil- (million (million (million
lions) dollars) dollars) dollars)
16.0
17.9
19.9
19.9
19.5
18.9
19.6
21.4
23.0
23.8
25.5
27.5
26.8
28.1
27.6
INDUSTRY
135.8
133.6
133.1
123.4
111.8
102.6
96.1
93.5
92.6
90.1
94.4
97.8
92.1
92,3
88.1
Assets and
Expenditures
New
Capital
Value of Expend i-
shipments tures
(million (million
dollars) dollars)
Ratios
Gross End-of-
value of Year
fixed inven- Special-
assets tories ization Coverage
(million (million ratio ratio
dollars) dollars) (percent) (percent)
2812, ALKALIES AND CHLORINE
805.4
960.4
897.9
697.8
463.0
455.6
360.3
362.0
377.9
372.4
419.2
467.0
442.8
436.0
389.2
823.4
852.7
749.5
601.0
416.0
365.5
313.7
299.6
310.2
286.2
302.0
319.6
291.4
276.2
263.6
1,663.2
1,797.7
1,633.2
1,282.4
884.0
823.2
675.9
660.3
687.9
664.9
719.8
782.7
735.4
711.6
652.1
186.6
222.8
183.4
163.7
67.9
61.5
45.2
51.0
121.6
90.2
98.0
81.2
57.7
49.4
57.5
1,692.1
1,792.5
1,724.4
1,481.8
1,364.0
1,302.0
1,165.4
1,158.9
1,233.1
1,193.8
1,185.6
(N/A)
(N/A)
1,083.8
1,046.7
141.
156.4
133.6
110.7
63.1
60.4
67.3
67.6
64.5
61.9
71.4
69.2
65.3
66.0
64.3
(N/A) (N/A)
(N/A) (N/A)
(N/A) (N/A)
{N/A) (N/A)
65 65
(N/A) (N/A)
(N/A) (N/A)
(N/A) (N/A)
(N/A) (N/A)
67 75
(N/A) (N/A)
(N/A) (N/A)
(N/A) (N/A)
66 79
available.
a/In years of
Annual Survey
of Manufactures
(ASM),
data are
estimates
based on a
representative sample
of establishments
canvassed
annually and may
^J
differ from results of a complete canvass of all establishments. The ASM publication shows percentage standard errors. For data prior to 1963, see 1963
Census of Manufactures, Vol. II, table 1 of industry chapter.
-------
TABLE 12
ECONOMIC INDICATORS
(continued)
All
Establishments
a/
Year-' With 20
Employees
Total or more
(number) (number)
All
Employees
Payroll
Number (million
(1,000) dollars)
Production Workers
Hours
Number (mil-
(1,000) lions)
Wages
(million
dollars)
Value Added
Value added—
by Manufacture
(million
dollars)
Cost of£/
materials
(million
dollars)
Value of-'
shipments
(million
dollars)
Assets
and
Expenditures
New-
f Capital
Expendi-
tures
(million
dollars)
Gross-
value of
fixed
assets
(million
dollars)
Ratios
' e/
End-of —
Year
inven-
tories
(million
dollars)
f
Special- —
ization
ratio
(percent)
/
Coverage-
ratio
(percent)
INDUSTRY 2819, INDUSTRIAL INORGANIC CHEMICALS, NEC (TOTAL)
a/
1977 Census
1976 ASM
1975 ASM
1974 ASM
1973 ASM
1972 Census
557
(N/A)
(N/A)
(N/A)
(N/A)
383
281
(N/A)
(N/A)
(N/A)
(N/A)
264
79.0 1,311.9
74.6 1,186.8
73.7 1,061.2
68.5 897.0
64.6 761.7
63.8 704.7
46.5
43.7
43.5
42.4
40.1
39.9
95.3
87.8
85.8
84.8
80.1
80.0
706.2
615.8
555.4
491.9
418.9
392.4
4,283.9
3,974.7
3,260.5
2,904.4
2,334.9
2,038.2
4,295.7
3,475.6
2,844.0
2,723.6
1,926.2
1,804.1
8,519.0
7,388.5
6,053.4
5,534.9
4,233.8
3,833.3
458.7
391.1
341.8
254.7
176.6
149.0
3,648.6
3,462.9
3,200.8
2,964.6
2,627.6
2,563.3
860.4
753.4
685.9
621.3
417.4
384.1
88
(N/A)
(N/A)
(N/A)
(N/A)
89
78
(N/A)
(N/A)
(N/A)
(N/A)
79
INDUSTRY 2819, INDUSTRIAL INORGANIC CHEMICALS, NEC (PRIVATELY OWNED AND OPERATED ESTABLISHMENTS ONLY)
co
1977 Census
1972 Census
547
371
271
252
49.9
39.7
813.0
426.5
31.3
27.0
64.1
54.6
476.6
262.2
2,729.2
1,260.3
3,648.5
1,549.4
6,321.0
2,800.7
458.7
149.0
3,648.6
2,563.3
860.4
384.1
88
89
78
79
(N/A) Not available.
iL/in years of Annual Survey of Manufactures (ASM), data are estimates based on a representative sample of establishments canvassed annually and
may differ from results of a complete canvas of all establishments. The ASM publication shows percentage standard errors. This industry was newly
defined for 1972 Census of Manufactures so no comparable data prior to 1972 exist.
b/Value added for government-owned, contractor-operated plants, included in total, was estimated based upon averages reported for commercial
establishments in prior years.
£/Total data exclude government-owned materials furnished to government-owned, contractor-operated plants, and include fuels and electric energy
purchased by or for these1 plants.
I/Total data include a calculated value of shipments for government-owned, contractor-operated plants, comprised of adjusted value added (estimated
as described in footnote 3) plus the cost of fuels and electric energy.
^/Includes expenditures for plants under construction. Total excludes expenditures, inventories, and fixed assets of government-owned, contractor-
operated plants.
I/Ratio excludes government-owned, contractor-operated establishments because their dollar receipts were included in miscellaneous receipts. See
Appendix B for discussion of calculation of specialization and coverage ratios.
£/lncludes both privately owned and operated plants and government-owned, contractor-operated plants.
Source: U.S. Department of Commerce, Bureau of Census, 1977 Census of Manufactures (Washington, D.C.: Government Printing Office,
1979.); and U.S. Department of Commerce, Bureau of Census, Annual Survey of Manufactures (Washington, D.C.: Government
Printing Office, various years) .
-------
E-79
compounds. However, the trade deficit in inorganic acids has been mounting in
recent years. The trade balance for inorganic chemicals not elsewhere
classified (NEC) has fluctuated from year to year, starting with a surplus of
$142 million in 1973 and continuing to a $94 million deficit in 1977. One
explanation for the deficit is that imports of alumina, uranium compounds,
hydrofluoric acid, sulfur, inorganic metal salts and precious metal compounds
have registered large gains in recent years. Combined with rapid inflation in
world markets, it is believed that this import trend acts to worsen the
balance of trade in miscellaneous inorganic chemicals.
INNOVATION
It appears that the inorganic chemicals industry has experienced very
little innovation in the way of new chemical substances. Most of the
chemicals and compounds that are part of the industry have well established
end uses. However, we believe that it is not necessarily true that past
trends will be continued in the future. Although the segment has experienced
limited innovation overall, within the segment there are several specialized
areas in which R&D effort has been high. For example, new phosphate, boron
and silicon compounds have been developed. in recent years many new theories
on inorganic chemistry have emerged from university laboratories. These
theories have not yet been translated into commercial innovations, but it is
quite possible that they may do so in the near future. One of the areas in
which commercial applications may soon appear is in rare earth salts.
-------
E-80
SYNTHETIC HIGH POLYMERS
-------
E-81
SYNTHETIC HIGH POLYMERS SEGMENT SUMMARY
Plastic Materials and Resins
Organic Fibers, Non-cellulosic
Synthetic Rubber
Synthetic High Polymers are chain-like macromolecules formed by the
chemical linkage of smaller molecular units known as monomers. Depending upon
the nature of the monomers, these compounds can assume the form of plastics,
resins, fibers, or rubbers for use in the fabrication of a wide variety of
industrial and consumer goods.
The basic polymers currently in use date largely from the period
1930-1960. Some important new polymers have been developed since
then—polysulfore plastic by Union Carbide (1965), olefin fibers by Hercules
(1962), and Anidex fibers by Rohm and Haas (1969)—but the synthetic high
polymers industry is built upon polymers that were first developed a
generation ago. A relatively small number of these basic polymers have large
market shares. For example, in 1978 polyester accounted for almost half of
domestic non-cellulosic organic fiber production, and nylon accounted for
almost one-third. Forty to fifty basic plastics are available commercially,
but in 1976 polyethylene accounted for 29 percent of domestic production,
polyvinyl chloride accounted for 15 percent, and polypropylene accounted for
almost 9 percent. in 1976 styrene-butadiene rubber constituted more than half
of all U.S. synthetic rubber output.
These characteristics of synthetic high polymers—a small number of basic
products that are made in very large volumes and have dominated the industry
for years—lead to a market which is dominated by large plants owned by large
companies. Concentration in synthetic high polymer markets is relatively
high, and this is particularly true in the synthetic fibers market. in 1976
Dupont alone owned 35 percent of domestic synthetic fiber production, and the
top four firms (including DuPont) owned two-thirds of domestic production.
The top four synthetic rubber producers accounted for half of domestic
production in 1976, and the top eight account for 72 percent. The plastics
market displays the lowest degree of concentration: in 1976 the top four
producers accounted for 27 percent of domestic production, and the top eight
firms accounted for 38 percent.
Because of the characteristics of high polymer markets outlined above,
chances seem low that a radically different generic fiber could be developed
that could compete successfully with today's major fibers. Not only would
finding such a fiber be difficult in this well-researched field, but the cost
of building a plant with a large capacity and then establishing that new fiber
in the man-made fiber market would require a large commitment of resources.
-------
E-82
Anidex, the last generic fiber to be developed, was introduced in 1969.
Rohm and Haas reputedly spent $20 million and 10 years of research to develop
this product. A 1977 estimate by an industry executive was that a minimum of
$50 million and 5 to 10 years of development would be required to
commercialize a new generic product for broad-based market application.
Even though the roster of basic polymers is quite stable, a constant
stream of new products emerges from the synthetic high polymer industry. in
recent years there seems to have been much innovation in the area of
copolymers. Copolymers differ from other polymers in that the polymers are
built from two or more different types of monomers rather than from one type
of monomer. The same building blocks are used in copolymers as in
polymers—they are simply put together in different ways.
The production of copolymers is not the only way in which the synthetic
high polymer industry introduces new products. By the use of additives which
affect color, flexibility, stability, tensile strength, electrical
conductivity, and dozens of other properties, and by the use of different
methods of processina the basic materials, manufacturers are able to produce
literally thousands of different formulations, custom-tailored to specific
end-uses. For example, in 1977, Hercules, Inc. the largest producer of
polypropylene at that time, had more than 150 polypropylene products
available. Most of the additives which are used to produce these products are
covered in another segment—Organic Chemicals. NEC.
-------
E-83
Plastics and Resins
-------
E-84
PLASTICS MATERIALS AND RESINS
DESCRIPTION
Plastics and resin materials are high molecular weight polymers or macro-
molecules which at some stage in their manufacture, exist in such physical
condition that they can be shaped or otherwise processed by the application of
heat and pressure. The terms "plastic," ''resin," and "polymer," are often
usea interchangeably. Strictly speaking, a "plastic" is a relatively tough
resin, with a molecular weight between 10,000 and 1,000,000, that can be
formea into solid shapes with good mechanical properties under the influence
of heat and pressure. The term "resin" is used for the nonstructural polymers
in protective coatings, adhesives. and binders, commonly, a processed polymer
is called a plastic and an unconverted polymer, a resin. "Latexes" are
dispersions of resins in water.
There are about 40 to 50 basic plastics and resins available commer-
cially. I/ These basic materials have thousands of individual compounds,
each with its distinct properties depending on the molecular weight of the
resin and the types and amounts of the additives present, conation
characteristics of plastics which are considered in production are strength,
dimensional stability, toughness, and other desirable mechanical properties.
Other characteristics are weight; ease of fabrication; resistance to wear,
water, and chemical attack; and color.
Plastics and resin materials are categorized generally into thermosetting
and thermoplastic types. Thermosetting materials harden with a change in
composition in the final treatment so that their final state is substantially
infusible and insoluble. That is, they cannot again be softened by heat or
solvents. Thermosetting materials comprised 20.6 percent.?/ of total U.S.
plastics and resins production in 1977. The most important products in this
category are phenolic, amino , polyester, and alkyd resins.
Thermoplastic materials have final states that can be repeatedly softened
by heating and hardened by cooling, in 1977 thermoplastic materials accounted
for 79.4 percent3/ Of total U.S. plastics and resins production. The most
important products in this category are polyethylene, vinyl resins, and
styrene-type materials.
I/Edward J.Taylor, "plastics and Resin Materials," Synthetic_qnjanic
Chemicals, 1977 (Washington, D.C.: U.S. international Trade Commission,
1977), p. 220.
j/Ibid., p. 220, calculated from data presented in article.
j/Ibid., calculated from data presented in article.
-------
E-85
HISTORY
The first commercial plastic was cellulose nitrate (celluloid) , patented
in 1870. Four decades passed before a predecessor company of union carbide
introduced the phenolics (Bakelite) in 1909. By the 1930s more than a dozen
plastics were either on the market or well along in development. World War II
created a heavy demand for materials of all kinds, polymer research and
production accelerated markealy, and established the technological base for
the industry.
Polyethylene is the largest-volume plastic in both the U.S. and the
world, it was Discovered durina the period 1932 to 1935 by imperial Chemical
Industries, Ltd., in the course of a research program on the effects of very
high pressure on chemical reactions. Although the initial discovery was
accidental, it became evident that polyethylene was the ideal material for
shielding microwave cable in military radar equipment. The British work on
radar was a top priority project as World War II drew near and sharply spurred
the development of polyethylene.
Although the major classes of commercial plastics and resins date largely
from World War II and earlier, important new polymers have been recently
discovered. Some examples are:
• General Electric's Lexan polycarbonate in I960;
• DuPont's Delrin polyacetal (polyformaldehyde) in 1960; and
• Union Carbide's polysulfone in 1965.
ENGINEERING PROCESS
Plastic materials and synthetic resins are either (1) formed by the
polymerization or polycondensation of organic intermediates or (2) chemically
modified from such natural polymers as cellulose. Common monomers are
ethylene, propylene, styrene, and vinyl and acrylic compounds.
In polycondensation, two or more different molecules (or monomers) are
reacted to form large molecules of high molecular weight, usually with the
elimination of a small molecule such as water or methanol. Examples are the
condensation of urea or phenol with formaldehyde. When more than one type of
monomer is being polymerized, the material formed is called a copolymer.
Polymerization of vinyl chloride, as an example, may be carried out by
any of several methods: suspension, emulsion, solution, or mass. Suspending
agents are needed for suspension polymerization, emulsifying agents are needed
for the emulsion method. The latter also requires coagulating aids to bring
the polymer out of emulsion, usually two or more catalysts are used.
-------
E-86
The basic polymer is seldom used alone in plastics, polyvinyl chloride
requires a thermal stabilizer to prevent loss of hydrogen chloride in any
processing step at temperatures above 100°C. Flexible polyvinyl chloride
films and foams require 20 to 40 percent of a plasticizer (organic chemical
that improves workability during fabrication). Flow agents may be included to
facilitate heat fabrication. Other additives may include colorants, solid
fillers to improve properties and reduce costs, and rubbers to improve low
temperature properties, plastics in general may contain such additional
additives as antioxidants, carbon black to stabilize against degradation by
light, delusterants, self-extinguishing agents, agents that control surface
properties, and so on.
RAW MATERIALS
Petroleum and natural gas are the basic raw materials of the plastics
materials and resins industry. For example, naphtha, derived from crude oil,
is the source of benzene. It is modified by chemical processes and converted
into resins such as alkyds, acrylonitrile-butadiene-styrene,
styrene-acrylonitile, polystyrene, phenolics, polycarbonates, and silicones.
Natural gas is the main source of ethylene and propylene, which are basic
to the production of polyethylene, polyvinyl chloride, polyvinyl acetate,
polypropylene, acrylics, and other resins. Liquefied refinery gases, obtained
from crude oil, serve as another source of ethylene, propylene and butylene.
Any restrictions on the supply of benzene, ethylene or propylene are bound to
limit the availability of synthetic resins.
As mentioned earlier, the base polymer is seldom used alone in plastics.
The most coitimon additives are plasticizers, fillers, antioxidants, ultraviolet
radiation absorbers, stabilizers, flame retardants, and colorants.
USES
The plastics materials and resins industry (SIC 2821) produces material
for sale to the plastic products industry (Sic 3079) and other industries for
molding, extruding, casting, fabricating and finishing into components or
parts for such products as furniture, automobiles and appliances.
The versatility of plastics materials is responsible for much of their
growth in competition with metal, wood, paper, and glass. Many of these
materials have been gradually replaced by plastics which offer improved
properties, often at lower cost, plastics can be produced with the physical
and chemical properties required to fulfill special product needs and are used
by most industries because of their ready adaptability to high output
processing methods.
-------
E-87
It appears that markets for plastics and resins are so diverse that
overall demand is not appreciably influenced by single factors such as defense
spending, shifts in fashion, or changes in the composition of the population.
Three of the principal markets for plastic materials are packaging,
building/construction, and automotive applications. Table 1 provides
information on the consumption of the ma^or types of plastics in 1976 and
their major uses.
Packaging represents a highly diversified market for plastics, packaging
is the single most important use for thermoplastic resins, representing in
1976 about 30 percent!/ of all the thermoplastic resins consumed, packaging
materials include both rigid and flexible plastic items such as shrink wrap,
blister containers, bottles, disposable cups, boxes, and trays, plastics
material constituted about 10 percent!/ of all material used in packaging in
1976. The growth of plastics in packaging has been at the expense of both
traditional materials (glass, paper products, and nonferrous metals) and older
plastics (e.g., cellulosic plastics).
The preference for newer plastics materials over other materials is due
primarily to cost ana performance factors. For example, plastics may be
formed into a greater variety of shapes, and at lower temperatures and lower
energy requirements than glass or metal. Also, plastics are typically lighter
than glass or metal, which results in lower shipping costs.
Major synthetic plastics used in construction include pipe, siding, and
insulation. Approximately 40 percent^/ of the thermosetting resins are
consumed in this market, insulation applications have made substantial gains
as a result of the energy crisis, polyurethane foam and polystyrene foam are
two of the principal materials used in insulation. Other important plastics
applications in the building and construction sector are glazing, panels,
ducts, and tanks. In 1976, plastic products accounted for about five
percent!/ of all the materials used in building and construction. Growth is
projected because plastics are increasingly being accepted by building
contractors, and because building codes are being rewritten to accommodate
them.
i/Edward J. Taylor, "Synthetic Resins and plastics Materials,"
Synthetic Organic Chemicals, 1977 (Washington, D.C.: U.S. international Trade
Commission, 1977) , p. 212.
5/Ibid. , p. 212.
6/Ibid. , p. 211.
yIbid., p. 212.
-------
E-88
TABLE 1
CONSUMPTION OP MAJOR PLASTICS MATERIALS AND SYNTHETIC RESINS BY END USE: 1976
(millions of pounds)
Electric
Polyethylene
Low-d ens i ty— /
High-density
Vinyl
Chloride
Other
Styrene
Polystyrene
Solid
Foam
ABS and SAN
Other
Polypropylene
Polyurethane foam
Phenolic
Polyester
Ami no
Alkyd
Acrylic
Cellophane
Courmarone-indeneH/
Epoxies
Cellulosics
Polyamides
Other-7
TOTAL
5/Includes data for
garden hose, and
— Includes data for
-Includes data for
Pack-
aging
2,515
1,320
3,835
375
225
600
875
280
1,155
35
—
1,190
430
45
10
—
15
—
—
200
40
—
45
—
165
6,575
Con-
struction
200
280
480
2,200
—
2,200
110
—
110
250
—
360
15
265
610
185
705
—
135
—
30
15
5
—
40
5,045
House- and
waresS/ Electronic
1,170
350
1,520
100
—
100
385
120
505
20
—
525
130
—
50
—
35
—
—
—
—
—
—
—
10
2,370
film consumed in household and
dinnerware
.
340
—
340
350
—
350
220
—
220
70
—
290
85
—
200
55
35
—
—
—
—
15
5
25
70
1,470
institutional
Trans-
portation
—
20
20
285
—
285
—
—
—
170
—
170
365
485
50
160
—
—
75
—
—
15
15
45
70
1,755
Paints
—
—
—
80
40
120
—
—
—
—
25
25
—
—
25
10
75
650
100
—
35
90
—
—
1,130
Toys
110
150
260
75
—
75
340
—
340
90
—
430
70
—
—
—
—
—
—
—
—
—
5
—
5
845
bags and wraps, wallcoverings
Furni-
ture
25
—
25
210
15
225
100
—
100
10
—
110
30
510
60
20
15
—
—
—
—
—
—
—
995
Appli- Other
ances domestic
10
10
10
45
—
45
155
—
155
130
—
285
90
80
85
35
—
—
5
—
—
5
—
10
50
700
775
650
1,425
455
580
1,035
75
145
220
355
535
1,110
945
240
190
425
320
40
525
10
195
70
80
45
50
6,705
other than paints,
ethylene copolymers.
petroleum
hydrocarbon
resins .
—Includes engineering thermoplastics, silicones.
Source: Mary K. Meegan, ed.,
Kline Guide
fluoroplastics
, and others
to the Chemical Industry (3rd ed..
•
Fairfield,
, N,J.=
Charles
Kline & Co
. , 1977)
p. 91.
-------
E-89
Although plastics are used in all forms of transportation, the automobile
is the largest end use for plastics in the transportation industry. Weight
reduction for improved fuel economy has been an important stimulant for the
growing use for plastics in automobiles. The average 1977 automobile was
estimated to contain 166 pounds of plastics as compared with 20 pounds in the
typical 1960 automobile.8/ It has been forecast that the typical 1985
automobile will contain 350 to 500 pounds of plastics.!/
Between 1966 and 1976, the production of synthetic resins and plastics
materials increased at an average rate of 8 percent per year.iP./ representing
one of the highest growth rates within the chemical industry. Continued high
rates of growth are likely, both through continued gains of market shares in
existing products and through the development of new products.
PRODUCTION
Table 2 provides information on the plastics and resins industry
including numbers of employees, value added by manufacture, and value of
shipments. U.S. production volumes of plastics and resins are shown in Table
3.
Shipments grew at an average rate of 12.4 percent a year between 1967 and
1977 and in 1977 represented 14 percent of the shipments of the entire
chemical industry.li/ Between 1948 and 1976 physical production of plastics
and resins other than cellophane increased more than 15 times, for an average
annual growth of 10 percent.A/?/
INDUSTRY STRUCTURE
The plastics and resins industry is somewhat concentrated since the
production of polymers requires a high capital investment. in 1976, the top
four companies accounted for an estimated 27 percent of shipments; the top
8/ibid., p. 213.
9/Ibid.
i£/Mary K. Meegan, ed., Kline Guide to the Chemical industry, (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977), p. 91.
jj/Ibid., p. 85.
12/Ibid.
-------
E-90
TABLE 2
PLASTICS AND RESINS INDUSTRY STATISTICS
Year
Number of
Number of Production
Employees Workers
(1,000) (1,000)
Value Added by
Manufacture
(million dollars)
Value of
Shipments
(million dollars)
1977
1976
1975
1974
1973
1972
Source:
57.4
56.2
54.3
57.7
54.4
54.8
U.S.
1977
36.9
36.4
34.0
37.6
35.0
35.0
Department of Commerce
Census of Manufactures
4,015.3
3,524.4
2,770.5
3,640.1
2,490.0
2.160.5
, Bureau of the
- (Washington, D
10,622.1
9,201.9
7,043.1
7,773.0
5,159.4
4,478.2
Census.
.C. : Government
Printing Office, 1979).
-------
E-91
TABLE 3
PLASTICS MATERIALS AND RESINS PRODUCTION
(millions of pounds
1966
1974
1975
1976
Polyethylene
Low-density2/
High-density
Total
Vinyl resins
Polyvinyl chloride and cc-polymers
Polyvinyl acetate
Polyvinyl alcohol
Other
Total
Styrene resins
ABS and SANJE/
Other
Total
Urethane chemicals^/
Polyurethane and diisocyanate resins
Polyether and polyester polyols
Total
Polypropylene.?/
Phenolics
Ami no
Polyesters-saturated and unsaturated-
AcrylicsS/
Alkyds
Engineering plastics2/
Cellophane^/
Petroleum hydrocarbons and
courmarone-indene resinsj3/
Epoxies—unmodif ied
Polyamides£/
Celluosics
Rosin modifications
Other
Total
2,648
910
3,558
2,164
336
38
132
2,670
362
2,032
2,385
72
—
72
554
1,047
718
470
d
666
d
395
334
140
93
116
131
561
1.3,910
6,027
2,799
8,826
4,744
543
141
241
5,669
1,009
4,051
5,060
193
1,112
1,305
2,249
1,578
1,236
944
890
726
398
335
407
270
221
224
123
1,228
31,689
4,889
2,594
7,483
3,695
526
118
197
4,536
791
3,086
3,877
119
932
1,051
1,903
1,275
1,057
879
778
674
266
300
360
183
144
157
64
128
25,115
5,611
3,113
8,774
4,545
617
126
265
5,553
1,003
3,740
4,743
126
1,346
1,472
2,551
1,305
1,229
973
888
705
f
325
306
203
155
f
64
678
29,924
^includes ethylene copolymers.
-•^1976 figures are only for ABS.
c/
-'Excludes resins for man-made fibers.
— Excludes isocyanic acids which are found in cylic intermediates.
— Estimates.
-'Included in other.
2/Includes such grades as acetals, polycarbonates, polyimide, polyphenylene
sulfide, polysulfone and polyphenylene oxide.
-'1916 data excludes coumarone-indene resins.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical Industry, (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977), p. 91.
-------
E-92
eight, 38 percent. Table 4 shows the 30 largest producers, along with their
1976 estimated sales in domestically produced synthetic resins. The 30 leading
producers accounted for about 72 percent of total shipments.A3/ In 1977
there were 337 establishments with 20 or more employees in the industry.il/
Despite the concentration, a competitive environment exists. There are a
large number of producers serving the same markets and competition from
different products for the same applications.
PRICES
Table 5 gives indices of average manufacturers' prices for selected
plastics. Between 1967 and 1972 prices generally fell. This was partially a
result of the low-volume specialties developing into high-volume commodities,
with consequent lower costs of production due to economies of scale. The
declines also reflect expanding production capacities from both old and new-
producers because of the high growth attraction to the industry. This
overcapacity situation has led to frequent price cutting.
From 1972 through 1975 overall prices increased by 80 percent, consistent
with large price increases for most chemicals, plastics prices in 1976 were
only four percent higher than 1975 levels. Price increases for plastics over
the 1967 to 1977 period have generally been significantly lower than price
increases for iron and steel, lumber, and plywood. Price increases for
nonferrous metals and pulp and paper were comparable to or slightly less than
plastics' price increases.
FOREIGN TRADE
Table 6 shows imports, exports, and the trade balance in plastics and
resins. As can be seen, the trade balance has generally increased over the
1968 to 1977 period.
In 1977 exports accounted for 16.6 percent of total U.S. shipments of
plastics materials. Thermoplastic commodity resins accounted for 45
I3-/Ibid., p. 93.
li/U.S. Department of Commerce, Bureau of the Census, 1977 Census of
Manufactures. (Washington, D.C.: Government Printing Office, 1979).
il/U.S. Department of Commerce, 1978 U.S. industrial Outlook
(Washington, D.C.: Government Printing Office, 1978).
-------
TABLE 4
MAJOR U.S. PRODUCERS OF PLASTICS AND RESINS: 1976
Rank
Company
Domestically
Produced
Plastics Materials
and Resins
($ million)
1
2
3
4
5
6
7
8
8
10
10
12
12
14
14
14 '
17
18
18
20
20
22
22
24
24
26
26
26
29
29
—
Dow Chemical
DuPont
Monsanto
Union Carbide
Reich ho Id
Rohm and Haas
General Electric
ARCO Polymer0./
Borg-Warner
Exxon
Hercules
Allied Chemical
Amoco
B.F. Goodrich
W.R. Grace!/
Phillips Petroleum
Hooker (Occidental
Petroleum)
Celanese
Diamond Shamrock
Gulf Oil
Shell Chemical
Borden
USI (National Distillers)
Chemplex
Eastman Kodak
Foster Grant
Northern Petrochemical
Soltex (Solvay)
American Cyanamid
Dart Industries
Others
900
800
600
550
345
300
275
250
250
225
225
200
200
175
175
175
1 fill
J.DU
150
150
150
150
135
135
125
125
110
110
110
100
100
3,105
Total
Chemical
Sales
($ million)
4,320
7,300
3,577
4,000
490
825
375
826
350
3,238
1,375
1,738
l,432b/
450
1,385
1,230
1,536
1,855
813
1,062
1,574
500
340
1,247
1,096
170
Plastics Materials
and Resins
Percent of Total
Chemical Sales (%)
20.8
11.0
16.8
13.8
70.4
36.4
73.3
30.3
71.4
6.9
16.4
11.5
14.0
38.9
12.6
14.2
10.4
8,
18.
14.1
9.5
27.0
39.7
10.0
9.1
58.8
Total
Sales!/
($ million)
5,652
8,361
4,270
6,346
585
1,053
15,697
8,462
1,862
48,631
1,596
2,630
11,532
1,996
3,615
5,698
5,534
2,123
1,357
16,451
9,230
3,381
1,504
5,438
2,094
1,476
Plastics Materials
and Resins
Percent of
Total Sales (%)
15.9
9.6
14.1
8.7
60.0
28.5
1.8
3.0
13.4
0.5
14.1
7.6
1.7
8.8
4.8
14.2
2.9
7.1
11.1
0.9
1.6
4.0
9.0
2.3
4.8
6.8
fd
Total
$10,560
—Sales exclude value of collected exise taxes, equity interest, dividends, royalties, fees and other non-operating income.
— Includes fabricated plastics.
— Sales figures are for Atlantic Richfield.
^/Includes $252 million in sales by its majority-owned subsidiary, Chemed Corporation.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical Industry, (3rd ed., Fairfield, NJ: Charles Kline & Co., 1977), pp. 7 and
94.
-------
E-94
TABLE 5
INDICES OF AVERAGE MANUFACTURERS' PRICES
OF PLASTICS AND RESINS: 1967-1976
(1967=100)
1967 1968 1969 1970 1971 1972 1973 1974 1975 1976
b/
Thermoplastics
Polyethylene
a/
Low-density—
High-density
Vinyl resins
Polyvinyl chloride—
Polyvinyl acetate
Styrene resins
ABS and SAN
Other
Polypropylene
c/
Total thermoplastics—
100.0 101.4 82.3 85.0 85.7 83.0 93.3 153.3 173.3 199.7
100.0 91.7 89.9 83.4 71.0 69.2 82.4 123.5 152.9 167.1
100.0 89.2 87.3 86.0 85.4 82.8 93.8 143.8 150.0 164.7
100.0 87.0 90.8 79.5 81.8 79.8 82.8 110.3 120.7 135.4
100.0 86.3 84.5 89.9 86.0 86.3 87.8 118.2 124.2 —
100.0 94.6 93.5 92.9 88.6 85.9 111.1 177.8 177.8 —
100.0 97.7 101.4 92.5 81.8 73.8 81.0 114.3 119.0 131.9
100.0 88.3 87.8 85.9 84.5 83.1 90.5 137.6 152.4 157.0
Thermosetting
Phenolics
Ami no
Polyesters
Alkyds
Epoxies
100.0 94.9 93.2 84.3 88.1 89.8 79.4 149.9 166.7 162.3
100.0 83.2 80.6 74.1 76.7 87.1 52.1 82.6 95.7 100.2
100.0 98.9 97.5 83.9 81.0 67.4 82.1 142.9 107.1 154.0
100.0 94.5 100.4 100.4 101.1 101.5 111.1 170.4 163.0 155.8
100.0 100.0 99.4 88.3 92.0 88.0 102.0 121.6 133.3 150.7
Total thermosetting- 100.0 100.8 99.6 92.2 94.2 90.3 80.8 138.5 150.0 153.8
Total-'' 100.0 90.6 89.2 86.4 85.2 83.4 90.9 136.4 150,0 159.1
— Includes ethylene copolymers.
— Includes vinyl chloride copolymers.
£'Includes products now shown separately.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical Industry, (3rd ed.,
Fairfield, NJ: Charles Kline and Co., 1977), p. 95.
-------
E-95
TABLE 6
FOREIGN TRADE OF PLASTIC AND RESINS
(millions of dollars)
Year
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
imports
93
99
123
133
177
207
357
247
340
415
Exports
590
590
653
657
696
1,028
1,618
1,173
1,672
1,768
Trade
Balance
497
491
530
524
519
821
1,261
926
1,332
1,353
Sources: For 1968-1976, Mary K. Meegan, ed., Kline
Guide to the Chemical industry (3rd ed..
Fairfield NJ: Charles Kline and Co.,
1977), p. 95; for 1977, U.S. Department
of Commerce, U.S. industrial Outlook
1978, (Washington, D.C.: Government
Printing Office, 1978).
percent in the same year.16/ Large U.S. exports of plastics, particularly
the commodity resins, are indicative of the inability of the manufacturers of
developing countries to keep pace with U.S. production. Living standards in
these countries are creating a considerable need for raw materials which can
be satisfied only by other than traditional natural sources.
Canada was the leading market for U.S. exports of plastics in 1977, as it
had been during the previous decade. Other important U.S. markets in the
Western Hemisphere during 1977 included: Brazil, Colombia. Ecuador, Guatemala,
16/Edward j. Taylor, "Synthetic Resins and plastics Materials," p. 212.
-------
E-96
Mexico, and Venezuela—nations whose fabrication demands have outpaced their
local plastics production capabilities. The ma^or Asian markets in 1977
included Hong Kong, Japan, Korea. New Zealand the Philippines, Singapore, and
Taiwan. The leading markets in Europe were all developed nations—Belgium,
the Netherlands, France, and West Germany. A significant share of these
exports are believed to represent shipments by U.S. producers to their own
European subsidiaries.
U.S. plastics producers face competition with many efficient producers
throughout the world. Capacity is also rising sharply in countries outside
the common Market, and the developing countries are expected to show the
fastest growth in the production and consumption of synthetic resins. As
markets expand, substantial investments are expected in these regions. For
example, the buildup of capacity in the Middle East with access to inexpensive
raw materials makes the Middle East a very promising future exporter.
Except for 1974, imports of plastic materials and resins have not
exceeded one percent of consumption in any year during the 1950 to 1977
period.AZ/ Traditionally, the capital-intensive, technology-oriented
manufacture of plastics has given the United States a competitive edge over
its foreign competition, but that advantage appears to be diminishing.
The leading sources of imports in 1977 included Canada, France, Japan,
the United Kingdom- and West Germany, together accounting for three-fourths of
the volume of plastics imports in that year, ana two-thirds in 1976. Since
most foreign plastics do not compete with domestic plastics in the U.S.
market, imports are usually sought for one of three reasons: (1) a shortage
of a particular resin exists in the United States; (2) the imported plastic is
a new product not yet made domestically; or (3) foreign firms are supplying
their U.S. affiliates or subsidiaries to make up for a short-fall for a given
plastic or resin.
The pattern of U.S. imports of plastics materials is not expected to
change signifcantly until at least the mid-1980s.117 At that time, the
nations of the Middle East are expected to attain a capacity for plastics
which will allow them substantial export capabilities.
127Ibid., p. 214.
M/Ibia.
-------
E-97
INNOVATION
The plastics and resins segment seems to have been one of the fastest
growing segments within the chemical industry. The impetus behind this growth
has been the versatility of plastics, displacing other materials in many uses
while offering superior performance at lower costs, plastics can be
formulated with specific physical, electrical, ana chemical properties that
can meet an endless series of requirements.
About 40 to 50 basic plastics and resins are manufactured. For most of
these, the ability of producers to vary molecular weights, copolymers,
lasticizers, colorants and other additives—together with their ability to
vary processing parameters such as temperature, time and pressure—has led to
production of thousands of different formulations, custom-tailored to specific
end uses, polypropylene products illustrate this point. in 1977 Hercules,
Inc., the largest producer of polypropylene at that time, had more than 150
polypropylene products available.it/
Review of a plastics buyers' guide.20/ further illustrates this point.
For extension grade acrylonitrile-butadiene-styrene (ABS), one of a number of
grades available, five suppliers were listed (Abtec, Borg-Warner, Mobil,
Monsanto, and USS Chemicals) in a recent buyers' guide. Readily available
product information (advertisements) for Abtec Chemical company and USS
Chemicals were reviewed. Abtec listed seven extension grade products with
different impact strengths and flame-retardancy characteristics. USS Chemicals
listed five extension grade ABS products with various impact strengths, tensile
strengths, and heat deflection data and also provided qualitative information
for each product. This review suggests the large numbers of plastics
materials available and the ability of the chemists to design chemicals for
specific requirements.
Innovation will continue to bring new products to the plastics materials
and resins industry. it seems unlikely that any new polymers discovered will
combine the broad utility and low cost to rival plastics such as polyethylene,
polypropylene, or polystyrene.^1/ More likely is the advent of new,
specialized materials such as polycarbonates, polyacetals. and others which
have been commercialized in the past several decades. Additionally, we
believe new products within existing types of plastics materials and resins
will likely continue to be produced at a high rate.
i9/"polypropylene: R&D is the Key," Chemical Marketing Reporter, March
14, 1977.
.iH/Modem Plastics Encyclopedia, McGraw Hill, October 1976, Vol. 56.
erican Chemical Society, Chemistry in the Economy . a study
supported in part by the National Science Foundation, 1973, p. 82.
-------
E-98
Organic Fibers, Non-Cellulosic
-------
E-99
ORGANIC FIBERS, NON-CELLULOSIC
DESCRIPTION
Just like plastics, non-cellulosic organic fibers are polymers. These
fibers are also known as "synthetic fibers".
Table 1 lists the major synthetic fibers, the monomers or polymers
involved, and the first commercial U.S. producer. As can be seen, there are
nine generic types of synthetic fibers in commercial production in the U.S.
However, within each generic type of synthetic fiber, there are a great many
different variations (up to several thousand in some cases). each individually
tailored to meet the requirements of a specific end use.
Synthetic fibers have great versatility and can be tailored for improved
washability, durability, tensile strength, ana resistance to soiling and
shrinking. These advantages have allowed them to gradually replace natural
fibers in many applications.
HISTORY
After seven years of effort, in 1935 scientists at Dupont successfully
combined hexamethylene diamine and adipic acid to form a fiber which was
subsequently named Nylon. This began the non-cellulosic organic fiber
industry.
Other synthetic fibers followed nylon in short order. I.G. Farbenin-
dustrie in Germany sold a slightly different nylon commercially in 1939
(Perlon). In England, Calico Printers Association produced the first
polyester fiber (Terylene) on a pilot-plant scale in 1948. Union Carbide
began selling an acrylonitrile-vinyl chloride fiber (Dynel) in 1949, and
Dupont followed with an acrylonitrile fiber (Orion) in 1950. Dupont bought
American rights to calico's polyester in 1946, produced experimental
quantities in 1950- and began full-scale commercial production (of Dacron) in
the U.S. in 1953. Dupont added a urethane fiber (Spandex) in 1959, and
Hercules produced textile-grade polypropylene fibers (Herculon) in 1961.
The Textile Products identification Act was passed to bring order to the
naming of man-made fibers.I/ The Act named "manufactured" fibers
generically and required manufacturers to use these generic names on textiles.
i/"Man-made fibers" in this paper means both cellulosic and non-cellu-
losic organic fibers unless otherwise noted.
-------
E-100
TABLE 1
NON-CELLULOSIC ORGANIC FIBERS
Generic Name Monomer or polymer^ First commercial U.S. Producer Year
Nylon
Vinyon
Saran
Modacrylic
Acrylic
Polyester
Spanaex
Olefinb/
Anidex
polyamide
85% vinyl
choride
Vinylidene chloride
35-85% Acrylonitrile
85% Acrylonitrile
Ester of dihydric
alcohol and tere-
phthalic acid
Urethane
Ethylene. pro-
pylene, or other
olefin
Monohydric alcohol/
acrylic acid
ester
E.I. dupont de Nemours & Co., 1939
American viscose Corp. 1939
(now FMC Corp.), and Union
Carbide Corp.
Firestone Plastics Co. (now 1942
Firestone Synthetic Fibers
and Textiles Co.)
Union carbide Corp. 1949
E.I. dupont de Nemours & Co. 1950
E.I. dupont de Nemours & Co. 1953
E.I. du pont de Nemours & Co. 1959
Hercules powder company (now 1962
Hercules, Incorporated)
Rohm and Haas Company 1969
j*/indicative only, as some definitions are more complex than shown.
b/Hercules produced olefin monofilaments for specialized use in 1949, but
the first production of textile grade monofilament occurred in 1961. In
addition to the above fibers, there are three others, azlon, nytrile, and
vinyl, that are no longer produced commercially in the U.S., and lastrile,
that has not ever been produced commercially.
Source: American Chemical Society, Chemistry in the Economy, a study
supported in part by the National Science Foundation, 1973.
-------
E-101
ENGINEERING PROCESS
The process of producing a polymer is called polymerization. The
polymerization processes—batch and continuous—used for producing the
various non-cellulosic organic fibers are basically similar, in the batch
process, the polymer is produced in batches, then sent into a spinning
process, in the continuous process, the polymer is made continuously and spun
continuously. To make the polyester polymer, dimethyl terephthalate is
reacted with ethylene glycol at a temperature between 150-210°C in the
presence of a catalyst. A monomer (dihydroxydiethyl terephthalate) is created
and transferred to a polymerization autoclave, where the temperature is raised
to about 280°C.2/
When the desired viscosity is reached, the polymer is extruded, cooled and
formed into chips. All moisture is removed to prevent irregularities.
Polymer chips are melted under high temperatures (260-270°C) into a syrup-
like solution which is then forced through the tiny holes of a spinneret or
jet. This forms the fiber (filament).
Filaments can be produced in various diameters. Monofilaments usually
have relatively large diameters and are most frequently used for non-textile
applications. Textile multifilament yarns consist of several small-diameter
filaments twisted together and are the most widely used type of yarn. The
size and number of strands used, as well as the amount of twist, can be varied
to form yarns of various sizes. The surface texture and softness which this
yarn gives to fabrics makes it appropriate for many ready-to-wear and home
furnishings uses. Multifilament yarn can also be textured to provide yarn
with more "natural" properties.
Filaments are also cut into short wavy strands varying in length from one
to five inches. These cut strands, called staple, are spun into soft, springy
yarns which are used especially in rugs, carpets, sweaters, and socks.
As the filament leaves the spinneret, it is cooled and stretched to three
or four times its original length. This provides the filament strands with
greater strength and elasticity, since random molecules are all drawn into a
parallel formation. When monofilaments are wound, the process is complete.
Staple fiber undergoes several additional steps after being stretched.
Compression boxes force the fiber to buckle back on itself like an accordion,
9 to 15 crimps per inch. Crimping holds the fiber together, giving it
J/American Fabrics Magazine, Encyclopedia of Textiles (2nd ed.,
Englewood Cliffs, New Jersey: Prentice-Hall, Inc. 1973), p. 31.
-------
E-102
coherence during the yarn spinning stage. The crimped fiber is dried at
100-150°F to set the crimp. The crimped and heat-set fiber is cut into
lengths determined by its eventual end use. The material, called staple at
this point, is baled and the process is complete.
RAW MATERIALS
The production of organic fibers depends heavily on petroleum as a source
for the basic chemicals required. The production of saran fibers provides a
good example of this dependence. Ethylene is obtained from petroleum by
cracking, and chlorine is extracted from salt water by electrolysis. Chlorine
and ethylene combine to form trichloroethane which is polymerized into
polyvinylidene chloride.
USES
In 1975 consumer goods led industrial goods as a market for man-made
fibers by about three to one (see Table 2). consumer goods include apparel;
home furnishings (mainly bedroom and bathroom supplies, floor coverings,
upholstery, and draperies); and toys, luggage, hospital supplies, and shoes.
Tires dominate the industrial market Reinforced plastics and a diverse array
of other products (hose, rope, belting, sewing thread, etc.) comprise the rest
of the industrial market.
Wool and cotton have been the most widely used fibers up to recent times.
Man-made fibers have been increasina their share of the market and in 1968»
surpassed natural fibers in U.S. consumption.I/ Table 2 shows how man-made
fibers have increased their market shares in nearly every consumer and
industrial market between 1970 and 1975. Table 3 provides some recent general
market share information. Man-made fibers occupy approximately 75 percent of
the market at present.
Man-made fibers succeeded so dramatically and changed clothing, home
furnishings, and industrial textiles to such a large extent because they are
long lasting and easy to care for. Non-cellulosic fibers generally soften at
high temperatures, and fabrics may therefore be heat-treated to set pleats,
develop shape retention, or receive embossed designs. Non-cellulosic fibers
are generally abrasion resistant, which allows them to withstand surface wear
and rubbing. Most of the fibers are resilient springing back when crushed.
They are relatively non-absorbent and quick drying. The smooth, non-porous
surfaces of most of these fibers do not allow dirt and grime to become
imbedded. Most non-cellulosic fibers are non-allergenic and are not affected
by moths or mildew.
I/American Chemical Society, Chemistry in the Economy, a study supported
in part by the National Science Foundation, 1973, p. 89.
-------
E-103
TABLE 2
U.S. MILL CONSUMPTION OF MAN-MADE FIBERS BY END USE: 1970 AND 1975
Million Ibs.
% Man-Made
to all fibers
HOME FURNISHINGS
Carpets and rugs
Draperies and upholstery
Sheets
Blankets
Curtains
Bedspreads and guilts
Towels
Other
Subtotal
APPAREL
Men's suits, slacks and coats
Women's dresses
Women's suits, slacks and coats
Shirts
Women's blouses
Women's under- and nightwear
Apparel linings
Uniforms and work clothes
Anklets and socks
Sweaters
Men's under- and nightwear
1970
1,098
320
109
91
25
27
1
1.110
2-781
>ats 299
406
coats 230
193
90
iar 179
182
82
65
76
33
47
66
30
177
2-155
GOODS
558
245
200
83
77
19
25
384
1,591
6,527
rs.
Kline Guide to the
1975
1,591
317
196
103
44
34
14
1,617
3,916
509
405
385
248
221
153
115
109
86
78
61
60
52
31
177
2,690
510
371
410
129
128
77
45
577
2.247
8,853
Chemical
1970
87.7
54.4
21.7
75.8
56.8
18.4
1.0
85.4
64.9
48.2
71.2
49.2
54.4
52.9
58.9
64.3
35.5
53.3
70.4
12.4
60.2
100.0
33.7
59.4
53.5
100.0
91.4
58.1
48.3
57.4
19.8
26.0
50.6
65.9
60.5
industry,
1975
98.1
57.8
41.7
88.0
75.9
31.4
5.1
96.6
80.2
59.5
80.5
64.7
57.8
75.9
73.2
60.2
46.0
71.7
77.2
22.0
73.4
100.0
36.9
54.0
64.5
100.0
93.7
73.9
60.8
78.5
55.4
39.1
67.6
77.0
73.3
(3rd ed.,
Robes and loungewear
Hosiery
Swimwear and other recrea-
tional wear
Other
Subtotal
INDUSTRIAL AND OTHER CONSUMER GOODS
Tires
Reinforced plastics
Retail piece goods
Medical, surgical and sani-
tary products
Rope, cordage, and tape
Coated fabrics
Sewing thread
Other
Subtotal
Total
£/Includes data for glass fibers.
Source: Mary K. Meegan, ed
Fairfield, NJ: Charles H. Kline & Co., 1977), p. 100.
-------
^/Estimate.
E-104
TABLE 3
MILL FIBER CONSUMPTION
(millions of pounds)
Fiber
Wool
Cotton
Man-made
Total
YEAR
1975
110.0
3,206.7
7,416.6
1976
121.7
3,413.9
8,052.5
1977
108.1
3,182.6
8,900.2
1978
117.1
3,043.0
9,338.3
19793/
108.8
3,100.0
9,808.0
1980£/
104.0
3,095.0
9,350.0
10,553.6 11,588.1 12-190.9 12,498.4 13,016.0 12,549.0
Source: Textile World, January 1980, p. 62.
-------
E-105
No fiber is considered an all-purpose fiber able to meet all the varied
requirements of apparel, home furnishings, and other textile uses. The
success of man-made fibers has been based largely on scientists' ability to
adapt man-made fibers to an ever-increasing variety of end uses.
polyester is the largest-volume man-made fiber produced (see Table 4).
Much of polyester's growth has been in blends with cotton for permanent-press
fabrics, polyester is also used in sheets, curtains, carpets, and towels.
Fiberfill, a short-length polyester fiber, is rapidly replacing cotton and
down as a filling material for pillows, comforters, and furniture.
polyester1s major industrial application is in tires where it is used as the
boay cord of belted-bias tires.
Nylon was used in ladies' hosiery at the end of World Vvar II and soon
replaced silk and rayon in this application. Currently, carpets and rugs are
the largest outlet for nylon fibers, accounting for 56 percent of nylon's 1975
domestic shipments.I/ Flat knit fabrics and yarn for hosiery are two of
nylon's major apparel uses. Tire cord is the major industrial application for
nylon.
Acrylics are exceptionally soft to the touch and have natural warmth and
resilience. Their largest uses are as replacements for wool in a variety of
household and apparel products such as pile fabrics, carpets, blankets and
sweaters. industrial uses are negligible.
polypropylene is the major polyolefin fiber in the U.S. It is widely used
in synthetic turf, where it competes with nylon. It is also used in bagging
materials and carpet backing.
Other synthetic fibers include spandex, used largely in foundation and
other garments where stretch is desired; saran, used for upholstery in public
conveyances, garden furniture, awnings, etc.; and vinyon, used as a bonding
agent for non-woven fabrics and products.
PRODUCTION
Table 5 provides historical information on the non-cellulosic fiber
industry including number of employees, value added by manufacture and value
of shipments. Overall dollar growth has averaged 9.2 percent per year since
1967. U.S. Quantities of production of the major non-cellulosic fibers are
shown in Table 4. As can be seen, polyester has grown at a very high rate
over the 1968 to 1978 period and surpassed nylon in 1972 as the non-cellulosic
fiber with the greatest production by weight.
i/Mary K. Meegan, ed., Kline Guide to the Chemical industry. (3d. ed.,
Fairfield, NJ: Charles Kline & Co., 1977), p. 198.
-------
TABLE 4
NON-CELLUIOSIC ORGANIC FIBERS PRODUCTION
(millions of pounds)
Acrylic^/
Nylonk/
OlefinsS./
Polyester
Other
TOTAL
1978
726
2550
692
3800
16S/
7784
1977
709
2326
635
3642
16S/
7328
1976
621
2075
577
3340
14S./
6627
1975
525
1857
497
2995
121/
5886
1974
631
2124
531
2926
12S/
6224
1973
742
2175
492
2888
131/
6310
1972
626
1974
416
23281/
IIS/
5355
1971
545
1595
322
114 2£l/
68817
4292
1970
492
1355
262
1022d/
455l/
3586
1969
533
1411
269
939d/
376^/
3528
JJ68
521
1350
264
8261/
267i/
3229
fd
i
o
5/Includes modacrylic.
k/Includes aramid.
£/lncludes olefin yarn and monofilaments, and olefin and vinyon staple and tow
-------
E-107
TABLE 5
NON-CELLULOSIC ORGANIC FIBERS: INDUSTRY STATISTICS
Year
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
1963
Number of
Employees
(1,000)
73.0
69.3
70.2
80.9
81.8
78.2
75.2
75.7
70.2
62.1
57.2
59.1
51.5
44.3
41.4
Number of
Production
Workers
(1,000)
54.0
50.2
51.0
60.5
61.5
58.4
55.2
54.6
50.9
45.6
40.7
40.6
36.5
30.7
28.4
Value Added
by Manufacture
(million dollars)
2,789.4
2,263.7
1,983.0
2,410.9
2,819.0
2,039.8
1,905.4
1,692.6
1,703.6
1,736.9
1,251.8
1,301.5
1,215.4
1,043.1
922.0
Value of
Shipments
(million dollars)
6,345.6
5,307.3
4,933.8
4,716.1
4,751.2
3,638.9
3,241.4
2,868.8
2,713.3
2,584.7
2,033.2
1,991.8
1,842.9
1,580.6
1,403.2
Source: U.S. Department of Commerce, Bureau of the Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
-------
E-108
INDUSTRY STRUCTURE
Table 6 lists the numbers of establishments within the non-cellulosic
fiber industry. The number of establishments has been relatively small;
however, the rate of firms entering the industry in recent years is
substantial. Dupont held patents on nylon, polyester, and acrylics throughout
most of the 1950's. With the expiration of these patents, however, and the
development of polyolefin fibers, many new producers entered the industry.
In spite of the increased number of manufacturers, the industry is still
highly concentrated. Table 7 shows the ranking of firms in the man-made fiber
industry (including cellulosics) in 1976. Dupont alone accounts for roughly
36 percent of all shipments. The top three firms (Dupont, Celanese, and
Monsanto) have a 60 percent share of the market, and the top ten firms have a
91 percent share.
PRICES
Table 8 gives indices of average manufacturers' prices for non-cellulosic
fibers from 1966 through 1975. It can be seen that prices had fallen sharply
until 1972. In fact, prices fell faster than those of any other product group
in the chemical industry for the previous 10 years.^/ part of the decline
was due to a shifting product mix. For example, staple production grew faster
than filament yarn, which is less expensive.
Prices of individual products, particularly nylon and polyester, declined
significantly during this period. Most of the price decrease was brought
about by increased competition. For example, Dupont was the only producer of
polyester fiber in i960, while in 1976, there were eleven relatively large
producers.
Beginning in 1973, prices of man-made fibers began to increase because of
raw material shortages caused by the oil embargo.
FOREIGN TRADE
Table 9 shows imports, exports and the trade balance in non-cellulosic
fibers. The trade balance decreased until 1971 and then made a strong
reversal. The turnaround was primarily accomplished by government agreements
with Hong Kong, Japan, South Korea, and Taiwan. These countries agreed to
1/Meegan, Kline Guide, p. 101.
-------
E-109
TABLE 6
NON-CELLULOSIC ORGANIC FIBERS INDUSTRY ESTABLISHMENTS
Total Number Number of Establishments
Year of Establishments With 20 Employees or More
1977 65 57
1972 40 35
1967 25 24
1963 14 14
Source: U.S. Department of Commerce, Bureau of the Census, 1977 Census of
Manufactures. (Washington, D.C.: Government Printing Office, 1979)
-------
E-110
TABLE 7
MAJOR U.S. PRODUCERS OF MAN-MADE FIBERS: 1976
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Man-Made
Man-Made Fibers Total Chemical Fibers %
Company Sales (Million $) Sales (Million $) of Total
Dupont
Celanese
Monsanto
Eastman Kodak
Akzona
Allied Chemical
Avtex Fibers
American Hoechst
Dow Baaische
Hercules
Standard Oil of Indiana
American Cyanamid
Beaunit
Courtaulds of North America
Standard Oil of California
OTHER
TOTAL
2,025
850
625
425
300
300
300
155
150
145
125
95
85
80
75
65
5,800
7,300
1,855
3,577
1,247
490
1.738
300
600
300
1,375
1.432S/
1,096
685
27.7
45.8
17.5
34.1
61.2
17.3
100.0
25.8
50.0
10.5
8.7
8.7
10.9
£/ Includes fabricated plastics.
Source:
Mary K. Meegan, ed., Kline
Guide to the chemical
industry
(3rd ed.,
Fairfiela, NJ: Charles Kline & Company, 1977), pp. 7 and 101.
-------
E-lll
TABLE 8
INDICES OF AVERAGE MANUFACTURERS'PRICES OF NON-CELLULOS1C FIBERS
1967 = 100
Year Price
1966 115.4
1967 100.0
1968 92.5
1969 86.2
1970 82.1
1971 78.3
1972 65.6
1973 74.6
1974 74.0
1975 81.9
Source: Mary K. Meegan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977), p. 102.
-------
E-112
TABLE 9
U.S. FOREIGN TRADE IN MAN-MADE FIBERS: 1967-1976
(millions of dollars)
imports^ Exports-^ Trade Balance—^
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
81
137
109
221
363
319
280
242
138
189
153
172
189
226
231
234
419
629
432
492
72
35
80
5
-132
- 85
139
387
294
303
•^/Includes data from glass fibers.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977), p. 102.
-------
E-113
limit the annual increase of their exports to the U.S. to only five to seven
percent. Their average annual rates of growth had been 33 percent between
1963 ana 1971.V
INNOVATION
During the first generation of non-cellulosic organic fibers, chemists
developed basic fiber technology. At that time, each of the fibers was made
in one form. During the next phase of development each of the generic fibers
underwent modification to improve both performance and aesthetics. This was a
time of problem-solving and the exploration of designs for end use. Now most
generic fibers are made in many different versions, each engineered to suit a
particular product.
Every man-made fiber has both positive and negative characteristics for
particular uses. At one time nylon was considered the universal fiber, the
best for all applications. But experience proved that nylon has limitations,
such as relatively poor recovery from deformation. Hence, it is prone to
wrinkling in wear and is not well adapted to many outerwear applications.
Nylon has also had the problem of static build-up, which triggers shocks to
people walking on nylon carpeting.
This static problem was addressed successfully by both Monsanto and
DuPont. in 1969, Monsanto introduced the first permanently altered antistatic
nylon fiber, 22N. Later in the year, Dupont introduced its textile fiber,
Antron. Production of 22N involves dispensing an ethoxylated hydrocarbon as a
second phase in the polymer matrix before the fiber is formed. in the
finished yarn, this dispersed phase reduces the fiber's electrical
resistivity, which allows static charges to dissipate rapidly. This virtually
eliminates shocks normally experienced after walking on nylon carpets.
There are a great many such stories within the non-cellulosic organic
fibers industry. There are literally hundreds of variants for each non-cellu-
losic organic fiber. Each variant has somewhat different characteristics. A
number of new products have been introduced over the years—some involving
changes to the chemistry and some involving physical changes to the fibers.
The development of bi-component fibers is an example of a physical change.
Bi-component fibers are composed of two generically similar but chemically or
physically different polymers, physically joined in a single filament, in
processing, or in later fabric finishing, one component shrinks more than the
other thus pullina the whole yarn into a crimped conformation, a desirable
aesthetic quality.
6/ibid.
-------
E-114
It appears that non-cellulosic organic fiber manufacturers are now
accelerating the trend toward engineering fibers to specific, narrow end
uses. They are also still concentrating on producing products that look and
feel like cotton, wool, silk, or linen.
The chances do not seem to be too high of developing and producing a new
generic fiber that differs radically from those now made and that would
compete successfully with today's major fibers.2/ Not only would finding
such a fiber be difficult in this well-researched field, but the cost of
building a plant with a large capacity and then establishing that new fiber in
the man-made fiber market woula seem to require a large amount of resources.
The last aeneric fiber introduced was anidex in 1969. Rohm & Haas
reputedly spent $20 million and 10 years of research to develop it .§/ A
1977 estimate by an industry executive was that a minimum of $50 million and 5
to 10 years of development would be required to commercialize a new generic
product for broad-based market application.!/
We belive that, for the forseeable future, new product development in the
non-cellulosic fiber industry will continue at a rapid rate, but will involve
modifications of existing products for enhanced performance and aesthetic
characteristics.
2/American Chemical Society, Chemistry in the Economy, p. 112; Robert L.
Stultz, Jr., and "Fibers through the Crystal Ball: No New Generics, Just
Variants," Textile World. December 1977, pp. 73-74.
^/American Fabric Magazine, Encyclopedia of Textiles, p. 47.
i/Stultz, "Fibers Through the Crystal Ball," p. 74.
-------
E-115
Synthetic Rubber
-------
E-116
SYNTHETIC RUBBER
DESCRIPTION
Synthetic rubbers (also known as synthetic elastomers) are part of a group
of materials called polymers which also include plastics and organic fibers.
An elastomer is any polymeric material capable of recovering quickly and
forcibly from large deformations such as stretching, bending, or twisting.
Generally, a cured elastomer (1) can be stretched to at least three times its
original length at room temperature and (2) after being held at twice its
original length for one minute, will return to no more than 1.5 times its
original length within five minutes.
The basic chemical elements of synthetic elastomers are carbon, hydrogen,
nitrogen, and oxygen. These elements are combined in specific ways to build
long chains of molecules with carbon "backbones". Synthetic elastomers can be
divided into three categories: (1) the general-purpose type, which includes
butyl, ethylene-propylene, polybutadiene, polyisoprene, and styrene-butadiene;
(2) the specialty, solvent-resistant type, which includes epichlorohydrin,
epichlorohydrin-ethylene oxide, nitrile, polychloroprene (neoprene),
polysulfides (Thiokol), and the polyurethanes (polyester and polyether); and
(3) the specialty, heat-resistant type, which includes chlorosulfonated
polyethylene (Hypalon), fluoroelastomers, polyacrylates, and silicone. For
each of these types there are a number of variants.
HISTORY
Synthetic rubber was first produced commercially in Germany during World
War I. in 1931, Dupont introduced the first synthetic rubber of great
importance, polychloroprene (neoprene), and Thiokol Corporation at about the
same time announced a polysulfide rubber it called Thiokol. Despite all their
good properties, neither Thiokol nor neoprene proved to be a truly general-
purpose synthetic rubber that could compete with natural rubber in its many
uses.
Standard Oil Company (New jersey). interested in coal liquefaction because
of rising demand for gasoline, signed an agreement in 1927 with I.G.
Farbenindustrie of Germany to exchange information on making oil from coal.
The next year, the East Texas oil field was discovered and the U.S. oil
industry shifted from scarcity to surplus. The coal liquefaction work was
suspended, but the agreement with I.G. Farbenindustrie was extended to include
making chemical raw materials (including synthetic rubber) from oil. The
Germans developed two synthetic rubbers and shared information with Standard
Oil under terms of the agreement. One was called Buna S, a butadiene-styrene
elastomer that wae viewed as a general-purpose rubber. The other was called
Buna N, a butadiene-aerylonitrile elastomer that was viewed as an
oil-resistant rubber.
-------
E-117
Although the original Buna S and Buna N rubber products were of poor
quality, they formed the technological basis for synthetic rubber production
in the United States. The U.S. Government, the four major rubber companies,
and Standard Oil Company (New Jersey) agreed in December 1941 to pool their
information on styrene-butadiene rubbers. Other companies later joined the
agreement. Within a short time, chemists developed a new all-purpose rubber
that could be processed on conventional equipment, and could improve the
quality of tires.
The U.S. synthetic rubber industry was established on a high-volume basis
during World War II when the government, anticipating the loss of natural
rubber sources, built enough synthetic rubber production capacity to meet
wartime requirements. Styrene-butadiene rubber (SBR) was selected as the
synthetic to substitute for natural rubber. in addition, plants for such
specialty synthetics as butyl, nitrite, and neoprene were also built.
Production of all types of synthetic rubber rose from 2-940 long tons in 1940
to 820,373 in 1945, when synthetic rubber constituted 86.9 percent of all
consumed rubber products.i/
Under the Rubber Producing Facilities Disposal Act of 1953 the government
sold its plants to private industry in 1955. The oil, chemical, and rubber
companies that had managed the properties for the government were the
successful bidders.
ENGINEERING PROCESS
There are four basic steps in processing synthetic elastomers. First,
the polymer is prepared from the monomer or monomers; this process is called
olymerization. If only one type of monomer is being polymerized, it is
called homopolymerization. if more than one type of monomer is involved, it
is called copolymerization. The polymerization step includes the receipt,
storage, and mixing of additives, solvents or suspending media, and monomers.
Second, the material is compounded or mixed and blended with other
polymers, vulcanizing agents, and other rubber-processing chemicals to obtain
the required properties.
The third step involves shaping or forming the compound either by
extrusion, calendering or molding, considerable quantities of elastomers are
also applied in the form of water dispersions, called latexes. Most latex is
made into foam rubber, but there are other important applications in paints,
paper coatings, textile coatings and backings, and such dipped rubber goods as
gloves and drug sundries.
i/Mary K. Meegan, ed., Kline Guide to the chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Company, 1977), p. 103.
-------
E-118
in the fourth step of processing synthetic elastomers, the elastomer is
vulcanized to obtain the characteristic elastic or rubbery qualities.
vulcanization also improves strength, hardness and other physical properties.
Sulfur is the most common vulcanizing agent, but many specialty rubbers use
peroxides, resins, and other chemicals. Even when vulcanized, some rubbers
are weak, particularly at higher temperatures, and they need reinforcing for
strength. Fine colloidal fillers, particularly carbon blacks and silicas, are
used. Sometimes softeners and plasticizers are added to make rubber easier to
process or to make it more flexible at low temperature.
RAW MATERIALS
The synthetic rubber industry draws almost entirely on chemicals derived
from petroleum and natural gas. The industry is the major consumer of
butadiene2/ which is produced from butane, a byproduct of petroleum refining
or natural gas manufacture. Other important petroleum derivatives include
benezene (for producing styrene); isobutylene and isoprene (for producing
butyl); propylene (for producing acrylonitrile and nitrile) ; and chloroprene
(for producing polychloroprene). The synthetic rubber industry is quite
sensitive to petroleum refining development.
The synthetic rubber industry consumes a large amount of carbon black.
In 1977 this consumption amounted to about 12 percent of the total carbon
black shipped in that year.I/ Soaps and detergents, plasticizers, and
rubber processing chemicals are also used in significant amounts.
USES
The predominant use of synthetic as well as natural rubber is in the
automotive industry with tires, tubes, and related tire products, accounting
for 57.7 percent of all synthetic rubber consumed in 1976.I/ Other major
uses are shown in Table 1.
2/u.S. Department of Commerce, 1978 U.S. industrial Outlook, Washington,
D.C.: Government Printing Office, 1978) p. 145.
I/Calculated from data in U.S. Department of commerce, Bureau of the
Census, 197? Census of Manufactures, (Washington, D.C.: Government Printing
Office, 1979).
i/Meegan, Kline Guide, p. 106.
-------
E-119
TABLE 1
U.S. CONSUMPTION OF SYNTHETIC RUBBER BY MAJOR END USE: 1976
Tires, tubes ana tire products
Molded goods
Industrial rubber
Automotive
Footwear
plastic impact modifiers
Belting, hoses and gaskets, etc,
Wire and cable
Adhesives
Coatings
Other
Total
Percentage of Tonnage
57.7
11.0
4.7
3.0
1.8
1.8
1.4
1.2
1.1
16.3
100.0
Source: Mary K. Meegan, ed., Kline Guide to the chemical industry (3rd
ed., Charles Kline & Co., 1977) , p. 106.
In 1940, natural rubber (new or reclaimed) held 99.6 percent of the U.S.
market.^/ By 1951 synthetic rubber had a 53 percent market share and a 69
percent share by 1960.JL/ By 1976, this share had risen to about 75
percent.7/ This success was achieved despite the fact that until the
development of the "stereo rubbers" (polybutadiene, polyisoprene, etc.) in the
1960s there were no synthetic rubbers that duplicated the excellent
elastomeric properties of natural rubber. The success of synthetic rubber may
be explained in part by the fact that world production of natural rubber is
inadequate for world demand. Also, styrene-butadiene rubber the largest
volume synthetic, is less expensive than natural rubber.8/
^/American Chemical Society, Chemistry in the Economy, a study supported
in part by the National Science Foundation, 1973, p. 116.
I/Ibid..
.2/Meegan, Kline Guide, p. 103.
8/ibid., p. 104.
-------
E-120
Table 2 lists the primary uses ana important characteristics of the major
types of synthetic rubber. in addition to the types of synthetic rubber
listed in the table are such specialty elastomers as chlorosulfonated
polyethylenes, polysulfides, fluorocarbons, polyacrylates, polyurethanes, and
silicones. Synthetic rubbers can be seen to compete with each other in
addition to competition with natural rubber.
Synthetic rubber has probably nearly reached the saturation point
regarding further penetration into the markets for natural rubber.!/ The
increasing wearlife of tires, and the consequent reduction in consumption of
replacement tires- is another factor which has contributed to slow growth
within the synthetic rubber industry. One other factor was the 1976 strike in
the industry and the resultant increases in market share achieved by foreign
competitors.
The automotive market will likely continue to dominate rubber usage.
Growth in auto production is not expected to be strong over the next few
years..10/ This is a negative factor in the synthetic rubber industry's
growth pro3ections. However the trend in the future will probably continue
to be toward more fuel efficient, lighter cars. Rubber products can play a
part in this trend by replacing some heavier metal automobile parts.
PRODUCTION
Table 3 provides historical information on the synthetic rubber industry
including number of employees, value added by manufacture and value of
shipments. The annual dollar growth in shipments averaged 7.5 percent between
1967 and 1977. U.S. production volumes of synthetic rubber are shown in Table
4. The growth rate during the 1966 to 1976 period in production volumes
averaged 3.4 percent. The difference between the two growth rates can be
attributed to the fact that average prices have increased.
The most rapidly growing segment of the synthetic rubber industry has
been projected to be the specialty elastomers, usually of much higher value
than general purpose materials.li/ This will cause the value of shipments
to increase more rapidly than the quantity of shipments.
9/Ibid..
i2/U.S. Department of Commerce, 1978 U.S. industrial Outlook, p. 145.
JJ/Ibid., p. 146.
-------
TABLE 2
MAJOR USES AND CHARACTERISTICS OF IMPORTANT SYNTHETIC RUBBERS
Synthetic-Rubber
Styrene-butadiene
Polybutadiene
Polyisoprene
Ethylene-propylene
Neoprene (polychloroprene)
Butyl
Nitrile
Major Uses
Passenger car tire treads, tire carcasses,
mechanical goods, and carpet backing.
Tire treads.
Passenger and truck tire carcasses, and
truck treads, mechanical goods, rubber
footwear, and latexes.
Bicycle tires, white walls, other side-'
walls, molded automotive parts and other
mechanical goods.
Belts, hoses, molded products, general
industrial and mechanical goods, wire
and cable jackets, construction,
adhesives, sealants, and coatings.
Inner tubes, inner liners, inflatable
sporting goods, liners for reservoirs
and grain silos, automotive and mechan-
ical goods, architectural and industrial
sealants, wire and cable.
Self-sealing fuel tanks, gasoline hose,
gaskets, printing rolls, seals, adhesive
and footwear.
Characteristics
Good wear characteristics due to high resistance
to abrasion, heat, and tread cracking.
Excellent abrasion resistance, high resiliency,
and excellent high- and low-temperature properties.
Contributes to better resistance to groove cracking.
Limitations include poor wet-skid resistance and
cutting and chipping in heavy-duty truck tire treads.
Chemically identical with natural rubber. More
expensive than natural rubber, but cleaner, lighter
in color, and more uniform from batch to batch and
therefore cheaper to process.
Poor adhesion and slow cures which make them difficult
to blend with other rubbers. Potentially low cost,
outstanding resistance to oxidation and cracking, and
low-temperature flexibility.
One,of most versatile elastomers with high
resistance to oils and solvents, superior
tensile strength and resistance, and high
resistance to abrasion and oxidation.
Low permeability to gases and excellent tear and
aging resistance.
Good oil resistance.
H
M
K>
Sources: Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed., Fairfield, NJ: Charles Kline & Co., 1977), pp. 103-108; and
American Chemical Society, Chemistry in the Economy, a study supported in part by the National Science Foundation (1973), pp. 116.
-------
E-122
TABLE 3
SYNTHETIC RUBBER INDUSTRY STATISTICS
Year
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
Number of
Employees
(1,000)
10.1
10.6
9.9
10.7
11.2
11.8
12.2
12.8
12.5
12.2
12.6
Number of
Production
Workers
(1,000)
7.2
7.6
7.0
7.5
7.8
8.2
8.2
8.7
8.5
8.3
8.5
V.alue Added by
Manufacture
(million dollars)
570.1
510.7
468.8
531.5
475.2
491.7
476.7
460.9
500.7
453.0
404.9
Value of
Shipment
(million dollars)
1,866.8
1,702.3
1,455.7
1,481.1
1,167.6
1,089.4
1,042.6
1,006.6
1,046.2
974.2
926.9
Source: U.S. Department of commerce, Bureau of the Census,
1977 Census of Manufactures (Washington, D.C.: Government
Printing Office, 1979).
-------
E-123
TABLE 4
U.S. PRODUCTION OF SYNTHETIC RUBBER
(millions of pounds)
SBR
Stereo-specific
Polybutadiene
EPDM
1966
2,448
417
196
1974
3,135
793
279
1975
2-608
656
187
1976
2,980
752
303
polyisoprene
Stereo-specific
Subtotal
613+
188
1,260
135
978
1,055s/
Butyl
Nitrile
Ure thane
Silicone
Oth erb/
231
157
12
13
455
3,929
354
206
88
44
655
5,742
182
119
51
31
610
4,579
277
166
81
39
869
5,467
a/ Additional amounts included in "other" elastomers.
b/ includes polychloroprene, chlorosulfonated polyethylene,
polysulfide, silicone, fluorocarbon, thermoplastic rubber
and miscellaneous elastomers.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical industry
(3rd ed., Fairfield, NJ: Charles Kline & Co., 1977), p.
105.
-------
E-124
INDUSTRY STRUCTURE
Table 5 lists the number of establishments within the synthetic rubber
industry. in 1976, there were 39 companies producing synthetic rubber through
60 establishments.JL2/ Fourteen of these companies accounted for almost 90
percent of the dollar shipments in 1976. Table 6 lists the major firms in the
industry with their estimated sales of synthetic rubber and total chemical
sales in 1976. The estimates include the value of production consumed within
the firm.
It can be seen that the industry is dominated by tire and oil companies.
Dupont, Copolymer Rubber and chemical. Ashland, and petro-Tex are the only
major producers that are primarily chemical companies. This tire and oil
company dominance can be traced to the origins of the industry as described
earlier. Styrene-butadiene and the "stereo rubbers" (polybutadiene, and
polyisoprene, etc.) are produced by many of the firms in Table 6 while at the
other end of the spectrum, butyl and neoprene are produced by few firms.
TABLE 5
SYNTHETIC RUBBER INDUSTRY ESTABLISHMENTS
Total Number of Number of Establishments
Establishments with 20 Employees or more
62 31
59 34
48 28
24 24
Source: U.S. Department of commerce, Bureau of the
Census, 1977 Census of Manufactures
(Washington, D.C.: Government Printing
Office, 1979).
i^/Meegan, Kline Guide, p. 106.
M/Ibid.
-------
E-125
TABLE 6
MAJOR U.S. PRODUCERS OF SYNTHETIC RUBBER: 1976
Synthetic
Rubber Salesa/
Rank company ($ million) capacity
1 Goodyear Tire & Rubber 320 610
2 Firestone 250 495
3 DuPont 230 240
4 B.F. Goodrich 150 275
5 Exxon Chemical 140 190
6 Copolymer Rubber & Chemical 95 160
6 General Tire & Rubber 95 190
8 Texas—U.S. Chemicals 90 180
9 American Synthetic Rubber 75 160
10 Phillips petroleum 65 125
10 Uniroyal 65 75
12 Ashland Chemical 30 55
13 Cities Service 25 37
13 petro-Tex Chemical 25 30
Other 245 NA
Total 1,900
a/ includes captive consumption as well as merchant sales.
NA: Not available.
Source: Mary K. Meegan. ed., Kline Guide to the chemical industry-
(3rd ed.. Fairfield. NJ: Charles Kline & Co., 1977), p.
107.
Many domestic rubber plants in use were constructed during NorId War II.
Improvements in design and processing at new plants make many of these old
plants comparatively inefficient, in recent years there has been relatively
little new capital investment in the industry because of ample capacity.
PRICES
Table 7 gives indices of average manufacturers' prices for selected
synthetic rubber. Until 1970, prices were fairly stable, in 1971 prices fell
4.8 percent from the 1970 average. Between 1971 and 1976 average prices
increased 60.4 percent.
-------
E-126
TABLE 7
INDICES OF AVERAGE MANUFACTURERS' PRICES
OF SELECTED SYNTHETIC RUBBERS: 1967-1976
1967=100
Year
Styrene-
butatiiene
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
100.0
104.1
103.2
104.5
90.9
90.9
72.7
109.1
122.7
121.3
Nitrile
100.0
99
101
101
98
95.3
95.7
108.7
123.9
132.5
Stereo-
specifics Urethanes
100.0
97.6
96.6
95.1
91.2
97.1
104.8
142.9
142.9
172.2
.3
,3
100.0
99.4
106.
98.
106.6
116.4
109.0
119.0
130.0
128.9
Silicones Total
100.0
92.4
95.0
94.3
81.1
71.0
66.1
73.8
93.5
89.0
100.0
101.9
100.7
100.7
95.9
98.9
92.6
122.2
137.0
153.8
Source: Mary K. Meegan, ed. . Kline Guide to the Chemical Industry,
(3rd ed., Fairfield, NJ: Charles Kline & Co., 1977). p. 108.
FOREIGN TRADE
Table 8 shows imports, exports, and the trade balance in synthetic
rubber. As can be seen, exports have fluctuated over the period. Overseas
synthetic rubber production capacity has grown significantly over the last
several decades. The U.S. currently has less than half the world's synthetic
rubber capacity. M/ In 1957 the U.S. accounted for 88 percent of the
non-communist world's production of synthetic rubber. 15/ jn that year, U.S.
exports were 18 percent of total U.S. production. in 1976, exports accounted
for only 11.8 percent of this production. M/ Exports are expected to
continue to fall as additional foreign production capacity is added.
J^/Ibid.
IV Ibid.
M/Ibid.
-------
E-127
TABLE 8
SYNTHETIC RUBBER FOREIGN TRADE
(million of pounds)
Year
1972
1973
1974
1975
1976
1977
imports
249.8
304.0
249.5
203.9
273.5
367.0
Exports
602.8
657.2
631.2
510.2
623.3
559.1
Trade
Balance
353.0
353.2
381.7
306.3
349.8
192.1
Source: David B. Beck, "Synthetic Elastomers:
Role of U.S. imports," Synthetic Organic
Chemicals, U.S. international Trade
Commission 1977, p. 243.
Exports of styrene-butadiene rubber have been particularly affected as
much of the foreign production capacity is for this type of rubber.17/ jn
1963 exports of styrene-butadiene rubber accounted for 15.2 percent of U.S.
production, while in 1976 exports only accounted for 6.0 percent.18/
imports of synthetic rubber also fluctuated over the 1972 to 1977
period. On the average 5.4 percent of total U.S. consumption was supplied by
imports.19/ m 1977 Canada and Japan supplied most of these imports, 52 and
23 percent respectively, with the remainder coming from Western European
countries.20/
IT/Ibid., p. 107.
jjl/lbid., p. 104.
ii/David B. Beck, "Synthetic Elastomers: Role of U.S. imports,"
Synthetic Organic Chemicals, U.S. International Trade commission, 1977, p. 245.
20/ibid.
-------
E-128
For the 1972 to 1977 period, styrene-butadiene rubber accounted for about
one-third of total imports; polybutadiene, about one-fourth; and butyl rubber,
about 15 percent. In 1977 for the first time, polybutadiene (34 percent of
total imports) surpassed styrene-butadiene (24 percent) as the leading
import.21/
In 1977 imports rose to a record level of 6.4 percent of U.S.
consumption,22/ mostly due to an increase in polybutadiene imports. U.S.
production capacity was insufficient to meet the increased demand for
polybutadiene because of increased truck and bus tire production. This
capacity situation was seen as temporary because U.S. tiremakers were
replenishing the inventories that had been depleted as a result of the 1976
strike.
imported synthetic rubber is generally comparable in quality to U.S.
products. The average unit value of imports (including insurance and shipping
costs) was one to four cents lower than the average value of U.S. sales during
1972 to 1977.23/ u.S. producers are able to compete for two reasons: (1)
the overall U.S. product mix is different from the imports, and (2) the
roximity of U.S. producers to their customers provides more rapid response to
customer needs and a steady availability of supply. Also, many imports from
Western Europe and elsewhere are intracompany transfers, some of which are
valued below the domestic market price.
INNOVATION
The history of the synthetic rubber industry has been characterized by
the development of new types of synthetic rubber and improved versions of
existing types. An example of the latter is styrene-butadiene which, over the
years, has become a vastly different and improved product due to better
polymerization techniques, new types of modifiers, and improved compounding
materials.
It appears that a novel synthetic rubber that would challenge the
established ones in more than small specialty markets would face stiff
competition, increment improvements will, however, continue to be made in
existing synthetic rubbers. These improvements will largely be the result of
process innovations and the development of new additives. The latter are
discussed in the section on rubber processing chemicals.
ICF believes that specialty elastomers production will to grow faster
than any other synthetic rubber. This part of the industry is characterized
by significant innovation since products are engineered to specific uses.
21/Ibid., p. 245.
A2/Ibid., p. 245.
jj/Ibid., p. 247.
-------
E-129
AMPHIPATHIC COMPOUNDS
-------
E-130
AMPHIPATHIC COMPOUNDS
All amphipathic compounds have two parts to them. The hydrophilic part,
or hydrophile, is soluble in water. The hydrophobia (lipophilic) part is
soluble in oil. Usually these molecules are large enough for each part to
display its own solubility behavior. The parts that are not soluble in the
particular chemical environment surrounding them are chemically attracted to
each other. As a result, the molecules huddle together with the insoluble
parts forming their own environment inside the huddle. These huddles, called
micelles, are of microscopic size and are spherically shaped, particles not
soluble in the solution may be dissolved in these micelles. This is what
accounts for the relatively high dissolving capabilities of many amphipathic
compounds such as detergents.i/
FIGURE 1
FLOW CHART OF THE INDUSTRIES
Fats and Oils
Other
industries
Glycerin
Fatty Acids
Other
Industries
Other
industries
Synthetic
Surfactants
Soaps and
Synthetic Detergents
Household
industrial
and
institutional
i/Robert T. Morrison and Robert N. Boyd, Organic Chemistry (3rd ed.,
Boston: Allyn and Bacon, inc., 1973), p. 1060.
-------
E-131
This section discusses the chemicals and industries in SIC 2841, Sic 2843,
and SIC 28992. These industries have many connections and common characteris-
tics, but also differ in many ways. The profile will be divided into three
major sections:
1) Surfactants;
2) Fatty Acids and Glycerin; and
3) Soaps and Synthetic Detergents.
Both the fatty acid and the synthetic surfactant industries are ma]or
suppliers of the soap and synthetic detergent industry. The fatty acid
industry also supplies the synthetic surfactant industry and glycerin is a
byproduct of fatty acid production.
Finishing agents and assistants, which form a segment of SIC 2843, are not
covered in this report because:
(I) they are not connected chemically to the rest of the
industry, and
(2) they are not a significant industry with regard to
sales ($172 million in 1977) or innovation.
Because natural glycerin is a byproduct of fatty acid production and has
no chemical relation to soaps or synthetic detergents, it is discussed with
fatty acids although it is part of Sic 2841 (Soaps and Detergents). The
synthetic glycerin market (SIC 2869) is included here, because it is difficult
to discuss the natural glycerin market alone.
Products that fall under Sic 2842 (polishes and Sanitary Goods) and
SIC 2844 (Toilet Preparations, perfumes) are mentioned in Soap and Synthetic
Detergents because they share common chemical characteristics and are produced
by the same companies.
Within the report, several terms are used whose definitions should be
clear at the outset.
(1) Synthetic detergent: a product synthetically
manufactured, usually including a surfactant,
builders, and other components. Synthetic detergents
are used for textile cleaning, dishwashing, hard
surface cleaning, etc.
(2) Detergent: a compound that reduces surface tension;
specifically, a surface-active agent which
concentrates at oil-water interfaces, exerts
emulsifying action, and thus aids in cleaning surfaces.
(3) Detergent industry: the industry producing synthetic
detergents.
-------
E-132
(4) Surfactant: a detergent. Surfactant is a commonly
used term, short for surface active agent, in this
report, "surfactant" and "synthetic surfactant" are
synonmous.
(5) Soap: a detergent derived directly from natural fatty
acids.
(6) Cleansing bar: a bar of soap usea for personal
hygiene.
-------
E-133
Surfactants
-------
E-134
SURFACTANTS
DESCRIPTION
Surface active agents (surfactants) are organic compounds that reduce
surface tension. They wet surfaces easily, remove and suspend dirt, disperse
particles, emulsify oil and grease, and produce foam. They are sometimes
called wetting agents, detergents, penetrants, dispersants, emulsifiers, or
foaming and frothing agents.
Different surfactants have different optimal concentrations called micelle
concentrations. These concentrations vary with temperature, the presence of
inorganic salts, and the pH level.
SHIPMENTS AND GROWTH
in 1977 total production of surfactants was 4,718 billion pounds, a 3.0
percent increase over 1976.^7 Sales increased 6.6% to $875 million. The
average unit value was $35 per pound.I/ The industry is expected to grow at
two percent or three percent annually^/ because the major use of
surfactants—detergents—is also growing at that pace. (See Table 1:
Economic indicators for Surfactants.) Some industrial applications are
expected to grow faster, but most analysts believe the slow growth rate of
household detergents will limit surfactant growth. Present capacity should be
sufficient through most of the 1980s.
PRODUCTS AND USES
The four types of surfactants are differentiated by their electrolytic
behavior. Anionics, the major group, have a hydrophile with a negative
charge, cationics have a hydrophile with a positive charge, nonionics have a
hydrophile with no charge, and amphoterics exhibit anionic and cationic
behavior depending on the pH of the solution they are in.
.i/U.S. international Trade Commission, Synthetic Organic Chemicals, 1977
(Washington, D.C.: Government Printing Office, 1977).
3/lbid.
i/Ibid.• and Chemical and Engineering News. May 22, 1979.
-------
TABLE 1
ECONOMIC INDICATORS FOR SURFACTANTS
XXX 1975 1974 1973 1972 1971 1970 1969 1968
Employees (thousands) 6.7 7.8 6.3 6.9 6.6 6.4 5.8 5.9
Payroll (millions) 91.4 95.2 73.2 71.5 68.5 60.4 57.7 54.9
Production workers (thousands) 3.7 4.4 3.4 3.8 3.5 3.4 3.0 3.2
Manhours (millions) 7.8 9.2 6.8 7.7 7.3 7.0 6.2 6.5
Wages (millions
of dollars) 42.4 46.6 32.5 32.3 30.0 26.6 22.7 22.7
Value added
(millions of dollars) 269.7 334.3 211.3 209.5 173.3 163.3 151.4 141.5
Cost of materials
(millions of dollars) 431.0 483.0 277.7 257.0 215.6 212.3 174.6 187.6
Value, industry shipments
(millions of dollars) 705.6 797.5 488.5 462.6 388.3 375.1 324.0 328.9
New investments
(millions of dollars) 34.7 31.6 25.1 19.7 19.8 21.9 8.3 9.1
End of year inventory
(millions of dollars) 100.6 117.4 66.6 61.4 52.3 48.9 42.5 40.7
OJ
en
Source: U.S. Department of Commerce, Bureau of Census, 1977 Census of Manufactures
(Washington, D.C.: Government Printing Office, 1979).
-------
E-136
The anionics, which include natural soaps, accounted for 79 percent of
total surfactant production in 1977. Lignosulfonates.5/ (also called lignin
sulfonates), the major anionic group, accounted for 24 percent with 1.160
billion pounds. They are obtained as byproducts of sulfite pulping, and are
one of the least expensive surfactants. They are used in drilling muds for
oil wells, dye dispersants, ceramic binders, concrete admixtures, gypsum
board, animal feeds, carbon black, and industrial cleaners.
Alkylbenzene sulfonates, the largest group of lignosulfonates, accounted
for 13 percent (632 million pounds) of total surfactant production in 1977.
They have good detergent and "sudsing powers" and are used in most heavy-duty
laundry powders, in the past they were inexpensive because they were made
from cheap, abundant, petrochemical starting materials and were produced on a
low margin. Because of rising oil prices, they are losing some of their
market to non-petroleum derived surfactants.
Until 1963 alkylbenzene sulfonates (ABS) were derived from tetrapropylene
benzene and contained a branched benzene ring. This made them
non-biodegradable and led to environmental problems (see History). Linear
alkylbenzene sulfonate (LAS) replaced them but is still not totally
acceptable. it breaks down slowly and incompletely, and has been banned in
many areas. The use of fat-based detergents, the most important of which are
the linear alkyl alcohols, has been growing because of their complete
biodegradability.
The move toward lower phosphate levels has hurt the market for LAS (see
History). Lower phosphate levels require higher concentrations of surfactant.
but they are anionics, which foam too much in high concentrations. Because
they also are not as effective as nonionics and cationics in hard water, they
have been replaced by nonionics. In the nonphosphate detergents, nonionics
account for 70 percent of the surfactants used and anionics account for the
rest. Other less important anionic sulfonates include the benzene, cumene,
toluene, xylene, and naphthalene sulfonates; the sulfosuccinamates; the
sulfonsuccinates; and the taurates.
Another group of anionics, sulfates,j>/ accounted for 11.3 percent (524
million pounds) of total surfactant production. Ether sulfates are primarily
used as auxiliary surfactants with LAS in light-duty dishwashing liquids and
delicate fabric detergents. They are also used in shampoos and bubble baths.
Alcohol sulfates are primarily used in cosmetics and toiletry products, and
remaining sulfates are used in the plastics industry.
The other major anionic group is phosphate and polyphosphate surfactants,
which had a production of 38 million pounds. These have excellent wetting,
1/Sulfonation is the formation of a sulfuric acid, i.e., a compound
containing the S02OH group. A common sulfonating agent is concentrated
sulfuric acid.
6/Sulfates contain H2SO4 esters. They are not as stable as, and are
more hydrophilic than, sulfonates.
-------
E-137
emulsifyin" detergent, and anticorrosive characteristics, but are very
expensive. They are used mostly for emulsion polymerization, latex
stabilization, antistatic effects, dispersants, textile scouring, and general
purpose cleaners. Other anionics include sarcosinates, polypeptides,
xanthates, and sulfonates. Natural soap is also anionic. but is not covered
in this section.
Nonionics accounted for 25 percent of the total production of surfactants
in 1977 (1.2 billion pounds). Nonionics are compatible with anionic
surfactants, cationic surfactants, and most builders because they do not
ionize.
The most important group of nonionics is the ethylene oxide condensates.
Alcohol ethoxylatesj/ are primarily used as auxiliary surfactants in
heavy-duty laundry detergents. Some are also used as intermediates for
anionic ether sulfates. Alkylphenol ethoxylates are used in textile
processing, petroleum oils, pesticides, paper manufacture, emulsion
polymerization, and as intermediates for sulfate surfactants.
Anhydrosorbitol esters and ethoxylated anhydrosorbitol esters^/ are used
in foods, cosmetics, and toiletries. Glycerol esters are used in foods, and
polyethylene glycol is used in foods and textiles. Fatty acid alkanolamides
are used as dispersants and foaming agents.
Cationics accounted for 6.3 percent of the total production of surfactants
(297 million pounds) in 1977. The most important group, the salts of higher
alkyl amines, are used as ore flotation agents, corrosion inhibitors,
dispersants, foam builders, softeners, and petroleum demulsifiers. The
quaternary ammonium salts have good wetting and germicidal properties and are
used in fabric softeners, germicides, and dye stuff fixatives. Cationics in
general are expensive and cannot be used with anionics; this severely limits
their use.
Amphoterics accounted for .3 percent (18,000 pounds) of total surfactant
production in 1977. They are used in cleansing bars and shampoos and are
unique in their ability to control detergency. However, they are very
expensive.
About one half the total surfactant production is used in household
detergents. Other major markets are industrial cleaning products, oil well
drilling, breaking of crude oil emulsions, secondary oil recovery, pesticides,
textile processing, metal processing, foods, ore flotation, paints, metal
cleaning, elastomer and polymer production, and lubricants.
Z/Ethoxylates are chemicals containing ethylene oxide, which provides
solubility in water.
JL/Esters are organic compounds that correspond in structure to salts in
inorganic chemistry.
-------
E-138
HISTORY
The first synthetic surfactants were developed in Germany during World War
I because of a shortage of natural fats.2/ They included sulfated fatty
alcohols, fatty aryl taurides, and isethiomates. and were used in textile
manufacturing, in the 1920s, the first commercially feasible sulfonated
surfactants were developed by the chemical and dye manufacturers who supplied
the textile industry. Although Germany continued to be the leader in this
field, the United States, Great Britain, France, and Switzerland quickly
caught up.
Alcohols were first ethoxylated in 1929 by I.G. Farben (Germany), and
Union Carbide and Rohm Haas were responsible for developing nonionic
surfactants in the United States.
In the middle 1930s the first light-duty surfactants were introduced. At
the end of World War II their performance was greatly improved from the
addition of builders that soften water.
Alkylbenzene sulfonate (ABS) was introduced in the early 1950s, and with
it came the explosive growth of the synthetic detergent industry. Over the
next two decades production increased 20 times its original amount and in the
middle 1960s the nonbiodegradability of ABS, due to its branched nature, was
discovered. The industry spent several hundred million dollars to develop
linear alkylbenzene sulfonates (LAS) .M/
INDUSTRY STRUCTURE
There are three parts to the surfactant industry: raw material suppliers,
producers that sell surfactants, and producers that use most of their
productive capacity.Al/
Major suppliers of linear alkylbenzene (LAB). the intermediate used to
produce LAS, are Conoco, Monsanto, and Union Carbide (see Table 5). Conoco,
Ethyl, and Shell chemical produce synthetic fatty alcoholsJL?./, and Proctor
and Gamble is the only producer of natural fatty alcohols. Nonylphenol, the
major alkylphenol.i^/ is produced by Borg-Warner, GAF Corporation, Jefferson
Chemical, Monsanto, Rohm Haas, and Schenectady Chemicals. Ethylene oxide is
produced by BASF Wyandotte, Jefferson Chemical and union carbide. Major
synthetic surfactant producers are: BASF Wyandotte, Conoco, GAF Corporation,
Jefferson Chemical, Monsanto, Rohm Haas, Shell chemical, and Union Carbide.
I/Natural fats are used to make soap.
i2/American Chemical Society, Chemistry in the Economy, a study
supported in part by the National Science Foundation, 1973, p. 200.
ii/Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977), p. 166.
ii/Fatty alcohols are used in anionic surfactants.
il/Alkylphenol is used in nonionic surfactants.
-------
TABLE 2
U.S PRODUCTION OF SURFACTANTS
(million pounds)
1977 1976 1975 1974 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 1958
An ionics
Sulfonates
Carboxylic
acids
Sulfates
Phosphates
i, poly-
phasphates
Other
Total
Nonionics
Carboxylic
acid amides
i
Carboxylic
acid esters
Esthers
Other
Total
Cationics
Amphoterics
TOTAL
1961
638
524
39
45
3207
81
226
883
6
1195
297
18
4718
1942
821
391
32
170
3356
78
222
653
3
957
252
18
4582
1780
735
374
21
153
3062
82
222
742
-
1046
226
14
4349
1832
839
341
31
133
3176
89
262
866
-
1218
284
19
4697
1524
939
311
28
165
2967
94
246
784
-
1124
260
21
4372
1335
907
330
26
149
2747
88
224
737
-
1048
229
14
4039
1278
872
281
27
137
2595
81
204
736
-
1021
203
10
3828
1331
938
297
27
135
2728
90
204
627
1
922
228
8
3886
1305
959
338
25
126
2753
83
179
706
2
971
169
8
3901
1271
1044
249
22
124
2710
87
164
601
2
854
167
8
3739
N/A
1044
N/A
15
135
2614
92
164
444
5
704
154
7
3479
N/A
962
N/A (X) (X) (X) (X) (X) (X) (X) (X)
13
133
2469 2358 1434 1369 1361 1238 1074 1068 979
93
146
444 (X) (X) (X) (X) (X) (X) (X) (X)
2
686 659 581 525 523 446 426 400 342
162 148 98 83 65 37 31 36 32
5 5 5 3 65 8 31 36 2
3321 3170 2119 1981 1949 1729 1532 1504 1355
td
i
i ^
U)
kD
N/A - not available.
(X) There was a change in the classification system that makes disaggregation difficult and inaccurate.
SOURCE: U.S. International Trade Commission, Synthetic Organic Chemicals, 1977 (Washington, D.C.: Government Printing Office, 1977),
-------
TABLE 3
U.S. SALES OF SURFACTANTS
(millions of dollars)
1977 1976 1975 1974 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 1958
Anionics
Sulfonates
Carboxylic
acids
Sul fates
Phospphates
S poly-
phosphates
Other
Total
Nonioni.cs
Carboxylic
acid amides
Carboxylic
acid esterst
Ethers
Other
Total
Cat ionics
Amphot erics
164
51
97
16
9
335
31
115
229
5
381
141
19
153
54
91
14
4
316
27
105
226
4
362
123
20
131
55
85
12
2
290
29
95
185
-
309
110
13
132 N/A
66 N/A
78 58
14 10
50
228 195
36 20
108 67
171 116
-
315 202
124 89
17 13
78
17
52
10
38
187
18
57
100
-
174
72
9
76
10
53
8
40
169
16
54
92
-
162
67
7
70
11
43
8
37
172
17
49
81
1
148
64
5
78
11
37
9
37
166
15
45
74
1
134
58
5
66
14
37
7
42
149
16
43
70
2
130
57
5
63
N/A
N/A
6
41
141
15
40
58
2
116
48
4
60
N/A
N/A (X) (X) (X) (X) (X) (X) (X) (X)
5
43
133 196 187 188 173 169 167 ' 148
19
40
60 (X) (X) (X) (X) (X) (X) (X) (X)
1
119 113 108 101 100 93 89 87 71
51 51 43 35 30 21 20 18 15
3 3 3 2 30 5 20 18 1
M
H*
it*
o
TOTAL
875
821
717
746
532
451
422
387
370
357
317
315
300
350
325
317
292
278
271
N/A - not available.
(X) There was a change in the classification system that makes disaggregation difficult and inaccurate.
SOURCE: U.S. International Trade Commission, Synthetic Organic Chemicals, 1977 (Washington, D.C.: Government Printing Office, 1977).
235
-------
TABLE 4
U.S. SALES OF SURFACTANTS
(millions of pounds)
1977 1976 1975 1974 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 1958
Car boxy lie
acids
Sulfates
Phosphates &
poly-
phosphates
Other
Total
Nonion ics
Carboxylic
acid amides
Carboxylic
acid esters
Ethers
Total
Cationic
Amphoteric
Total
134
214
22
25
1,425 1
56
t
191
617
868
204
17
2 , 515 2
146
234
19
12
,440
52
182
640
877
178
17
,512
146
216
16
6
1,280
56
159
512
728
159
14
2,182
177
212
24
--
1,452
56
210
568
833
108
19
2,502
N/A
223
21
221
1.519 1,
59
190
585
834
207
20
2,580 2,
48
226
21
205
274
60
194
533
787
183
14
258
16
208
18
228
1,223
52
182
552
786
167
10
2,186
32
189
16
225
1,163
58
154
523
736
155
8
2,061
31
177
18
248
1,157
53
145
483
682
140
8
1,988
50 N/A N/A
158 N/A N/A (X) (X) (X) (X) (X) (X) (X)
16 12 9
276 281 298
1,161 1,088 1,112 1,078 1,365 1,316 1,311 1,192 1,046 1,024
53 58 63
143 126 121
492 344 337 (X) (X) (X) (X) (X) (X) (X)
689 533 523 492 434 395 389 349 322 314
140 123 127 123 96 75 59 36 31 34
8 7 5 5 5 3 59 7 31 34
1,998 1,750 1,766 1,698 1,900 1,790 1,758 1,583 1,399 1,372
(X)
901
(X)
274
26
2
1,203
N/A - not available.
(X) There was a
change in
SOURCE: U.S. International
the
class if ication
Trade Commission,
system that makes disaggregation difficult and inaccurate.
Synthetic
Organic Chemicals,
1977
(Washington, D.C.: Government Printing Office, 1977).
M
I
-------
TABLE 5
U.S. PRICES OF SURFACTANTS
(dollars per pound)
1977 1976 1975 1974 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 1958
An ionics
Sulfonates
Carboxylic
acids
Sulfates
Phosphates
& poly-
phosphates
Other
Total
.16
.38
.45
.71
.36
.24
.15
.37
.39
.73
.38
.22
.15
.38
.39
.72
.37
.22
.13
.37
.37
.59
N/A
.20
N/A
N/A
.26
.49
.23
.15
.10
.35
.23
.45
.19
.15
.10
.63
.25
.46
.17
.15
.10
.34
.23
.51
.16
.15
.11
.35
.21
.49
•15
.14
.10
.28
.21
.47
.15
.14
.09
N/A
N/A
.52
.15
.13
.09
N/A
N/A
.53
.14
.12
Nonionics
Carboxylic
acid amides
Carboxylic
acid esters
Ethers
Other
Total
Cationic
Amphoteric
.55
.60
.37
1.22
.44
.69
1.08
.52
.58
.35
1.21
.41
.69
1.13
.52
.60
.36
N/A
.42
.69
.94
.64
.51
.30
N/A
.38
1.15
.91
.34
.35
.20
N/A
.24
.43
.67
.30
.29
.19
N/A
.22
.39
.67
.31
.30
.17
N/A
.21
.40
.68
.29
.32
.15
1.09
.20
.41
.72
.28
.31
.15
.94
.20
.41
.64
.30
.30
.14
1.03
.19
.41
.59
.26
.32
.17
.46
.22
.39
.62
.30
.33
.18
.87
.23
.40
.66
TOTAL
.35
.33
.33
.30
.21
.20
.19
.19
.19
.18
.18
.18
(X) (X)
.14 .14
(X)
(X)
(X)
(X)
.14
.15
.16
.16
(X) (X) (X) (X)
(X)
(X)
N/A - not available.
(X) There was a change in the classification system that makes disaggregation difficult and inaccurate.
SOURCE: U.S. International Trade Commission, Synthetic Organic Chemicals, 1977 (Washington, D.C.: Government Printing Office, 1977).
(X) (X)
.16 .16
(X) (X)
.23 .35 .26 .26 .27 .28 .28 .26
.41 .45 .47 .50 .58 .63 .52 .56
.60 .61 .65 .50 .60 .63 .52 .49
.18 .18 .18 .18 .60 .20 .20 .20
-------
E-143
TABLE 6
LAB PRODUCTION AND DEMAND DATA
Supply
Producer
Conoco
Monsanto
Union Carbide
Witco
Total
Capacity - 1979 (million Ibs.)
240
225
140
40
645
Demand
1978: 524 million Ibs.
1979: 530 million Ibs.
1983: 560 million Ibs.
Growth in Demand
1968-1978: - .1% annually.
1979-1983: - 1.5% annually.
Uses
LAS:
Exports:
Other:
90%
9%
1%
Source: Chemical Marketing Reporter, May 28» 1979.
-------
E-144
TABLE 7
FOREIGN TRADE OF SURFACTANTS
1970 1971 1972 1973 1974
1975 1976 1977
Exports
Million Pounds 134 142 151 174 198 151 163 157
% of Production 3.4 3.7 3.7 4.0 4.2 3.5 3.4 3.3
imports
Million Pounds 74 56 42 62 73 75 88 98
% of Consumption 1.7 1.5 1.1 1.5 1.6 1.8 1.9 2.1
Source: Synthetic Organic Chemicals.
Diamond Shamrock, ICI united States, and Stepan are the three large
companies selling their surfactants to other firms. Smaller companies in this
group include Alcolac, Emery industries, Glyco, Miranol, Henkel, Lonza,
Millmaster Onyx, Mona, and Quaker chemical.
Companies using most of their production captively include Proctor and
Gamble, Lever Brothers, and colgate-palmolive, the three synthetic detergent
giants. Witco Chemical also uses surfactants in its private label
detergents. About 50 percent of total surfactant production is captively
consumed.
FOREIGN TRADE
Between 1970 and 1977 estimated annual U.S. exports of surfactants
increased from 134 million pounds valued at $41 million to 157 million pounds
valued at $83 million (see Table 6). Exports ranged from 3.3 percent to 4.2
percent of total quantity. IV principal export markets were Canada, japan,
Holland, Belgium, Great Britain, France, and other European countries.
Nonionics were the largest export group, valued at $21 million.
The volume of exports is not expected to exceed 173 million pounds in 1982
and will probably continue to grow erratically. High shipping costs and
foreign production levels should limit export growth
Imports in 1977 totaled 98 million pounds, an increase of 11 percent over
1976. This represented 2.1 percent of U.S. consumption.
Imports consist mainly of non-benzenoid surfactants, including 28.5
million pounds of lignosulfonates. Total imports are expected to reach 150
million pounds by 1982.
M/Meegan, Kline Guide, p. 166.
IVu.S. international Trade Commission, Synthetic Organic Chemicals,
1977 (Washington, D.C.: Government Printing Office, 1977).
-------
E-145
INNOVATION
The surfactant industry appears to have shown a great deal of innovation
in the past and will probably continue to do so. Many significant new uses
have been found for surfactants in the areas of oil processing, phosphate
ester anionics, cosmetics, dry cleaning, emulsion polymerization, powdered and
liquid detergents, and fabric softeners. Currently, unknown uses may require
totally new surfactants. There is still much room for innovation in detergent
surfactants, i.e., a completely biodegradable replacement must be found for
LAS. We predict that the use of nonionics will continue to grow as detergent
phosphate levels are decreased, and, as energy costs rise, there will be
pressure to develop surfactants that work well in cold water.
ICF conducted an analysis of new chemicals that are introduced for
commercial purposes. From a sample of 1978 through 1979 issues of Chemical
Purchasing, 151 new chemicals were identified. Of these, ten were
surfactants. Only one of these surfactants had been introduced by a major
producer (Stepan). Also, five new surfactants were geared toward uses other
than synthetic detergents, and three, introduced by Hodag Chemical
Corporation, were for use in food processing.
This analysis is not conclusive for it is limited by a small sample size,
a relatively short time span, and publishing considerations. However, it does
suggest that a substantial amount of innovation is occurring, and that much of
this is being done in relatively small firms.
-------
E-146
Fatty Acids and Glycerin
-------
E-147
FATTY ACIDS AND GLYCERIN
FATTY ACIDS
Patty acids are carboxylic acids with long, straight hydrocarbon chains.
They are one of two byproducts from the hydrolysis of natural fats; the other
byproduct is glycerin.
Fats and oils are usually combinations of oleic, palmitic, and stearic
fatty acids with glycerin. Oleic acid is the principal acid in olive and
cottonseed oils, and palmitic ana stearic acids are the major acids in tallow.
Tall oil fatty acids occur freely in crude tall oil,I/ so the pulp and paper
industry, which produces crude tall oil, also produces some fatty acids as a
byproduct.
Fatty acids can also be produced synthetically from petroleum
derivatives. This source is widely used in Europe where there is a shortage
of natural oil.2/ supplies, although some synthetic fatty acids are also
produced in this country. The rising costs of natural oils, uncertainty about
droughts and storms, and political considerations have motivated the industry
to look for other sources. Because of soaring petroleum prices, synthetics
are not presently viable; however, there are two exceptions. High coconut oil
prices and a shortage of alternative supplies have resulted in the continued
popularity of short chain (C5_io) acids found in oil despite rising oil
prices. The second exception is the group of branched chain fatty acids,
which usually do not occur naturally.
In 1978 the industry produced 1,351.2 million pounds of fatty acids (see
Table 1), and captive consumption and sales totaled 1.411 billion pounds
(Table 2), about 21.4 percent of which was captively consumed. Domestic
shipments were $1,066.4 million (Table 3), and exports were $82.2 million
(Table 4) .
Between 1967 and 1978 production grew at an annual rate of 4.15 percent.
Since 1975 production has grown at a 11.8 percent rate. Continued growth is
expected at between 2.5 and 4 percent. C.H. Kline Company expects shipments
to reach $390 million in 1985, which represents a three percent growth rate.
Fatty acids are used in many markets. in 1977, rubber compounding accoun-
ted for the largest share, 10.8 percent, use in emulsion polymerization,
fooa, plastics, cosmetics, household detergents, soaps, ozonolysis, polishes,
and speciality household cleaners had a total of 61.6 percent (see breakdown
in Table 5). Other uses accounted for 27.6 percent. Exports accounted for
only 6.7 percent of production but were over 10 percent of the total value of
shipments (see Table 6). imports were negligible.
A/Tall oil comes from pine wood.
2/ln this report, oil refers to vegetable and animal oils, not petroleum.
-------
E-148
Tall oil, a pine wood derivative, is the most important fatty acid group,
accounting for 29 percent of total production. in 1975 tall oil fatty acids
were used in intermediate chemicals (48 percent), protective coatings (23
percent), and soaps, detergents, ana disinfectants. (12 percent).
Approximately 30 million pounds were exported Other unsaturated.3/ oils
accounted for 29 percent of total production; saturated oils accounted for the
rest. Oleic acid is used primarily in surfactants. Stearic acid, accounting
for nine percent of production, is used mainly in rubber compounding, but is
also used in surfactants, plasticizers, metallic soaps, and cosmetics. Laurie
acid, derived from coconut oil, is used in specialty detergents, plasticizers,
cosmetics, and high-performance synthetic lubricants, the production of which
is growing very rapidly. Fatty acids are also employed in textiles, paints,
mining, leather, and metal work.
Many fatty acids are upgraded through esterification, polymerization,
oxidation, and hydrogenolysis. Fatty acids are easily transformed into fatty
alcohols, amides, amines, and nitriles, and can also be sulfonated and
chlorinated
.^/Saturation refers to the number of valence bonds, (i.e., carbon atoms)
in a fatty acid.
-------
E-149
TABLE 1
FATTY ACID PRODUCTION, 1974 - 1978
(millions of pounds)
Saturated Fatty Acids
1974
98.5
1. Stearic acid—40-50% stearic content 115.4
2a. Hydrogenated fatty acids having a
maximum titer of 60°C and a
minimum i.v. of 5
2b. Hydrogenated fatty acids having a
minimum titer of 57°C and a
maximum I.V. under 5
2c. Hydrogenated fatty acids having a
minimum stearic content of 70%.
3. High palmitic-over 60% palmitic,
I.V. maximum 12
4. Hydrogenated fish fatty acids,
5. Coconut-type acids I.V. 5 or more
including palm kernel and babassu,
hydrogenated coconut acid
6a. Fractionated short-chain acids
CIQ or lower including capric
6b. Fractionated short-chain fatty
acids, lauric and for myristic
content of 55% or more.
TOTAL SATURATED
Unsaturated Fatty Acids
7. Oleic Acid 165.8
8. Animal fatty acids other than
oleic—I.V. 26-80 68.2
9. vegetable or marine fatty acids
I.V. maximum 115 1.6
10. Unsaturatea fatty acids—I.V.
116-130 16.4
11. Unsaturated fatty acids—
I.V. over 130 27.9
TOTAL UNSATURATED 279.9
12. Tall oil fatty acids—containing
less than 2% rosin acids and more
than 95% fatty acids 207.6
13. Tall oil fatty acids—containing
2% or more rosin acids 155.6
GRAND TOTAL 1172.1
1975
94.4
86.3
1976 1977 1978
123.5 123.9 127.2
103.1 102.3 98.1
165.7
31.2
14.6
9.1
61.9
14.8
17.8
529.0
99.5
27.2
8.3
5.1
58.9
14.1
15.1
409.0
126.8
30.8
8.3
7.3
69.3
18.4
16.2
503.6
142.8
30.4
11.5
7.0
79.4
19.1
17.4
533.8
158.5
32.3
14.7
6.5
88.8
18.6
16 8
561.4
118.1 154.6 142.4 158.3
113.3 135.9 157.6 156.3
.5 9.5 3.5 0.1
19.3 17.4 54.7 57.0
12.2 21.4 27.8 24.2
263.5 338.7 385.9 396.1
149.6 201.0 181.0 191.7
143.6 172.4 178.2 202.1
966.1 1215.7 1278.9 1351.2
Source: Fatty Acid Products' Council, Fatty Acid Production, Disposition and
Stocks Census (Monthly); and pulp Chemicals Association (provided
tall oil fatty acid statistics).
NOTE: Titer is the solidification point of the fatty acids which have been
liberated from fat by hydrolysis (Condensed Chemical Dictionary.
1971). I.V. is iodine value.
-------
E-150
TABLE 2
FATTY ACID DISPOSITION, 1974 - 1978
(millions of pounds)
Saturated Fatty Acids 1974 1975 1976 1977 1978
1. Stearic acid—40-50% stearic content. 114.0 128.2 138.4 142.6 146.2
2a. Hydrogenated fatty acids having a
maximum titer of 60°C and a
minimum I.V. of 5 96.8 88.8 103.9 102.9 100.5
2b. Hydrogenated fatty acids having a
minimum titer of 57°C and a
maximum I.C. ^nder 5 162.5 124.8 147.0 165.0 188.1
2c. Hydrogenated fatty acids having a
minimum stearic content of 70% 29.8 30.4 33.0 32.5 33.8
3. High palmitic-over 60% palmitic,
I.V. maximum 12 13.6 7.9 9.8 12.4 14.4
4. Hydrogenated fish and marine mammal
fatty acids 8.7 6.7 7.0 7.2 6.9
5. coconut-type acids I.V. 5 or over,
including piam kernel and babassu,
hydrogenated coconut acid 61.2 59.9 71.9 82.0 90.1
6a. Fractioned short-chain acids, CIQ
or lower including capric 15.3 14.0 18.5 19-8 18.1
6b. Fractionated short-chain fatty
acids, lauric and for myristic
content of 55% or more 16.8 15.3 17.7 19.6 17.6
Unsaturated Fatty Acids
7. Oleic Acid (red oil) 163.8 121.9 157.8 149.6 160.9
8. Animal fatty acids other than
oleic I.V. 26-80 67.3 130.4 157.9 175.6 162.8
9. vegetable or marine fatty acids
I.V. maximum 115 1.6 0.8 9.4 3.5 0.4
10. Unsaturated fatty acids—I.V.
116-130 15.7 19.0 18.6 57.8 56.3
11. Unsaturated fatty acids—I.V. over
130 27.3 12.5 21.7 29.0 24.6
12. Tall Oil fatty acids—containing
less than 2% rosin acids and more
than 95% fatty acids 202.3 148.1 203.5 178.0 189.6
13. Tall Oil fatty acids—containing 2%
or more rosin acids 156.6 133.3 183.9 177.1 ^00.8
TOTAL 1152.3 1042.1 1300.0 1354.9 1411.1
Source: Fatty Acids Producers' Council, Fatty Acid Production, Disposi-
tion & Stocks Census (Monthly); and pulp Chemicals Association
(provided tall oil fatty acid statistics).
Note: Totals may not agree exactly with those shown due to independent
rounding of figures. I.V. is iodine value.
-------
E-151
TABLE 3
Saturated Fatty Acids
1. Stearic acid—40-50% stearic
content
2a. Hydrogenated fatty acids having a
minimum titer of 60°C and a
minimum l.v. of 5
2b. Hydrogenated fatty acids having a
minimum titer of 57°C and a
maximum l.v. under 5
2c. Hydrogenated fatty acids having a
minimum stearic content of 70%
3. High palmitic-over 60% of palmitic,
I.V. maximum 12
4. Hydrogenated fish and marine mammal
fatty acids
5. coconut-type acids I.V. 5 or over,
including palm kernel and babassu,
hydrogenated coconut acid
6a. Fractionated short-chain acids,
or lower including capric
6b. Fractionated short-chain fatty
acids, lauric and for myristic
content of 55% or more
UnsaturatedFattyAcids
7 Oleic Acid (red oil)
8. Animal fatty acids other than
oleic l.v. 26-80
9. vegetable or marine fatty acids
I.V. maximum 115
10. Unsaturated fatty acids—I.V.
116-130
11. Unsaturated fatty acids—I.V.
over 130
12. Tall oil fatty acids—containing
less than 2% rosin acids and more
than 95% fatty acids
13. Tall oil fatty acids—containing
2% or more rosin acids
TOTAL
Source:
Note:
'TY ACIDS
pounds)
1974
82.7
94.7
92.3
24.5
6.3
8.4
55.0
13.8
7.8
95.2
58.5
0.7
12.6
26.8
179.2
132.9
891.8
, 1974
1975
71.2
85.5
58.4
24.3
3.2
5.7
45.8
11.9
7.1
60.5
99.7
0.4
10.8
12.1
133.4
124.8
754.7
iil, Fatty Acid
- 1978
1976
92.8
101.9
96.4
25.0
5.2
5.9
54.0
16.0
12.0
85.9
109.9
9.1
9.8
16.4
173.6
163.8
977.7
1977
96.0
100.8
99.7
23.6
6.3
6.2
56.8
16.5
10.1
90.3
119.4
1.3
39.3
26.9
155.7
137.8
986.9
1978
94.5
99.0
115.3
25.4
7.1
5.3
61.4
16.9
9.6
86.4
119.0
0.3
36.1
21.1
196.6
172.4
1066.4
Production, Disposi-
tion & Stocks Census (Monthly) ; and Pulp Chemicals Association
(provided tall oil fatty acid statistics).
Totals may not agree exactly with those shown due to independent
rounding of figures. I.V. is iodine value.
-------
E-152
TABLE 4
CAPTIVE CONSUMPTION OF FATTY ACIDS, 1974 - 1978
(millions of pounds)
Saturated Fatty Acids 1974 1975 1976 1977 1978
1. Stearic acid—40-50% stearic content 28.6 55.5 43.5 45.0 49.6
2a. Hydrogenated fatty acids having a
maximum titer of 60°c and a
minimum I.V. of 5 0.4 1.9 0.6 1.5 0.4
2b. Hydrogenated fatty acids having a
minimum titer of 57°c and a
maximum I.V. under 5 70.2 63.3 50.2 64.8 72.1
2c. Hydrogenated fatty acids having a
minimum stearic content of 70% 5.1 5.9 7.6 8.8 8.3
3. High palmitic-over 60% palmitic,
I.V. maximum 12 6.6 4.6 4.4 5.8 7.1
4. Hydrogenated fish and marine
mammal fatty acids 0.3 1.0 1.1 0.9 1.5
5. coconut-type acids l.v. 5 or
over, including palm kernel and
babassu, hydrogenated coconut acid 6.2 13.9 17.7 25.1 28.4
6a. Fractionated short-chain acids, CIQ
or lower including capric 1.4 0.8 0.8 1.0 1.0
6b. Fractionated short-chain fatty
acids lauric and for myristic
content of 55% or more 8.8 8.1 5.5 9.4 7.8
Unsaturatea Fatty Acids
7. Oleic Acid (red oil) 64.7 57.8 69.2 55.6 69.6
8. Animal fatty acids other than
oleic I.V. 26-80 8.7 30.4 47.8 53.2 34.8
9. vegetable or marine fatty cids
I.V. maximum 115 0.9 0.4 8.4 2.2
0.1
10. Unsaturated fatty acids—I.V.
116-130 3.1 8.3 8.9 7-8 8.1
11. Unsaturated fatty acids—I.V.
over 130 — — 0.2 0.9 1.1
12. Tall oil fatty acids—containing
less than 2% rosin acids and more
than 95% fatty acids n.a. n.a. n.a. n.a. n.a.
13. Tall oil fatty acids—containing
2% or more rosin acids n.a. n.a. n.a. n.a. n.a.
TOTAL 205.0 251.9 265.9 282.2 289.8
Source: Fatty Acids Producers' Council, Fatty Acid production. Disposi-
tion & Stocks Census (Monthly); and pulp Chemicals Association
(provided tall oil fatty acid statistics).
n.a. - Not Available.
Note: I.V. is iodine value.
-------
E-153
TABLE 5
PERCENT OF FATTY ACID USE By MARKET: 1977
Market percent
Rubber compounding 10.8
Emulsion polymerization 9.9
Food 8.0
Plastics 7.5
Cosmetics 7.0
Household Detergents 7.0
Soaps 6.3
Ozonolysis 6.1
polishes 5.1
Specialty household cleaners 4.7
Others 27.6
Exports 6.7
Source: "Fatty Acids Use to Increase, Partly because of Plastic Boom,"
Chemical Marketing 'Reporter. April 18, 1978.
-------
E-154
TABLE 6
FATTY ACID EXPORTS, 1974 - 1978
(millions of pounds)
Saturated Fatty Acids
1.
2a.
2b.
2c.
3.
4.
5.
6a.
6b.
Stearic acid — 40-50% stearic content
Hyarogenated fatty acids having a
maximum titer of 60°C and a
minimum I.V. of 5
Hyarogenated fatty acids having a
minimum titer of 57°C and a
maximum I.V. under 5
Hyarogenated fatty acids having a
minimum stearic content of 70%
High palmitic-over 60% palmitic,
I.V. maximum 12
Hydrogenated fish and marine
mammal fatty acids
Coconut-type acids I.V. 5 or
over, including palm kernel
and bassu, and hydrogenated
coconut acid
Fractionated short-chain acids,
CIQ or lower including capric
Fractionated short-chain fatty
acids, lauric and for myristic
content of 55% or more
1974
2
1
0
0
0
a/
0
0
0
.7
.6
.1
.2
.7
.05
.09
.1
1975 1976
1.
1.
3.
0.
0.
a/
0.
0.
0.
5
4
1
1
1
2
1
1
2.
1.
0.
0.
0.
a/
0.
o.
0.
1
3
4
5
2
3
2
2
1977
1
0
0
0
0
0
0
0
0
.6
.6
.5
.1
.1
.05
.2
.2
.2
1978
2.
1.
0.
0.
0.
0.
0.
0.
0.
1
1
7
2
2
1
2
3
3
Unsaturated Fatty Acids
7.
8.
9.
10.
11.
12.
13.
Oleic Acid (red oil)
Animal fatty acids other than
oleic I.V. 26-30
Vegetable or marine fatty acids
I.V. maximum 115
Unsaturated fatty acids — I.V.
116-130
Unsaturated fatty acids — I.V.
over 130
Tall oil fatty acids — containing
less than 2% rosin acids and more
than 95% fatty acids.
Tall oil fatty acids — containing
2% or more rosin acids
TOTAL
3
0
-
0
0
27
23
60
Source: Fatty Acids Producers' Council,
tion & Stocks Census (Monthly) ;
.1
.06
-
.04
.6
.2
.7
.2
Fatty
3.
0.
—
o.
0.
14.
8.
35.
6
3
2.
o.
a/
7
2
3
3
.8
.0
4.
9.
9
0
a/
05 a/
4
8
5
6
Acid
and Pulp
5.
29.
20.
65.
1
9
1
5
10
1
22
39
86
Production,
Chemicals
.7
.1
.7
.7
.7
12.
2.
20.
28.
82.
0
4
3
5
2
Disposi-
Association
(provided tall oil fatty acid statistics)
a/ Less than 10,000 pounds.
Note: i.v. is iodine value.
-------
E-155
There are about 20 companies manufacturing fatty acids. The largest
producers are Armak, Ashland Chemical, Emery Industries, Hercules, Humko,
Sheffield Chemical, and Union Camp. Other companies include Baker Castor Oil,
Darling, General Mills, Glyco, and Millmaster Onyx. Nearly all of these
companies also make fatty acid derivatives.
The fatty acid industry should not be affected by a premanufacturing
notification requirement (PMN). All natural fatty acids come from animal and
vegetable fats so there seem to be no problems with regard to toxicity or
innovation. The synthetic fatty acids are not toxic and it appears that not
enough of them are being developed to consider this an innovative segment.
Rising petroleum prices continue to seriously limit this market.
GLYCERIN
Glycerin is the other byproduct of the hydrolysis of natural fats. it has
many desirable characteristics, giving it many applications. Glycerin absorbs
and retains moisture up to 50 percent of its volume. it has strong solvent
powers but is itself insoluble in chloroform and gasoline. It is clear,
colorless, viscous, very stable, and noncorrosive. it also has strong
preservative powers.
Because of all these qualities, glycerin is used in more than 25
industries. These include: adhesives and cements, cleaners and polishes,
electrical equipment, explosives, leathers, lubricants, metals, packaging
materials, paper photography, plastics, printing and lithography, paints and
protective coatings, rubber, textiles and dyes, tobacco, glass, agriculture,
cosmetics, beverages, foods, medicine and surgery, dentistry, Pharmaceuticals,
veterinary medicine, and optometry (see Table 7).
TABLE 7
GLYCERIN END USE PATTERN
1979 1978
Estimate Estimate
Derivative percent percent
Drugs and Cosmetics 21 22
Food and Beverage 17 15
Alkyd Resins 15 15
Tobacco 9 10
Cellophane 7 5
polyether polyols 8 8
Explosives 2 2
Exports 15 15
Miscellaneous 6 8
Source: Mannsville Chemical Products, "Chemical Brief", Chemical Age, March
1979.
-------
E-156
The supply of natural glycerin is determined by fatty acid production.
Since demand is greater than supply, there is a market for more expensive
synthetic glycerin.4/ AS demand changes, synthetic glycerin production
changes. The existing market causes extreme volatility in synthetic
production and tight price competition, in 1977 synthetic glycerin
represented 45 percent of the total market. in 1978, because of decreasing
overall glycerin demand, synthetic glycerin represented only 32 percent of the
total market. Prices decreased from $.48 to $.47 per pound (see Table 8).
Over the last few years domestic demand for glycerin has declined.
Glycerin is used as a plasticizer in cellophane processing; this application
historically accounted for about 15 percent of glycerin demand. Recently,
however, it has dropped to five percent, as cellophane production has severely
decreased. The demand for glycerin in the explosives industry has also
severely decreased, and went from five percent to two percent of glycerin
demand. The use of alkyd resins, used in paints, has shown slow growth as
paint formulations use less glycerin than in the past.
Between 1960 and 1970 domestic demand decreased 10 percent. Nevertheless,
exports grew 270 percent, allowing overall production to increase at one or
two percent over the 10 year period, in the 1970s, however, domestic demand
was static while imports rapidly increased,5/ and this caused a drop in U.S.
production.
Production of natural glycerin was estimated at more than 200 million
pounds for 1978.^/ The average price was $.47 per pound, and in 1979 prices
rose to $.58 because of lower domestic production. During the next few years,
production is expected to decrease by one or two percent annually.
The major producers of natural glycerin are the major manufacturers of
soaps and fatty acids. These include Armak, Proctor and Gamble, Colgate-
Palmolive, Emery, Humko, Kraftco, Lever Brothers, pacific Soap, Swift, and
Union Camp.
Because it is non-toxic and has shown no innovation, glycerin will not be
affected by a PMN. it may find some new uses, but its nontoxicity should make
a PMN a mere formality.
i/Synthetic glycerin is classified in SIC 28695.
-S./imports have since ceased.
6/Mannsville Chemical Products, Chemical Products Synopsis, October 1979.
-------
TABLE 8
AVERAGE PRICES RANGE-GLYCERINE-SYNTHETIC-99.6%
CENTS PER POUND-DELIVERED-BULK-EASTERN
1960 1965
Trade List Prices 29 1/4 23
Average Sales Price 27
1970
20 1/4
19
1974
22 1/2-50
42
1975
48-50
48
1976
46-48
47
1977
50-50 1/4
48
ESTIMATED GLYCERINE PRODUCTION:
ALL GRADES-SYNTHETIC AND NATURAL-100% BASIS
(millions of pounds)
1978
51 1/4-49
47
1979
49-58
1980
60-62
Capacity
Natural
Synthetic
Production
Demand
Inventory Change
Exports
Imports
1960
180
150
305
285
20
15
1965
180
250
353
305
52
4
1970
165
360
336
274
(12)
74
1974
165
335
358
296
66
6
1975
165
335
272
218
6
45
1
1976
165
335
325
277
(6)
58
4
1977
165
335
311
286
8
30
13
1978
180
345
303
286
(16)
40
7
1979
180
345
350(Est)
297
(8)
58(Est)
1980
180
170
250
1982
290
1985
280
Source: "Glycerine,1 Chemical Products Synopsis (a reporting service of Mannsville Chemical Products Co., Cortland, N.Y.), October 1979.
Ui
-J
-------
E-158
Soaps ana Detergents
-------
E-159
SOAPS AND DETERGENTS - INTRODUCTION
INTRODUCTION
Soap and detergent industry shipments were $6.3 billion in 1978 and real
annual growth is expected to be 2.7 percent.!/ Soaps, household detergents,
and industrial cleaners each have different markets and market structures.
The household soap industry is highly concentrated; one product has been the
industry leader for decades. Both household soaps and detergents involve a
great deal of advertising and a good Distribution system. The top three ma]or
household detergent producers comprise 83 percent of the industry. One
product, in fact, has held more than 25 percent of the market for 25 years.
In contrast, industrial cleaners are not concentrated at all. Most products
are sold on a regional level and many are custom tailored to specific uses.
Cleaners can also be classified as either synthetic or natural. The
natural cleaners, soaps, have been produced for 3000 years; they are derived
from vegetable and animal fats. The synthetic detergents were introduced at
the beginning of the twentieth century in Germany; they are mixtures of
surfactants, builders, and other agents. The two groups are in direct
competition with each other, the synthetics having captured most of the
cleaning market since the 1930s. Some analysts believe natural soaps are
making a comeback because of environmental issues and cost considerations.
SOAPS
Soap is the sodium, potassium or triethanolamine salt of a long chain
prganic acid. Soaps are primarily made from beef tallow, palm oil, coconut
oil, and olive oil.
To have "detergent power", an acid must have more than nine carbons.
Technically, any salt of a fatty acid with more than seven carbons is a soap.
As the number of carbons is increased, so is the detergency; however, if the
soap has more than 18 carbons it is no longer soluble in water. (The more
carbons in each chain, the less soluble the soap.) Oleic acid is one of the
best soaps because it has the detergent power of a 17-carbon soap, but the
solubility of a 12-carbon soap. Soaps of length greater than 17 carbons are
used in scouring pads where they need not be soluble.
Soaps were discovered 3000 years ago by the Romans, in 1791 Nicolas
LeBlanc used electrolysis to make sodium hydroxide from sodium chloride,
thereby making it possible for anyone possessing electrolysis technology to
make soap, in the early 1800's, M.E. Chevreul explained the chemistry
involved in soap.
I/Charles Kline & Company, Household and personal Care Products
Industry, August 1979.
-------
E-160
The basis of soap manufacture is the splitting of fat stocks into fatty
acids and glycerin. The glycerin is a valuable byproduct (see Fatty Acids).
The fatty acids are neutralized by adding an alkaline material, usually sodium
hydroxide. Other minor ingredients are added later for added alkalinity,
odor, and aging stability.
Soap works well in soft water; but in hard water, it tends to combine with
calcium and magnesium ions to form insoluble curds. Because these curds leave
residues such as bathtub rings, while synthetic detergents do not, synthetic
detergents have captured the cleaning industry. Even though synthetics tend
to aegrease and thereby, dry skin, the cleansing bar industry has seen the
entry of some synthetics in combination with natural soaps.
According to the census of Manufactures, soap and detergent shipments in
1977 were valued at $4,987 million. industrial and institutional products
accounted for $979 million of this value, and household soap products
accounted for $710 million (see Table 1). This incidates that soaps represent
14.2 percent of all shipments and 17.7 percent of the household market of SIC
2841 (soaps and other detergents, except specialty cleaners), but Charles
Kline & Co. estimates that soap has less than five percent of the cleaning
market. The difference in estimates is caused by ambiguities in the
classification systems used For soap as defined in this report, the Kline
figure is a better estimate.
The two major cleansing bar manufacturers are Proctor & Gamble (Ivory,
Coast, Safeguard, Zest, Camay) and Armour-Dial (Dial, Tone). Ivory has the
most unit sales, but Armour-Dial maintains that Dial has the most dollar
sales. Other large manufacturers are Lever Brothers (Caress, Dove, Lifebouy,
Lux, Phase III) , Colgate-Palmolive (Irish Spring, Cashmere Bouquet) , and
Andrew Jergens (jergens, Gentle Touch). Other major products that contain
soap are Brillo scouring pads and some liquid dishwashing lotions. Although
the market for the industrial applications of soaps is more diversified than
that for synthetic detergents, it follows the same marketing patterns (see
Synthetic Detergents). Both markets depend heavily on distribution outlets
and advertising, for example.
We believe there is no new chemical innovation in the natural soap
industry. Any innovation at all is process innovation. Thus, this industry
probably does not warrant further investigation.
Synthetic fatty acids have been developed for use in soaps, and it is
possible that new ones may be developed. However, these synthetics are not
dangerous and it appears that recently they have not experienced much
innovation.
Finally, any soaps containing ingredients other than neutralized fatty
acids (this includes almost all cleansing bars) are covered by FDA.
SYNTHETIC DETERGENTS
A synthetic detergent is a mixture of surfactants, builders, bleaching
agents, corrosion inhibitors, and other agents used to clean surfaces.
-------
E-161
TABLE 1
SOAPS AND OTHER DETERGENTS:
VALUE OF SHIPMENTS
(millions of dollars)
Total
Soaps and Detergents
Non-Household
Detergents, Household
Synthetic Organic
Detergents, Dry
Light-Duty
Heavy-Duty (Phosphate)
Heavy-Duty (Phosphate-Free)
Hard-Surface Cleaners
Synthetic Detergents, Liquid
Light-Duty
Heavy-Duty (Phosphate)
Heavy-Duty (Phosphate-Free)
Pre-Soaks
Soap, Household
Toilet Soap
1972
2
1
,852
653
,634
79
808
45
2
299
(D)
(D)
52
412
339
1977
4,987
979
3,807
130
(D)
499
12
483
(D)
147
95
710
613
increase
75%
49%
72%
65%
1014%
500%
62%
83%
72%
81%
(D) Withheld
Source: U.S. Department of Commerce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979)
-------
E-162
Detergents are used to clean textiles, cooking and eating utensils, walls and
floors, and metals. They may also be used for human cleansing, ana may appear
in powder, liquid, tablet, or gel form.
Components
Surfactants are the active component in all detergents. Because they work
much better in soft water, builders are used to soften water. Builders
prevent the metal ions in hard water, mainly calcium and magnesium, from
combining with either surfactants or dirt particles; they also help disperse
dirt, provide added and buffered alkalinity, and kill microorganisms.
Examples of builders are the condensed polyphospates, STP (also called STPP),
tetrasodium pyrophosphate, sodium carbonate, NTA. tetrasodium ethylenediamene
tetraacetate (EDTA), and the polycarboxylates.
Bleaches are used to whiten surfaces. There are two types of bleaches in
use: Hypochlorites, which include potassium dichloroisocyanurate (KDCC) and
chlorinated trisodium phosphate, are the more powerful of the two. The
peroxygens such as sodium perborate however are used more often. All
detergents containing bleach are in solid form because the liquid bleach
solutions are too unstable. Bleaches are used in scouring pads, automatic
dishwashing detergents, commercial sanitation, and textile cleaning.
Corrosion inhibitors prevent the corrosion of washing machines and fine
china. They are soluble silicates with varying ratios of SiC>2 and Na2O.
They also contribute to detergency because of their alkalinity.
Sudsing modifiers alter the foaming and sudsing properties of a
detergent. Mono- and diethanol amides of Cig_i6 fatty acids increase
sudsing, and long chain (Ci6_22) fatty acids and ethoxylated fatty alcohols
decrease sudsing.
Fluorescent whitening agents, also called FWA, are fluorescers,
brighteners, and optical bleaches. They increase the "brightness" of textiles
by absorbing incident light in the ultraviolet region and re-emitting part of
it as visible light, generally in the blue region of the visible spectrum.
They are organic chromophores modified with an organic substituent to make it
attracted to the textile involved. Fluorescent whitening agents are derived
from sulfonated triazinylstilbenes, and those for organic fibers differ from
those for synthetic fibers. The brighteners are usually incorporated into
synthetic fibers when the fibers are produced.
Enzymes loosen soils and stains that have protein and carbohydrate parts,
including body soils and food, grass, and blood stains. The commonly used
enzymes (proteolytic and amylolytic enzymes) are derived from fermentation
cultures of specific strains of ubiquitous bacteria. Research over a long
period of time was required to find enzymes that could react at high
temperatures. Addition of enzymes to the industry is considered by many to be
the most significant advance in detergent technology since the introduction of
synthetic detergents.
-------
E-163
Anti-redisposition agents help disperse dirt into the liquid solution and
prevent it from being redeposited onto the clean surface. Examples include
carboxymethyl cellulose ana polyvinyl alcohol.
Other components facilitate production or add to product acceptability.
Hydrotropes, such as xylene sulfonate, increase surfactant solubility and
detergent shelf life. Colors and perfumes are added to improve product
appearance.
History
The first synthetic detergents, short chain alkyl napthalene sulfonates.
were produced in Germany during World War I because animal fats were being
diverted to other uses. Long chain alcohol sulfates were introduced in the
1920s and early 1930s. Long chain alkyl aryl sulfonates were also introduced
in the 1930s, and by the end of World War II, had replaced alcohol sulfates
(see Surfactants). Companies began to produce detergent formulations from
these compounds between 1950 and 1955, which led to the explosive growth of
phosphate builders.
In the early 1960s consumers became concerned about the environment. The
branched alkyl sulfonates in use at the time were not biodegradable, so linear
alkyl sulfanates (LAS) replaced them. However, many environmentalists felt
that high phosphate levels in rivers and lakes were causing dangerous levels
of algae. This effect was "entrophic", meaning that an increase in mineral
and organic nutrients was depleting the waters' dissolved oxygen, and thereby
establishing an environment that favors plant over animal life. Although it
was not clear that detergents were the major source of the problem, many
areas, especially in the Great Lakes region, banned phosphates in detergents,
and federal agencies and detergent manufacturers arranged for the voluntary
reduction of phosphate levels. it is still questionable if lower phosphate
levels in detergents have reduced phosphate levels in our water systems.
Alternatives to phosphate builders that have been tried are zeolites
(Proctor & Gamble), Builder M (Monsanto). NTA, carboxymethyloxysuccinate
(CMOS) (Lever Bros.), and citric acid. Zeolites are not as effective as
phosphates and NTA may be as harmful. Because none of these chemicals
presently have the production capacity to replace phosphates, this is an area
with potential for innovation.
The latest innovations have been the addition of brighteners (which are
losing popularity) and enzymes. Enzymes may be dangerous if workers are
constantly exposed to them, but they are harmless in household applications.
Detergent Uses
The largest use of detergents commercially is in textile cleaning. Since
World War II, synthetics have replaced soaps in this industry, and soaps now
have less than 5 percent of the market. Most detergents (80-90 percent) are
powdered, but liquids are gaining popularity. Ten to 20 percent of a
detergent's bulk is surfactant, 30 to 60 percent are builders, and 5 to 10
-------
E-164
percent are sodium silicates. The rest of the bulk is provided by
inconsequential components, presoaks usually contain less surfactants and
more enzymes, builders, and bleach. Heavy-duty laundry detergents contain
high levels of builders.
The second largest use is in hard surface cleaners, which can be broken up
into: automatic and hand dishwashing detergents; floor and wall cleaners; and
scouring pads. Except for automatic dishwashing detergents, these contain a
relatively large concentration of sudsing agents.
Hand dishwashing detergents usually come in liquid form, in comparison to
powders, liquids offer superior ease and convenience, are better suited to the
surfactant type and level used in hand dishwashing, and require no builders.
Dishwashing liquids are 25 to 45 percent anionic surfactants; the remaining
ingredients are solvents, hydrotropes, buffers, colors, perfumes, and water.
The surfactants usually used are LAS, alkyl sulfates, alkyl polyethoxy
sulfates. di- or mono-ethenol fatty acid amides, alkyl glyceryl ether
sulfonates, and alkyl dimethylamine oxides. These surfactants have shorter
chains than those used in detergents.
Automatic dishwashing detergents require low sudsing to avoid overflows,
complete rinsing to avoid residual deposits, and complete chelating.
Chelating is the process of neutralizing mineral ions in hard water.
Automatic dishwashing detergents require a low level of nonionic surfactant,
usually polyoxyethylene or polyoxypropylene condensate, a low level of bleach,
a high level of builder (usually STP or sodium carbonate), and a moderate to
high level of alkalinity in auxiliary sources. All automatic dishwashing
detergents are powders to accommodate dishwashing machine design.
Abrasive cleaners have a high level of abrasive, usually silica flour, a
low level of bleach, and a low level of surfactant which serves as a wetting
agent and helps remove stains.
Large area cleaners come in both liquid and solid form. The liquids
contain a low level of nonionic and anionic surfactant, a high level of
stable, highly soluble builder (usually tetrapotassium pyrophosphate)
solvents, hydrotropes, and water. The solids contain very low levels of
surfactant (usually LAS), moderate levels of builder (usually STP), and high
levels of mild alkalinity (usually trisodium phosphate and mixtures of sodium
carbonate and sodium bicarbonate). All large area cleaners require low
sudsing.
Personal care products using synthetic detergents include cleansing bars,
shampoos, bubble baths, cosmetic cleaners, and toothpaste. The cleansing bar
market is still dominated by natural soaps but some synthetic soaps have
appeared. Unfortunately, the synthetics degrease skin, although some mixtures
of natural and synthetic detergents have been successful in the market.
Surfactants sometimes added are alkyl sulfates, alkyl glyceryl ether
sulfonates. alkyl esters of sodium isethionate. and alkyl amides of N-methyl
tauride. Other personal care products are in SIC 2842 and are covered by FDA
regulations.
-------
E-165
Industrial and institutional products are analogous to household products
but are more powerful, more specialized and are packaged differently.
Applications unique to certain industries and institutions include yarn
cleaning, metal cleaning, and surgical equipment.
Manufacturing Process
The most sophisticated method for producing detergents is called spray
drying. The first step is sulfation and/or sulfonation of anionic surfactant
intermediates (fatty alcohol and/or LAB). This is accomplished through the
introduction of oleum and intermediates into a special acid-resistant alloy
pump which acts as a mixer for raw materials. Reaction heat is reduced by
putting the surfactant into a larger mass of recirculating, externally cooled,
reaction product just prior to sulfation. Key control variables are:
1) temperature, which must be high enough for pumpable
viscosity and rapid reaction, but low enough to avoid
charring;
2) the ratio of oleum to surfactant intermediate;
3) mixing efficiency; and
4) reaction time.
The second step is neutralization of the acidity of the surfactant using
sodium hydroxide. This forms the sodium surfactant salts present in the final
detergent product. Sodium sulfate is also formed from neutralization of
excess sulfuric acid, and it passes into the finished product. Heat of
reaction is again reduced by mixing the reactants with a larger, externally
cooled, recirculating mass of neutralized material. The resultant neutralized
surfactant paste is passed through a cooler to a holding tank.
Next, the major detergent ingredients—surfactant paste, builders, and
corrosion inhibitors—are mixed together to form a thick paste in a large
closed tank containing a worm screw agitator. The tank is mounted on a scale
to determine an accurate measurement of each component. The mixer is called a
crutcher, and the process crutching. This is usually done in a batch and then
poured into a holding tank for continuous operation of the next step.
High pressure pumps deliver paste to the atomizing nozzles of a spray
drying tower. Droplets from the nozzles are puffed into granules and dried by
hot (600°F) air. Finally, the granules are cooled and the remaining
ingredients are added.
A simpler method involves just adding the dry raw materials to heated
surfactant, but usually more than one mixing is needed. Liquid and paste
detergents are mixed in batches, and may be preceded by sulfation or
sulfonation of the surfactant intermediate, or a finished surfactant may be
used. The key control factors are temperature, time, agitation rate, and the
specific hydrotropes used.
-------
E-166
The Industry and its Relationship to Other Industries
In 1978 sales of household soaps and detergents were estimated at $3
billion and sales of industrial and institutional soaps and detergents were
$1.9 billion.2/ m 1977 the industry had 31.900 employees, an increase of
one percent from 1972. Leading states in employment were New Jersey,
California. Ohio, and Illinois, representing about 40 percent of the total.I/
The synthetic detergent industry buys all its raw materials from basic
chemical companies. The industry sometimes uses surfactant intermediates to
make finished surfactants.
The soap and detergent industry has two separate markets, household and
industrial. The domestic household detergent market is dominated by Proctor &
Gamble (P&G) with 50 percent of the market, and Colgate-Palmolive Co. and
Lever Brothers, each with 17 percent. Tide, a P&G product, has had more than
25 percent of the market for 25 years.
Proctor & Gamble's total fiscal 1978 sales were $4.1 billion and net
income was $512 million, mostly in household cleansers, food products,
toiletries, and disposable paper products. Laundry and cleaning products had
sales of $3.19 billion. For 1976, "domestic chemical sales" were estimated at
$245 million, $200 million of which was earned by the industrial Chemicals
Division in natural glycerin, fatty acids, fatty alcohols, surfactants (mostly
for captive use), and specialty textile chemicals. Sales of industrial
cleaning products, estimated at $45 million, are handled by the industrial and
Institutional Sales Departments of the Proctor & Gamble Distributing Co.
Colgate-Palmolive Co. had sales of $4.31 billion and net income of $176
million in 1978. Sales of household and personal care products totaled $2.95
billion. Colgate has increased sales and earnings for 18 consecutive years.
Lever Brothers is the only one of the three dominant firms with over half
its sales in the detergent market, it is a subsidiary of Unilever, N.V. of
Holland, its major liquid detergent, Wisk, is the industry leader for liauids.
The other 17 percent of the market is shared by S.C. Johnson, Clorox,
Sterling Drug, Amway, American Home Products, Bristol-Myers, Purex, and a
number of smaller companies.
yHamilton c. Carson, "Soaps and Detergents." Household and personal
Products industry, January 1979.
1/U.S. Department of commerce. Bureau of the Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
-------
E-167
Distribution and marketing are probably the most important factors in the
industry. Also, the large capital investment involved in the spray drying
technology appears to limit the number of national distributors. Proctor &
Gamble's strength in distribution and marketing and its access to substantial
capital appear to be the causes of its large share of the market.
The industrial and institutional cleaning products market has a high
degree of competitiveness and firms are mostly regional. Less than 30
companies operate on a national basis and only 14 have domestic sales of $25
million or more. These 14 companies share 50 percent of the market, chemical
Week estimates there are 3.000 firms in the industry.!/ Economics
Laboratories, the industry leader, has $400 million in yearly sales and has
increased its earnings for 26 consecutive years and its sales for 44
consecutive years.
Large producers with at least $10 million in sales include Airwick,
Beatrice Foods, Consolidated Foods, Huntington Laboratories, Merck, Occidental
Petroleum. Rochester Germicide. Stauffer Chemical, and U.S. Borax and
Chemical. Because of the large number of different surfaces to clean,
products tend to be specialized. According to Edward Minklein of Klix
Chemical Company ,j>/ the industry has three types of firms: One type
manufactures and processes the product and then sells it directly to end users
or intermediate formulators. Alcolac, Stauffer, BASF Wyandotte. and Diamond
Shamrock fall into this group. Another type only processes and sells the
product. Examples are Oakite. Zep, National Chemsearch, West Chemical, and
Economics Laboratory. Finally, some firms merely process the material and let
distributors market it. Klix Chemical Company falls into this last group.
Industrial and institutional cleaners are associated with much less
advertising and lower distributional and capital expenditures than other
products in the detergent industries. instead, they require a high degree of
service, which also acts to make these markets more regional in nature.
Different segments of the detergent industry are growing at different
rates. Home laundry products have become a mature industry and will only grow
with the population. Also, energy considerations are motivating consumers to
do larger loads to save energy and simultaneously use less laundry detergent.
Therefore, most forecasters are predicting a 2 to 2.5 percent growth rate.
Heavy-duty liquids seem to be growing faster than any other segment.
The use of automatic dishwashing detergents will continue to grow rapidly
as more consumers buy dishwashers, in 1977 only 38 percent^/ Of all
households had dishwashers ana their use is expected to grow at a rate of four
4/chemical Week, August 22, 1973.
5/Ibid.
i/"Detergent Sales Expected to Reach $6.1 Billion by 1985", Soaj
Cosmetics/Chemical Specialties, April 1977.
-------
E-168
percent annually.2/ Hand aishwashing liquid is losing its market to the
automatic dishwashing powders, and its sales are expected to grow 5.5 percent
annually in current dollars..§/ The household specialty products industries
rate for the use of automatic dishwashing powders are not yet mature and will
continue to grow rapidly.
The use of industrial and institutional cleaners has also been rapidly
growing, but is expected to slow to about 4 percent annually.^/ The use of
acid cleaners, car wash detergents, carpet cleaners, sanitizers, and
disinfectants will grow faster, and conventional floor care products use will
grow slower than it has in the past.
INNOVATION
The synthetic detergent industry is certainly innovative but it seems that
a large percentage of that innovation is geared toward new formulations and
better processes. Some work is being done on new surfactants and builders and
the ecology issues are unsettled.
After a cursory review, it appears that the detergent producers are
performing much of this research themselves and then licensing it to their
suppliers. This should be verified, however.
Some producers are experimenting with a plastic surfactant that would
replace conventional laundry detergent. Also, some new uses, one of which is
fatty acid production, are being introduced into the detergents industry.
I/John Whitehead, "Slow Growth Seen for U.S. Detergent Market", Chemical
Age, November 23, 1979.
8/"Detergent Sales." Soap/Cosmetics Chemical Specialties.
I/Mary K. Meegan, ed., Klin Guide to the chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977), p. 136.
-------
E-169
TABLE 2
ECONOMIC INDICATORS FOR SOAPS AND DETERGENTS
1975 1974 1973 1972 1971
Employees (thousands) 30.0
Payroll (millions 406.3
of dollars)
Production workers
(thousands) 19.3
Man hours (millions) 38.1
Wages (millions 241.2
of dollars)
Value added
(millions
of dollars)
Cost of materials
(millions
of dollars)
Value, industry
shipment
(millions
of dollars)
New investments
(millions
of dollars)
End of Year
Inventory
(millions
of dollars)
30.9 32.4 31.5 30.1
385.3 371.2 341.6 305.5
20.0 20.9 20.4 19.2
40.5 41.3 40.9 38.0
228.7 222.0 205.9 178.7
1970 1969 1968
30.9 30.8 29.6
283.5 269.8 246.7
19.9 20.5 19.8
39.8 40.5 38.8
171.6 161.5 150.6
2249.2 2267.4 2011.3 2038.8 1728.1 1647.6 1542.7 1485.9
2383.3 2216.3 1699.4 1373.7 1291.4 1375.3 1346.1 1286.7
4675.6 4383.9 3758.7 3394.4 3020.7 2987.3 2888.6 2763.0
107.2 103.5 77.0 90.7 96.2 84.7 48.6 46.0
536.0 592.1 379.7 381.7 326.4 317.8 274.7 266.7
Source: U.S. Department of Commerce. Bureau of Census, Annual Survey of
Manufacturers (Washington, D.C.: Government Printing Office,
various years).
-------
E-170
Elementary Organic Chemicals
-------
E-171
ELEMENTARY ORGANIC CHEMICALS SEGMENT SUMMARY
Petroleum Refinery Products
Cyclic Crudes
Gum and Wood Chemicals
Elementary Organic Chemicals are the simple alkanes, olefins and aromatics
which can be obtained directly from petroleum, coal, or wood. Although the
products can be varied to some extent by making minor adjustments in the
production processes, emphasis is always placed on production of the
relatively small number of basic compounds which serve as the building blocks
for the entire organic chemical industry.
Prior to World War II, the basic chemical building blocks were derived
primarily from coal tar, a by-product of coke manufacture. But with the
development of the vast Middle East oil fields after World War II, petroleum
displaced coal as the primary chemical feedstock. Although the basic chemical
building blocks could also be obtained from gum and wood chemicals, in
practice they are not. The major types of gum and wood chemicals are
turpentine, charcoal, rosin, and tall oil.
Product innovation in this segment appears to be virtually non-existent.
But, the huge petroleum price increases of the last ten years have brought
about renewed interest in coal-based chemical feedstocks, it seems that such
a switch would result in significant process innovation in the chemical
industry. However, in light of the intricate oil-based network which has
developed over the last thirty years, any conversion from petroleum to coal
will be slow. The energy crunch has also renewed interest in biomass-based
chemicals, but here again any expansion will be slow.
The production of petroleum refinery products, by far the dominant factor
in this segment, is relatively unconcentrated and has changed little over the
years, in both 1958 and 1972, the top four firms accounted for 13 percent of
the total value of shipments, petroleum products are produced by almost all
major chemical and petroleum companies.
-------
E-172
petroleum Refinery Products
-------
E-173
PETROLEUM REFINERY PRODUCTS
DESCRIPTION
SIC code 2911 comprises establishments primarily engaged in the production
of gasoline; kerosene; distillate fuel oil; residual fuel oils; lubricants and
other products (from crude petroleum); and fractionation products (through
straight distillation of crude oil, redistillation of unfinished petroleum
derivatives, cracking or other processes).!/
This category includes common products like kerosene, paraffin wax, and
petroleum jelly in addition to less familiar items like butane, butadiene,
petroleum, coke, and xylene. All of these products fall under the broad
classification of basic organic chemicals, which are distinct from
intermediate and end products, petroleum products are not further altered
chemically, but are either formulated with other materials or used by other
industries for fabricating products.
In general, petroleum products are commodities produced in relatively
large volumes and sold at low prices. in 1976 an estimated 289 billion pounds
of organic chemicals were produced, 74 percent of which could be classified as
basic and intermediate compounds.2/ of these, over 54 percent were basic
petrochemicals such as benzene, toluene, propylene, ethylene and xylene.I/
ENGINEERING PROCESS
The chemical composition of crude oil varies widely, especially with
respect to hydrocarbon compound content. When underground in its natural
state it is at a higher temperature and greater pressure than at the surface.
Changes in pressure and temperature that occur during the extraction process
release or break down some of the hydrocarbons contained in crude oil.
The hydrocarbons within crude oil can be divided into numerous categorical
series according to their chemical properties. The four series that comprise
most of the naturally occurring petroleum products are paraffin, isoparaffin,
naphthene, and aromatics. petroleum products are the result of assorted
chemical reactions and mixtures of hydrocarbons from all of these series.
i/Executive Office of the President, Office of Management and Budget,
Standard industrial Classification, 1972 (Washington, D.C.: Government
Printing Office, 1972).
2/Mary K. Megan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
.3/Forty-four percent were petrochemical intermediates and solvents, and
the remainder were gum and wood chemicals and fatty acids.
-------
E-174
Petroleum products are often derived through distillation and
fractionation processes of crude oil (see Table 1). Roughly 55 percent of the
raw materials for basic petrochemicals are byproducts or coproducts of
petroleum refining. The remainder is obtained from natural gas feedstocks.!/
USES
Petroleum products produced in refineries have wide-ranging uses and
applications. Kerosene that is distilled from petroleum, for example, is used
in rocket and jet fuels as well as in solvents and insecticidal sprays.
Paraffin wax is used in household products, and petroleum coke and alkylates
are important in chemical products processes (see Tables 1 and 2).
Petroleum products generally form a family of basic building blocks used
in the manufacture of other organic products. At one time, benzene, toluene,
and xylene were mainly byproducts of coke production for steel, but now these
building blocks are obtained primarily from petroleum sources.
INDUSTRY STRUCTURE
Petroleum products are produced by almost all major chemical and petroleum
companies. The latter group, with its captive feedstocks for chemical
conversion, tends to concentrate only on basic organics that it supplies to
producers of end-use chemicals. in contrast, chemical companies produce
organics for captive consumption in their own chemical end product operations.
Overall concentration in petroleum refinery products has changed very
little since 1958 (see Table 3). in both 1958 and 1972 the four largest
companies accounted for 13 percent of the total value of shipments. At a more
specific product level, such as gasoline or jet fuel, shares of the market
appear to be fairly stable. The two exceptions to this are residual fuel oil
(where the four largest companies accounted for 34 percent of shipments in
1954 and 41 percent in 1972) and unfinished oils (where the four largest
companies had 39 percent of shipments in 1954 and 55 percent in 1972). If any
trend exists, it is toward greater concentration.
Concentration on a product-by-product basis varies considerably. The top
four producers of miscellaneous petroleum products, including waxes, held 28
percent of the market while the top four producers of jet fuel captured 52
percent of their market in 1972.
Industry structure has changed markedly since World War II. The industry
once depended almost entirely on steel mills and coke ovens as sources for raw
materials, but it now relies heavily on petroleum feedstocks.^/
i/Meegan, Kline Guide.
5/Ibid.
-------
TABLE 1
Product
Alkylate
Asphalt
Engineering Process
DERIVATION AND USES OF SELECTED PETROLEUM PRODUCTS
Uses
Benzene
1,3 - butadiene
Coke, petroleum
Kerosene
Lubricating
grease
Naphtha
Naphthenic acid
Paraffin wax
Petrolatum
(mineral was,
petroleum jelly,
mineral jelly)
Derived from reaction between an isoparaffin and an olefin
Mixture of paraffinic and aromatic hydrocarbons and heterocyclic
compounds containing sulfur nitrogen and oxygen; occurs in nature
or obtained as residue in petroleum refining.
a) Hydrodealkylation of toluene or of pyrolysis gasoline
b) Transalkylation of toluene by disproportionation reaction
c) Catalytic reforming of petroleum
d) Fractional distillation of coal tar
a) Catalytic dehydrogenation of butenes or butane
b) Oxidative dehydrogenation of butenes
Destructive distillation (carbonization) of petroleum. Petroleum
yields coke during cracking process, the formation acting as
a catalyst poison
Distilled from petroleum
Mixture of mineral oil or oils with one or more soaps.
Generic term applied to refined, partly refined, or unrefined
petroleum products subject to distillation.
Gas-oil fraction of petroleum by extraction with caustic soda
solution and subsequent acidification
Occurs naturally in crude oil; obtained from high boiling point
fractions.
Fractional distillation of still residues from the steam
distillation of paraffin-base petroleum; or from steam-
reduced crude oils from which the light fractions have been
removed.
As a high-octane blending component of aviation and civilian
gasolines.
Paving, road-coating, roofing, sealing, special paints; adhesive
in electrical laminates and hot-melt compositions; diluent in
low-grade rubber products; fluid loss control in hydraulic
fracturing of oil wells; medium for radioactive waste disposal;
pipeline and underground cable coating: rust-proofing; base for
synthetic turf; water-retaining barrier for sandy soils; supporter of
rapid bacterial growth in converting petroleum components to protein.
Styrene; synthetic detergents; cyclohexane for nylon; aniline; DDT;
maleic anhydride; dichlorobenzene; benzene hexachloride; nitrobenzene;
diphenyl; insecticides; fumigants; solvent; paint removers; rubber
cement; anti-knock gasoline.
Principally in styrene-butadien rubber; as starting material for
adiponitrile (nylon 66); in latex paints; resins; organic
intermediate.
Refractory furnace lining in electrorefining of aluminum and other
high-temperature service; electrodes in electrolytic reduction of
alumina to aluminum; electrothermal production of phosphorous;
silicon carbide, and calcium carbide.
Rocket and jet engine fuels; domestic heating; solvent; insecticidal
sprays, diesel and tractor fuels.
Source of gasoline by various cracking processes; special naphthas,
petroleum chemicals, especially ethylene.
Production of metallic naphthnates for paint driers and cellulose
preservatives; solvents; detergents; rubber reclaiming agent.
Candles, paper coating; protective sealant for food products,
beverages etc.; glass cleaning preparations; hot-melt carpet backing,
biodegradable mulch; impregnating matches; lubricants; crayons;
surgery; stoppers for acid bottles; electrical insulation; floor
polishes; cosmetics; photography; anti-frothing agent in sugar
refining; packing tobacco products, protecting rubber products from
sun-cracking.
Protective dressing and substitute for fats in ointments; lubricating
greases; metal polishes; leather grease; rust preventive; perfume
extractor; insect repellents; in foods as defoaming agent, lubricant,
release agent, protective coating; softener in white or colored
rubber compounds.
H
Source- Gessner G. Howley, ed..The Condensed Chemical Dictionary (8th ed.. New York: Van Nostrand Reinhold Company, 1971),
-------
E-176
TABLE 2
USES OF OTHER PETROLEUM PRODUCTS
percent
Butadiene
Synthetic elastomers 53.0
Polybutadiene 18 0
Nitrile rubber and neoprene 10.0
Adiponitrile and other 19.0
Ethylene
Polyethelene 40.0
Ethylene oxide 20 0
Ethylene dichloride 14.0
Ethylbenzene 10.0
Other 16.0
N-paraffins
Linear Alkylate (major raw material for surfactants) 70.0
Linear primary and secondary alcohols 24.0
Other 6.0
Propylene
Isopropanol 14.0
Polypropylene 23 0
Acrylonitrile 13.0
Propylene oxide 10.0
Cumene-phenol 24.0
Other
Toluene
Gasoline (octane improver) 90.0
Benzene 6.5
Toluene diisocyanate, Benzyl chloride, and other 3.5
Source: Mary K. Meegan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
-------
TABLE 3
CONCENTRATION IN PETROLEUM REFINERY PRODUCTS
Total
Value of Shipments
Product
Class
2911
29111
29112
29113
29114
29115
29116
29117
Class of Product
Petroleum refinery products
Gasoline
Jet Fuel
Kerosene
Distillate fuel oil
Residual fuel oil
Liquefied refinery gases (feed stock and other uses)
Lubricating oils and greases, made in refineries
(See also code 29920.)
Year
1972
1967
1963
1958
1972
1967
1972
1967
1972
1967
1972
1967
1963
1958
1954
1972
1967
1963
1958
1954
1972
1967
1972
1967
(million
dollars)
$24,772.8
19,248.5
15,557.7
13,889.4
13,029.6
9,844.2
1,371.6
1,100.4
372.4
430.5
4,407.7
3,305.7
2,896.3
2,490.9
2,064.3
1,107.2
566.1
621.8
817.2
787.8
1,152.9
1,135.7
894.8
883.6
Percent Accounted for by-
4 largest
companies
31
32
32
31
31
33
52
45
43
34
33
34
36
35
36
41
38
35
32
34
38
39
39
43
8 largest
companies
56
57
55
54
55
58
74
63
64
54
58
58
59
59
59
60
61
55
56
57
57
59
64
65
20 largest
companies
84
84
81
81
86
87
92
86
93
89
87
85
83
83
85
83
83
82
83
84
89
86
98
96
50 largest
companies
96
96
95
93
98
98
99
98
99+
99+
98
98
96
96
(N/A)
96
96
96
94
(N/A>
09+
99+
100
99+
-------
TABLE 3 (continued)
CONCENTRATION IN PETROLEUM REFINERY PRODUCTS
Value of Shipments
Year
se stock 1972
1967
1963
1958
1954
1972
1967
1963
1958
1954
luding waxes 1972
1967
Total
(million
dollars)
733.7
613.2
526.2
440.9
294.9
671.5
424.2
360.5
284.6
221.7
1,031.4
994.9
Percent Accounted for by-
4 largest
companies
55
56
51
46
39
43
41
43
39
45
28
36
8 largest
companies
79
76
78
74
69
62
58
58
56
63
48
52
20 largest
companies
98
96
94
94
93
84
82
81
77
83
79
77
50 largest
companies
100
99+
99+
99
(N/A)
98
98
98
96
(N/A)
06
9R
Product
Class Class of Product
29118 Unfinished oils and lubricating oil base stock
29119 Asphalt
29110 Other finished petroleum products, including waxes
1967 994.9 36 52 77 9R
H
Source: 13.S. Department of Commerce, Bureau of Census, 1972 Census of Manufactures (Washington, D.C.: Government Printing Off ice, 1175). H>
00
-------
E-179
According to the 1977 Census of Manufactures, the total number of
establishments in SIC 2911 dropped by 18 percent from 1963 to 1977.
TABLE 4
NUMBER OF ESTABLISHMENTS
Year Number of Establishments
1977 349
1972 323
1967 437
1963 427
Source: U.S. Department of Commerce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office,
1979) .
SHIPMENTS
The value of shipments of petroleum refining products increased dramati-
cally from 1963 to 1977. Much of the increase came after 1973; the value of
shipments percentage increase was 93 percent from 1963 to 1973, and it was
roughly twice that, or 188 percent from 1973 to 1977 (See Table 5).
Data on the value of shipments over time for individual SIC 2911 products
are not available. Additionally, data on production quantities for all petro-
leum refining products are somewhat incomplete (census data omit a number of
products, and time trend information is often unavailable—see Appendix A).
It appears, however, that the large increases in value of shipments are price
rather than quantity related. AS the price of petroleum has risen sharply
from 1974 on, so has the price of petroleum refining byproducts and co-
products.
Of the 20 Sic 2911 products with production in quantities reported by the
census, eight (kerosene, heavy fuel oil, unfinished oils, naphtha and other
oils, lubricating oil petroleum base stocks, petrolatum, special naphthas, and
aromatics) showed production quantity increases (see Appendix A). These
increases ranged from a high of 70 percent for aromatics (included in this
category are benzene, toluene, xylenes, etc.) to a low of six percent for
lubricating oil petroleum base stocks.
As the production increases are rather small in terms of quantity, it
seems that price increases are the main factor in the growth of shipment
values. As Table 6 shows, prices of refined petroleum products exhibited
marked increases since 1974.
Value-added figures, obtained from the 1977 Census of Manufactures, appear
in Table 7. The value-added between 1968 and 1977 almost tripled.
-------
E-180
TABLE 5
PETROLEUM PRODUCTS: VALUES OF SHIPMENTS!/
(millions of dollars)
Year Amount
1963 16,498
1964 16,802
1965 17,501
1966 18,759
1967 20,294
1968 21,361
1969 22,486
1970 22,783
1971 24,584
1972 25,921
1973 31,846
1974 54,834
1975 65,254
1976 77,507
1977 91,833
Source: U.S. Department of Commerce, Bureau of
the Census, 1977 Census of Manufactures
(Washington, D.C.: Government Printing
Office, 1979)
a/Values reflect all shipments made by establishments in SIC 2911.
Values in Table 3 reflect shipments of goods in product category 2911.
-------
Refined Petroleum Products
Gasoline
Light Distillate
Middle Distillate
Residual Fuels
Lubricating Oil Materials
Finished Lubricants
Petroleum Wax
TABLE 6
PRICE INDEX
REFINED PETROLEUM PRODUCTS
1979
325.7
314.7
407.0
425.5
517.9
382.5
216.0
295.4
1978
314.1
279.0
383.0
396.6
513.0
333.4
197.5
249.4
1977
289.2
261.1
325.6
359.0
492.3
274.3
180.4
206.9
1976
273.1
247.7
310.5
336.7
451.8
267.4
180.7
183.2
1975
242.3
204.9
253.7
299.1
604.4
276.6
179.8
172.0
1974
271.4
257.4
328.3
317.9
450.8
171.6
131.1
N/A
1973
112.3
107.7
112.1
113.9
161.8
102.0
120.0
N/A
1972
106.1
101.1
105.4
109.7
154.3
100.7
111.7
N/A
1971
107.9
102.9
106.2
111.6
165.3
100.0
109.8
N/A
1970
101.0
96.1
110.8
107.3
83.4
114.3
115.6
87.8
1968
98.8
93.6
112.9
105.6
82.2
114.3
109.8 f
87.8 £
tilble from the Department of Commerce.
lerce.
Wholesale Price
Index and
Producer Price
Index,
various years.
-------
E-182
TABLE 7
VALUE-ADDED PETROLEUM PRODUCTS
(millions of dollars)
1977 $14,274
1976 H'410
1975 8,927
1974 8,364
1973 6,519
1972 4,595
1971 4,614
1970 4,608
1969 4,950
1968 4,839
Source: U.S. Department of commerce, Bureau of the census,
1977 Census of Manufactures (Washington, D.C.:
Government Printing Office, 1979).
FOREIGN TRADE
In recent years the petroleum refinery products industry has been charac-
terized by a trade deficit, in 1974 the deficit hit a high of $8.7 billion as
imports climbed 171 percent and exports grew at a slower rate of 53 percent
from the year before. Despite a 28 percent decline in imports and a modest
seven percent increase in exports, the trade deficit in 1975 loomed at $6
billion, in 1976 the deficit was down slightly to $5.9 billion. in 1977 the
trend reversed itself as imports grew by 27 ercent and exports by only nine
percent, leaving a trade deficit of $7.7 billion (refer to Table 8 for trade
values).
Tables 10 and 11 provide a closer look at the composition of petroleum
refinery product exports and imports.
INNOVATION
In reference to Table 9 Production Quantities, there are no products
listed in 1977 that were not available in 1972. (Although production figures
for some categories such as liquefied refinery gases were not available, this
does not mean the products were not in existence.)
-------
E-183
TABLE 8
PETROLEUM REFINERY PRODUCTS^/: FOREIGN TRADE
(thousands of dollars)
1977
1976
1975
1974
1973
1965
Value of
Exports
1,120,476
1,029,338
932,894
874,472
569,799
454,891
Value of
imports
8,823,584
6,916,853
6,977,707
9,628,151
3,554,698
955,652
Balance of Trade
(7,703,108)
(5,887,515)
(6,044,813)
(8,753,679)
(2,984,899)
( 500,761)
2911
Sources: U.S. Department of Commerce, U.S. Exports, FT 610, and U.S. imports,
FT 210.
-------
E-184
TABLE 9
PETROLEUM PRODUCTS: PRODUCTION QUANTITIES
(millions of barrels)
Product
Gasoline, inc. finished
base stocks and blending
agentsa/
jet fuel
Kerosene
Light fuel oil
No. 4 Type fuel oil
Heavy fuel oil
Liquefied Refinery Gases:
Ethane and/or Ethylene
Propane and/or Proplylene
Butane and/or Butylene
Other liquefied refinery gases
SIC code
29111
29112
29113 13
29114
29114 14
29115
ises
1977
Quantity
N/A
N/A
87
N/A
23
548
68
120
47
28
1972
Quantity
2,397
311
81
1,033
1,033
337
N/A
N/A
N/A
N/A
Unfinished Oils,
Naphthenic and
Paraffin^/
Naphtha and other oils for
use as petrochemical
feedstocks, except for
carbon black
Lubricating oil petroleum
base stocks for blending,
compounding, and grease
manufacture^/
Petroleum
Road oild/
Special Naphthase/
Aromatics (benzene,
Toluene, xylenes, etc.]
29118 13
29116 16
29118, 51, 52
54, 56, 58
29110 11
29110 31
29110 51
29110 54, 56
92
57
34
3
3
29
122
67
41
32
2
9
18
71
-------
E-185
TABLE 9 (continued)
PETROLEUM PRODUCTS: PRODUCTION QUANTITIES
(millions of barrels)
1977 1972
Product SIC code Quantity Quantity
Lubricating and similar
oilf/ made in petroleum
refineries 29117 21 46 50
Lubricating greases made
in petroleum refineries 29117 31 1 2
Source: U.S. Department of commerce, Bureau of the Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
a/Includes all finished gasoline, finished base stocks, and blending agents
such as alkylate, polymers (dimer, codimer, etc.), hydropolymers (hydrodimer,
hydrocodimer, etc.), cumene, isopetane, neohexane, iso-octane, motor benzol
(benzene), and other blending agents derived from petroleum. Excludes natural
gasoline derived from natural gas.
^/Includes such products as cracking stock, unfinished gasoline requiring
further distillation, naphtha stocks, slops, wax distillate, and other
finished petroleum oils. Excludes lubricating oil base stocks, natural
gasoline, and cycle condensates.
£/Includes light, medium, heavy neutral, and residual stocks.
^/Represents residual asphaltic oil used for surface treatment of road and
highways.
e/Includes petroleum ether, rubber solvent, mineral spirits (petroleum
spirits), varnish makers' and painters' naphtha, high-solvency naphtha, benzol
diluent, lacquer diluent, cleaners' naphtha, stoddard solvent, extraction
solvents, and other petroleum distillates shipped as solvents.
f/Includes oils for lubrication purposes and such non-lubrication purposes
as transformer oil, hydraulic oil, processing oil, quenching oil, and liquid
rust preventative.
-------
TABLE 10
PETROLEUM REFINERY PRODUCTS: VALUE OF EXPORTS
(thousands of dollars)
Description
Aviation Gasoline
Gasoline, NEC, and Gasoline Blending
agent, NEC
Jet Fuel
Kerosene—except Jet Fuel
Distillate Fuel Oils
Residual Fuel Oils
Butane
Propane
Butadiene Monomer
Butylene
Ethylene
Propylene
Natural Gas Liquids, including
LPG, NEC
Lubricating Oils and Nonlubricating,
Nonfuel oils
Lubricating Greases
Petroleum—Partly refined
Petroleum—Asphalt
Product Class
2911 10 10
2911 10 30
2911 20 00
2911 30 00
2911 40 00
2911 50 00
2911 6E 25
2911 6E 45
2911 6E 50
2911 6E 61
2911 6E 62
2911 6E 63
2911 6E 97
2911 70 20
2911 70 40
2911 80 00
2911 90 00
1977
961
4,080
1,915
448
420
23,448
1,345
17,596
13,638
1,581
9,689
1,059
52,638
490,226
29,845
—
6,550
1976
864
4,727
3,404
504
1,333
32,301
2,676
23,766
13,630
1,106
5,745
2,294
72,449
436,170
26,825
~
7,271
1975
901
2,202
3,459
437
1,156
43,179
5,516
22,291
11,423
1,997
362
2,607
72,234
426,671
26,063
8,277
6,222
1974
752
11,350
7,637
525
5,518
41,232
1,328
23,388
12,783
—
—
—
69,748
414,405
24,043
—
5,328
1973
1,573
19,164
4,087
810
25,679
23,579
3,855
23,345
6,132
—
—
—
29,991
238,970
15,981
572
2,981
1965
6,260
18,111
621
1,275
15,493
33,509
N/A
N/A
N/A
N/A
N/A
N/A
27,231
218,565
15,650
2,082
2,827
M
I
03
cr*
-------
TABLE 10 (continued)
Description
Petroleum Jelly—All Grades
Petroleum Coke, except calcinated
Microcrystalline Wax
Paraffin Wax—Crystalline, Fully
Refined
Paraffin Wax-Crystalline, except
Fully Refined
Benzene
Toluene
Xylene, except Ortho- and
Para-xylene
TOTAL:
PETROLEUM REFINERY PRODUCTS: VALUE OF EXPORTS
(thousands of dollars)
Product
2911 XO
2911 XO
2911 XO
2911 XO
2911 XO
2911 XO
2911 XO
2911 XO
Class
10
25
80
33
37
43
47
49
1977
10
172
14
15
7
23
79
44
,919
,858
,419
,263
,442
,694
,950
,517
1976
9,306
158,841
14,749
9,886
6,362
25,879
76,293
53,776
1975
6
150
9
12
5
10
46
33
,907
,416
,239
,689
,574
,192
,955
,730
1974
8
78
16
10
7
25
44
34
,925
,943
,026
,520
,918
,334
,010
,463
1973
6
63
11
7
5
12
28
17
,114
,205
,341
,180
,655
,089
,842
,403
1965
5,589
42,027l/
8,726
21,347l/
N/A
10,670
7,230
—
CO
-J
2911
1,120,476
1,029,338
932,894
874,472
569,799
454,891
I/Includes calcinated petroleum coke.
UIncludes all crystalline paraffin wax.
NEC - not elsewhere classified.
Source: U. S. Department of Commerce, U. S. Exports, FT 610.
-------
TABLE 11
PETROLEUM REFINERY PRODUCTS: VALUE OF IMPORTS
(thousands of dollars)
Description
Gasoline
Jet Fuel, Naphtha-Type
Jet Fuel, Kerosene-Type
Kerosene Derived from Petroleum,
Shale oil, or both (except
motor fuel)
Fuel Oil and Top Crudes Not
Further Refined, Saybolt Universal
Viscosity under 145 seconds
Fuel Oil and Top Crudes Not Further
Refined, Saybolt Universal
Viscosity under 145 seconds
Propane
Butadiene
Butylene, Ethylene, and Propylene
Ethane, Propane, & Liquefied
Petroleum Gases, NES; Derivatives
of Petroleum or Natural Gas, NES
Lubricating Oils Derived from
Petroleum, Shale, or both
Lubricating Greases Derived from
Petroleum, Shale, or both
Asphalturn, Bitumen, and
Limestone-Rock Asphalt
Product Class
2911 10 00
2911 20 20
2911 20 40
2911 30 00
2911 40 01
2911 50 01
2911 6E 45
2911 6E 50
2911 6E 60
2911 6E 95
2911 70 20
2911 70 40
2911 90 00
1977
371,814
40,515
308,672
13,324
741,837
5,187,536
N/A
115,930,256
21,515
738,716
32,336
592
61,478
1976
133,124
337,674l/
N/A
2
306,423
4,363,541
218,859
82,398
12,368
222,477l/
4,987
515
46,220
1975 1974 1973
313,591 574,687 140,991
483,098 676,870 297,816
N/A N/A N/A
511 20,418 6,946
497,792 1,003,366 715,814
3,966,199 5,062,764 1,687,143
191,566 157,071 79,838
67,163 99,603 26,541
19,282 31,483 7,257
181,203 218,288 79,581
3,778 6,652 1,101
381 484 426
52,274 64,144 20,868
1965
27,689
90,480
N/A
3,990
13,904
698,072
N/A
N/A
2,1922
8,462
1,009
110
14,710
00
00
-------
TABLE 11 (continued)
Description
Paraffin and Other Petroleum Maxes
Benzene
Toluene
Xylene
Naphthenic Acids
Naphthas, Derived from Petroleum,
Shale Oil, etc., except Motor
Fuel, Not to be further refined
Hydrocarbons, NES, and
Hydrocarbon Mixtures, NES
Naphthas, Fuel Oil, and other
Liquid Derivatives of Petroleum
to be further refined.
TOTAL:
PETROLEUM REFINERY PRODUCTS: VALUE OF IMPORTS
(thousands of dollars)
Product Class
1977
1976
1975
1974
1973
1965
2911 XD 35
2911 XD 43
2911 XD 47
2911 XD 60
2911 XD 65
2911 XD 75
2911 XD 95
2911 80 00
8,519
44,063
33,250
22,736
1,704
952,543
81,494
N/A
8,823,584
5,318
38,335
20,050
25,429
812
47,625
146,900
903,793
6,916,853
6,128
50,900
9,824
31,145
682
50,613
135,354
916,220
6,978
11,356
111,699
30,264
50,618
615
199,076
98,938
1,209,752
9,628,151
8,899
14,695
20,529
20,742
733
46,583
27,979
350,216
3,554,698
265
6,370
1,962
3,782
803
11,530
N/A
70,321
955,652
CO
i/Prior to 1977, jet fuel figures were not separated by type.
2/Includes sales of butadiene.
A/Figures prior to 1976 exclude ethane and propane.
NES - not elsewhere specified.
Source: U.S. Department of Commerce, U.S. Imports, FT 210.
-------
E-190
Cyclic Crudes
-------
E-191
CYCLIC CRUDES
DESCRIPTION
Cyclic crudes are organic chemicals which are isolated from coal tar by
distillation. The raw material originates almost exclusively in the steel
industry as a byproduct of coke manufacture. Although the components of coal
tar vary greatly, depending upon the temperature, timing, and design of the
coke oven, the most important cyclic crudes are fundamental aromatic compounds
such as benzene, toluene, and the xylenes. They are used primarily as
building blocks for more complex cyclic intermediates and end products.
However, many crudes have end uses by themselves as solvents, fuels, wood and
leather treatments, biocides, anti-oxidants, and roofing materials.
Essentially all cyclic crudes, except the multi-component residual Tac-
tions (creosote oil and tar pitch) have identical counterparts that are
produced in petroleum refineries (Sic Code 2911). indeed, coal tars currently
account for only a small fraction of aromatic production (Table 1). However,
coal served as the basts of the synthetic organic chemical industry until the
discovery of the vast Middle East oil fields after World War II. Because of
its low cost, availability, and ease of transport, petroleum quickly replaced
coal tar as the primary chemical feedstock, and in the 1950s it facilitated
rapid expansion of the chemical industry.
As Mideast tensions and the depletion of world oil reserves erode the
price and quantity advantages of petroleum, an eventual return to coal-based
feedstocks (including synfuels and synthesis gas) is expected.1 However, in
light of the intricate oil-based network which has developed over the last 30
years, the conversion will be very slow. The International Trade Commission
notes that, "in some cases, (chemical) facilities are so sensitive that even a
change in sources of petroleum feedstocks can cause an increase in operating
cost. Obviously then, essentially entirely new facilities would be needed to
process entirely new feedstocks."2/ it has been estimated that, in the
absence of an appropriate industrial infrastructure, a coal-chemical plant
would cost 60 to 100 percent more than a corresponding plant based on oil and
natural gas. consequently, petroleum and gas will remain the preferred
feedstocks for at least the next decade.
I/The slow shift from oil to coal is already beginning. On January 9,
1980 Eastman Kodak announced plans to construct a plant that reduces acetic
anhydride from coal. The importance of this development is noted in the
February 1, 1980 issue of Science.
2/U.S. international Trade Commission, Synthetic Organic Chemicals, 1977
(Washington, D.C.: Government Printing Office, 1979).
-------
E-192
TABLE 1
COMPETITION BETWEEN PETROLEUM AND COAL TAR
IN THE PRODUCTION OF ELEMENTARY AROMATICS
BENZENE
Year
Percent of
Total Volume
That Was
Produced from
Coal-Tar
Price Per Gallon
of coal-Derived
Product
1950
1955
1960
1965
1970
1975
1977
94.6
68.1
32.4
14.6
8.2
9.3
4.5
$.27
.35
.32
.23
.21
.75
.82
Price per Gallon
of Oil-Derived
Product
$.36
.43
.31
.24
.22
.70
.76
Coal/Oil
Derived
Price Ratio
.75
.81
1 03
.96
.95
1.07
1^08
XYLENES
Year
1950
1955
1960
1965
1970
1975
1977
Percent of
Total Volume
That Was
Produced from
Coal-Tar
13.1
10.9
2.8
1.8
0.8
0 3
0.2
Price Per Gallon
of Coal-Derived
Product
$.27
.33
.26
.22
.20
.55
.63
Price per Gallon
of Oil-Derived
Product
$.23
.26
.21
.18
.17
45
.51
Coal/Oil
Derived
Price Ratio
1.5
1.2
1.2
1.2
1.1
1.2
1.2
Source; computed from figures in U.S. international Trade Commission,
Synthetic Organic Chemicals (Washington, D.C.: Government
Printing Office, various years).
-------
E-193
INNOVATION
It is believe that the switch from petroleum to coal-based feedstocks will
result in significant process innovation as old processes are restudied and
entirely new ones are developed. However, all of the new research will be
directed toward producing the same building blocks which have always been the
staple of the chemical industry—the elementary alkanes, olefins, and
aromatics. As a result, conversion will not by itself lead to the
introduction of new chemicals.3/
QUANTITY AND VALUE OF TRADE
Since virtually all coal tar is obtained as a byproduct of metallurgical
coke ovens, the supply of cyclic crudes might be expected to follow the
generally increasing demand for steel. However, this effect has been
countered by the decrease in coke consumption per ton of steel which has
resulted from the use of alternate fuels in blast furnaces, consequently,
production of tar and tar crudes has declined steadily since 1950 (Table 2).
A general price index for these products is not currently available,
partially because the information is often obscured by petrochemical data.
However, Table 1 indicates that the prices of individual cyclic crudes have
moved in tandem with those of their petroleum-derived counterparts since
1960. This relation has been maintained even through the rapid increases in
oil prices during the 1970s. Since coal prices did not keep pace with oil
prices in this period,A/ prices of coal tar crudes are evidently not based
on cost, but are determined by the petrochemical-dominated markets.
Since the 1973 oil embargo, the value of cyclic crude shipments has jumped
dramatically, reflecting the increased prices (Table 3). For the 20 years
before 1973, though, the value of shipments fluctuated near $90 million—even
in the face of a steady decline in both quantities and production. This
apparent contradiction can be explained at least in part by the influence of
residual fractions, such as tar pitch, whose prices are not kept down by
direct competition from petroleum products (Fig. 4).17 The unusual behavior
might also result from an increasing proportion of interplant transfers before
1973. Unfortunately, this hypothesis cannot be tested with publicly
accessible information.
J/Of course, the conversion will be accompanied by the development of
new catalytic preparations. These products, however, are discussed in a
separate profile.
.1/ICF inc., Discussion of Relationship of coal and Oil Prices, Final
Report to U.S. Department of Energy, February 1980.
I/The increase in the prices of creosote oil and tar pitch since 1973 is
probably due to the rising prices of both coal and petroleum-derived goods
which are competitive with, but not identical to, the cyclic crudes.
-------
E-194
TABLE 2
QUANTITIES OF PRODUCTION, SALES, AND CONSUMPTION OF COAL TAR
(millions of gallons)
Year
Production Sales Distillation Fuel
1950 988 565 622 205
1955 914 — 679 142
1960 709 — 616 85
1965 802 — 616 122
1970 760 371 657 108
1975 645 285 450 162
1977 592 292
Source: U.S. international Trade coiranission, Synthetic Organic Chemicals
(Washington, D.C.: Government Printing Office, various years).
TABLE 3
VALUE OF SHIPMENTS
(million of dollars)
Year Value
1954 87.4
1958 105.3
1963 79.3
1967 87.6
1972 80.9
1977 250.9
Source: U.S. Department of Commerce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979
various years).
TABLE 4
PRICES OF TAR CRUDES WITH ONLY INDIRECT
COMPETITION FROM PETROLEUM PRODUCTS
Year Creosote Oil Tar Pitch (Hard)
1950 $.!6/gallon $25.17/ton
1955 .20 33.30
1960 .22 39.07
1965 .21 38.11
1970 16 38.19
1975 .50 104.11
1977 .58 131.07
Source: U.S. International Trade commission, Synthetic Organic Chemicals
(Washington, D.C.: Government Printing Office, various years).
-------
E-195
There are no statistics available to translate these shipment figures into
value added. However, for establishments concentrating in tar crudes during
1972, value added amounted to $26.7 million, compared to $69.3 million in
value of shipments.j>/
INDUSTRY STRUCTURE
The structure of the cyclic crudes industry has changed little since the
1950s. Only 12 firms have sales in excess of $100,000,7/ and of these, the
top four control 92 percent of the "market".8/ while these figures suggest
a high degree of concentration, the most important competition comes from the
petrochemical industry. As previously mentioned, coal tar distillers are
essentially price-takers, as are firms" in a competitive market.
FOREIGN TRADE
Because trade statistics for chemicals are not collected by source, import
and export data for cyclic crudes are almost invariably obscured by informa-
tion on petrochemicals. When all data are considered, they show that most
elementary aromatics have had more than a nominal trade surplus since
1973.j*/ However, imports of benzene exceed imports due to inexpensive
overseas sources, and the favorable trade balance is increasingly threatened
by the prospect of a large-scale manufacture of aromatics in the Middle East.
Prevention of further deterioration of the U.S. position, along with expansion
of its trade surplus, may be brought about by technological advancements in
obtaining chemicals from coal.
EMPLOYMENT
Complete employment figures are not available for the cyclic crude
industry. However. 800 people were employed in the 21 establishments which
concentrated in tar crudes in 1972.10/
i/U.S. Department of Commerce, Bureau of the Census, 1972 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1975).
JZ/U.S. Department of Commerce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
JL/U.S. Department of Commerce, Bureau of Census, 1972 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1975).
2/U.S. international Trade Commission, Synthetic Organic Chemicals, 1976
(Washington, D.C.: Government Printing Office, 1976).
10/U.S. international Trade Commission, industrial Organic Chemicals
(Washington, D.C.: Government Printing Office, 1973).
-------
E-196
Gum and Wood Chemicals
-------
E-197
GUM AND WOOD CHEMICALS
DESCRIPTION
Gum and wood chemicals are made by either the carbonization of wood or the
distillation of resin. They are often referred as to "naval stores", since
for thousands of years they have been used for caulking on ships. They can be
obtained from living and dead trees, but their major source is from the
byproducts of kraft paper production (the production of wood pulp using a
sodium sulfate solution).
USES
The major types of gum and wood chemicals are the following:
1) Rosin: Used in chemical intermediates and rubber (39 percent)
paper sizing (32 percent), ester gums and synthetic resins (22
percent), surface coatings (2 percent), and other uses (5
percent);
2) Tall oil: obtained from kraft paper production, tall oil is a
source of pitch (37 percent), rosin (25 percent), and fatty
acids (22 percent);
3) charcoal: used mostly for outdoor barbecuing; and
4) Turpentine: used as a paint thinner, and as a source of pine
oil, insecticides, flavors and fragrances, and other products.
RAW MATERIALS
Gum and wood chemicals are obtained from living trees and from dead trees,
stumps, and old logs. Gums are made by wounding living trees and obtaining
the resin, and steam-distilled wood chemicals are made from dead trees,
stumps, and old logs. Producers of these substances are currently facing
shortages of both the raw materials and the unskilled labor needed for
production. Therefore, wood chemicals are increasingly being obtained as
byproducts of kraft paper manufacture. But kraft paper itself is becoming a
less plentiful source of wood chemicals due to changes in paper-making
technology and also due to an increase in the proportion of hardwood used in
paper mills. These changes act to reduce the amounts of turpentine and tall
oil being produced.
PUBLIC DATA
As can be seen in Table 1, the gum and wood chemicals industry is either
stagnant or declining. The value of shipments, value added by manufacturers,
and fixed assets have not increased in real terms for the last two decades,
and the number of employees and establishments have both decreased. This
-------
E-198
TABLE 1
GUM AND WOOD CHEMICALS: INDUSTRY DATA
Year
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
1963
1962
1961
Number of
Establish-
ments
121
139
184
246
Employees
(thousands)
5.0
4.7
4.6.
5 1
5.5
5.9
5.2
5.3
5 8
5.7
5.9
5 0
5 8
6.4
6.8
6.2
6 7
Value Added
Manufacture
(million $)
202.2
147.2
130.2
199.5
181.1
155 4
139 8
116.3
102.3
117.2
100.8
99.2
92.6
102.3
100.3
100.5
99.1
Value of
Shipments
(million $)
Gross value
of Fixed Assets
(million $)
440.3
364.8
314.2
403.3
355.4
332.3
279.4
261.7
228.5
233.3
215.9
208.7
206.2
222.0
212.9
199.6
201.0
227.1
184.6
162.1
148.8
210.6
203.1
167.9
165.3
152.8
147.8
139.2
118.1
115.2
111.2
Source: U.S. Department of Commerce, Bureau of the Census, Census of
Manufactures and Annual Survey of Manufactures (Washington,
D.C.: Government Printing Office, various years).
-------
E-199
TABLE 2
PRICE INDICES OF SELECTED GUM AND WOOD CHEMICALS
(1967 = 100)
Year Rosina Turpentines Tall
1976 239.9 247.4 186.2
1975 242.8 276.1 216.7
1974 346.7 242 0 297.4
197.3 219.3 140.3 166.0
1972 182.3 182.2 131.8
1971 163.4 209.1 138.0
1970 145.1 209.1 121.4
1969 113.9 198.3 111.5
1968 100.9 134.1 125.3
1967 100.0 100.0 100.0
a Based on crop yearf running from April 1 to March 31.
b Based on calendar year.
Sources: Data on rosin and turpentine: Mary K. Meegan, ed., Kline
Guide to the chemical industry (3rd ed., Fairfield, NJ:
Charles Kline & Co., 1977), p. 69.
Data on tall oil: U.S. Department of Commerce, U.S.
Exports; Commodity by Country, FT 410 (Washington, D.C.:
Government Printing Office, various years).
-------
E-200
stagnation is partly due to problems of supply, as discussed above. That the
stagnation is due primarily to supply problems is reflected in the prices of
gum and wood chemicals (see Table 2). Such prices rose steadily even before
the inflation of the 1970s, and during the 1970s they outpaced the general
level of inflation. This behavior is indicative of products whose supply is
constricted.
imports of gum and wood chemicals are negligible, but exports are
substantial; the U."S. is a major world supplier of these products. Table 3
displays total U.S. exports and exports as a percentage of shipments.
Throughout the period 1967 to 1976 exports accounted for about 20 percent of
total U.S. production.
TABLE 3
EXPORTS OF GUM AND WOOD CHEMICALS
Total percentage of value
Year (million $) of Shipments
1976 81 22.2
1975 53 16.9
1974 88 21.8
1973 72 20.3
1972 58 17.5
1971 58 20.8
1970 62 23.7
1969 47 20 6
1968 49 21.0
1967 46 21.3
Source: U.S. Department of commerce, U.S. Exports; commodity by
Country, FT 410, various years.
The degree of concentration in the manufacture of gum and wood chemicals
is shown in Table 4. concentration is moderate to high, and appears to have
increased somewhat in recent years. Presenting only the concentration ratio
for the entire industry conceals major differences in the different sectors of
the industry. As shown in Table 5, the production of soft wood distillation
products is highly concentrated. However, the production of other gum and
wood chemicals including gums, charcoal, and tall oil is much less
concentrated, though concentration has increased in recent years.
COMPANIES IN SEGMENT
Crude tall oil is produced by almost all kraft paper producers, but there
are only eight (according to the Kline Guide) or nine (according to the Census
of Manufactures) firms which process tall oil. The eight firms listed by the
Census of Manufactures are Hercules, Crosby Chemical, Arizona Chemical, Union
Camp, Sylvachem, Reichhold Chemicals, Westvaco, and Monsanto. Major producers
of steam-distilled rosin and turpentine are Hercules, Reichhold, and Continen-
-------
E-201
TABLE 4
CONCENTRATION RATIOS FOR PRODUCT CLASS 2861:
GUM AND WOOD CHEMICALS
(in percent)
Year
Four
Firm
Ratio
Eight
Firm
Ratio
Twenty
Firm
Ratio
Fifty
Firm
Ratio
1972
1967
1963
49
51
44
64
63
54
78
76
69
92
89
86
Source: U.S. Department of Commerce, Bureau of the census, 1972 Census
of Manufactures (Washington, D.C.: Government Printing Office,
1975).
TABLE 5
CONCENTRATION RATIOS FOR
PRODUCT CLASSES 28611 AND 28612
(in percent)
Year
Four Eight Twenty Fifty
Firm Firm Firm Firm
Ratio Ratio Ratio Ratio
28611, Softwood distillation
products
1972
1967
1963
1958
1954
90
85
N/A
80
83
97
93
91
92
94
100
100
99
98
99
100
99
N/A
28612, Other gum and wood
chemicals
1972
1967
1963
1958
36
36
25
27
54
50
38
41
76
69
60
67
95
70
85
88
Source: U.S. Department of commerce, Bureau of Census, 1972 Census of
Manufactures, (Washington, D.C.: Government Printing Office, 1975)
-------
E-202
tal Turpentine and Rosin. Kingsford, Georgia-pacific, Great Lakes carbon, and
Husky industries are important producers of charcoal, and Shelton Naval
Stores, Monsanto, Stallworth pine products, Taylor-Lowenstein, Union Camp,
Varn Gum Turpentine and vidalia Gum Turpentine are producers of gum products.
All of these firms are either closely held firms, whose financial records are
not available, or subsidiaries or units of very large conglomerates.
Therefore, the information necessary to determine the profitability of the gum
and wood chemicals industry is not available.
INNOVATION
While there does seem to be some development of new gum or wood chemicals,
if innovation in the industry is measured by the amount which is mentioned in
the trade journals, there is little innovation in this sector. However, the
huge petroleum price increases of the last ten years have apparently brought a
renewed interest in biomass-based chemicals. Given the large oil-based
chemical industry which now exists, however, any expansion of the use of gum
and wood chemicals will be slow.
-------
E-203
Organic Chemicals, NEC
-------
E-204
Organic Chemicals, NEC Segment Summary
Cyclic intermediates
Miscellaneous Organic Chemicals
Synthetic Oraanic Dyes and pigments
plasticizers
Rubber-Processing Chemicals
The Organic Chemical, NEC segment consists of organic chemicals that do
not fit into the other organic chemical categories because of their unique
structures and functions. As a whole, this segment is highly innovative,
although some of its components (synthetic organic dyes and pigments, and
miscellaneous acyclic chemicals) are not. Cyclic intermediates are
distinguished from other chemicals by both structure and function, cyclic
intermediates all consist of various functional groups which are attached to
(or built into) a carbon framework that contains at least one ring. Cyclic
intermediates are typically used in the production of end use products,
although they also have end uses as biocides, photographic chemicals, fuel
additives, and antioxidants.
There are a few cyclic intermediates which have always dominated the
industry. A group of eleven (cumene, cyclohexane, ethylbenzene, styrene,
o-xylene, p-xylene, alkyl benzene, arilene, chlorobenzene, phenol, and
phthalic anhdride) has traditionally accounted for 65-70 percent of production
volume and 40-50 percent of sales volume. But despite the dominance of these
large-volume commodity chemicals, innovation in this component is quite high.
In aeneral, there are many paths by which end-use chemicals can be produced
from the initial feedstock. Each process innovation in which a new path from
feedstock to end use product is discovered may result in the production of
several new chemical intermediates for use in the new process, in addition,
new intermediates may result from the search for new end-use products, and may
also be produced along with new end-use products.
The structure of the cyclic intermediate industry as a whole is difficult
to describe. The large-volume commodity chemicals typically have more than
ten major producers. However, many of the intermediates are produced by only
one firm. Since there are many ways to produce most cyclic compounds, there
is some competition among the different intermediates, in discussing the
-------
E-205
structure of the cyclic intermediate industry, one should also note that oil
companies command a significant share of the market, particularly in the
production of large volume commodity chemicals. They have been attracted to
the industry by the close relationship between many cyclics and refinery
products.
Miscellaneous cyclic chemicals include end-use cyclic compounds such as
gas and oil additives, many oil field chemicals, photographic chemicals,
tanning materials, paint driers, enzymes, and some flavorings, in general,
there is a high rate of innovation among end-use cyclics, just as among
intermediate cyclics. It is difficult to say much more about the
innovativeness and structure of the industries producing miscellaneous end-use
cyclics, since data on these chemicals is often grouped with miscellaneous
acyclic chemicals - a much larger, though less innovative group.
Plasticizers are organic chemicals which are physically incorporated into
plastics, either to improve workability during fabrication or to increase
flexibility in the end-use products. About 85 percent of all plasticizers are
used in the plastics industry (about two thirds of the total in polyvinyl
chloride), with the rest being used in the production of rubber and cellulosic
products.
There is a great deal of innovation in the plasticizer industry,
particularly involving the relatively new polymeric plasticizers. Even though
the roster of basic plastics has been relatively unchanged for twenty years,
during that time, thousands of new end-use products have been developed for
these basic plastics. Often, a new product will be associated with a new type
of plasticizer.
In the mid 1970s the leading four firms produced just over 50 percent of
all plasticizers, and the leading eight firms just over 70 percent. in more
narrowly defined markets (e.g., phthalates, phosphate esters, and polymeric
plasticizers) the concentration ratios are somewhat higher. There has been
some turnover among the leading plasticizer producers in the last twenty
years. Allied Chemicals and Celanese, both among the leading plasticizer
producers in the 1960s, no longer produce phthalate plasticizers. U.S. Steel,
Exxon, Stauffer, Tenneco, and BASF Wyandotte have become major plasticizer
producers, either by buying small producers and expanding or by beginning
production from scratch.
Rubber-processed chemicals include a wide variety of substances that
modify rubber so it can be used in commercial applications. Not all of the
chemicals which are used in rubber production are included in this category;
such products as sulfuric acid, salt, alum, sulfur, zinc oxide, fatty acids,
silicas, clays, carbon black, nylon, rayon and pigments have many uses outside
the rubber industry, and are not included in this segment. The major
categories of rubber-processing chemicals (out of a total of several dozen
categories) are:
1) Accelerators — cause rubber to vulcanize faster; in addition,
they often retard aging;
-------
E-206
2) Activators — increase the efficiency of vulcanization;
3) Antioxidants — protect rubber from deterioration due to the
action of oxygen and oxidizing chemicals; and
4) Antiozonants — protect rubber from deterioration due to the
action of ozone.
As with plastics, there has not been much innovation in the roster of
basic synthetic rubbers during the last twenty years, but hundreds of new
end-use products have been developed from those basic rubbers. One or more
new rubber-processing chemicals are associated with many of these products.
Not only have new rubber-processing chemicals of a given type been introduced,
but entire new types have been created.
The major tire companies are important producers of rubber-processing
chemicals. Goodrich, Goodyear, and Uniroyal produce about half of the total.
Much of the volume produced by major rubber producers is used in their own
rubber factories, it should be noted that the advantage that a high degree of
concentration would normally give the rubber-processing chemicals industry is
somewhat negated by the high degree of concentration among rubber producers,
the buyers of rubber-processing chemicals.
-------
E-207
Cyclic Intermediates
-------
E-208
CYCLIC INTERMEDIATES
DESCRIPTION
Cyclic intermediates are organic chemicals which are grouped together
because of a common chemical "architecture". They all consist of various
functional groups that are attached to (or built into) a carbon framework
containing at least one ring. Although the vast majority are used as
intermediates in the production of higher cyclics, they also have end uses as
biocides, photographic chemicals, fuel additives, and antioxidants. indeed,
many individual cyclic intermediates are used in more than one of these areas.
The similarity in the structure of cyclic intermediates causes
similaritity in their production. The carbon skeleton of these compounds can
be formed either by dismembering a more complex ring frame or, more commonly,
by linking smaller molecules together. Although the cyclic portion(s) can be
formed from acyclic recursors, it is almost always easier to use prefabri-
cated structural units like the phenyl or benzene ring. For this reason, the
majority o* cyclic intermediates are derived from simpler cyclic compounds
which are produced either inside the industry or in the petrochemical or
cyclic crudes industries.
The functional properties of the molecules can be adjusted at various
points in the reaction sequence by the introduction, deletion, or exchange of
attached groups. These alterations typically involve organic compounds (both
cyclic and acyclic) and industrial inorganic chemicals. Occasionally, the
reactions require catalysts.
Because of the way in which cyclic intermediates are constructed, there
are many different routes to all but the most complicated synthetic goals.
For example, phenol, a widely used organic intermediate, is currently produced
through six distinct commerical processes.!/ Although new synthetic
techniques are always being discovered, many of the fundamental organic
reactions have been known for 100 years. Consequently, the method of
producing cyclic intermediates is usually determined by economic rather than
scientific factors.
1/B.G. Reuben and M.L. Burstall, The Chemical Economy (London: Longman
Group, Ltd., 1973).
-------
E-209
INNOVATION
It seems possible to isolate a large portion of the cyclic intermediate
industry for which virtually no product innovation takes place. Because of
the way in which cyclic intermediates are synthesized, there are a few
elementary building block cyclics which have always dominated the industry. A
group of only six has traditionally accounted for 50-60 percent of the
production volume and 30 to 35 percent of the sales value (Table 1). For the
top 11 of these fundamental cyclics, the proportions increase to 65 to 70
percent and 40 to 50 percent, respectively. When other compounds that are
reported only sporadically by the International Trade Commission (ITC) are
included, it becomes clear that more than half of the sales value is derived
from a non-innovative portion of the industry. Yet, despite the dominance of
the large-volume commodity chemicals, innovation appears to be quite high in
the segment, in general, there are many paths by which end-use chemicals can
be produced from the initial feedstocks. Each process innovation in which a
new path from feedstock to end use product is discovered may result in the
reduction of several new chemical intermediates for use in the new process.
In addition, new intermediates may result from the search for new end-use
products.
QUANTITY AND VALUE OF TRADE
The quantity of cyclic intermediates produced and sold has increased
steadily since the 1950s as a result of rising demand for the end
products—from both inside and outside the chemical industry—which are
derived from these compounds (Table 2). The segment is very competitive
because, in many product lines, high growth and profit potential coexist..?/
Pricing trends have not been consistent (Tables 2 and 3). Before. 1973
prices declined due to both economies of scale and competition. Since 1973,
however, increases in the price of petroleum raw materials has caused a
dramatic price rise.
Despite falling prices during the 1950s and 1960s, quantities increased
enough in this period to permit constant expansion in the value of shipments
(Table 4). The more recent combination of rising quantities and prices has
accelerated this growth.
Unfortunately, the shipment figures areatly overstate the impact of cyclic
crudes on the economy. As the ITC points out, "since many of the
intermediates included in the statistics represent successive steps in
production, the totals necessarily include considerable duplication. ",3/
2/Mary K. Meegan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
J/U.S. international Trade Commission, Synthetic Organic Chemicals, 1965
(Washington, D.C.: Government Printing Office, 1965).
-------
TABLE 1
PRODUCTION AND SALES FOR 11 BASIC CYCLIC CHEMICALS
Quantity of Production (1000 Ibs Quantity of Sales (1000 Ibs Value of Sales ($1000)
Cumene
Cyclohexane
Ethylbenzene
Styrene
O-xylene
p-Xylene
Subtotal
Percent
Alkyl benzene
Ariline
Chlorobeneze
Phenol
Phthalic
anhydr ide
Subtotal
Total
Percent
§5.
663
1700
3023
2864
351
Zi
1983
1841
4827
4335
799
75_
2003
1734
4822
4673
702
T7
2644
3020
8312
6867
985
396 1590 2484 3172
8997 15375 16418 25000
•53.3 54.4 52.3 57.2
645 553 495 526
196 398 407 584
546 485 306 325
1229 1755 1746 2338
608 734
702 926
3224 3925 3656 4699
12221 19300 20074 29699
72.5 68.3 63.9 67.9
§i
_
1475
580
1248
344
375
(4022)
(53.3)
583
76
82
533
Zi
1200
1976
513
2013
777
1294
7593
58.5
536
195
67
769
75^
1100
1722
490
1964
697
1879
7862
53.2
428
151
77
927
77
1294
2198
211
2799
810
1841
9152
53.4
456
176
175
1206
65_
_
60
24
95
9
33
(221)
(27.1)
56
10
5
50
70
46
62
19
130
23
82
362
28.7
54
22
7
54
75_
124
211
43
368
58
267
1071
33.8
109
34
20
237
77_
160
261
29
520
271
170
1411
35.2
117
42
35
232
336
441
436
567
28
40
92
95% intermediate fohenol, acetone, etc.
90% intermediate (adioic acid, canrolactam, etc.
95% intermediate (stvrene)
"5% monomeric "intermediate"
70% intermediate fohthalic anhydride); 10% fuel
and solvent
90% intermediate (TA and DMT)
Intermediate (detergents)
95% intermediate (isolyanates, etc.)
70% intermediate; 20% solvent
90% intermediate (phenolic resins, 'bisobenol P, etc
128 95% intermediate (olasticizers and resins)
1610 2008 2019 2580 149 177 492 554
(5632) 9601 9881 11732 (370) 539 1563 1965
(74.6) 74.0 66.9 68.5 (45.5) 42.8 49.3 49.0
NJ
I-1
O
Sources: U.S. International Trade Commission, Synthetic Organic Chemicals (Washington, D.C.: Government Printing Office, various vears); and Gloria M.
Lawler, ed., Chemical Origins and Markets (5th ed. Menlo Park, CA: Chemical Information Services, Stanford Research Institute, 1977).
-------
E-211
TABLE 2
PRODUCTION AND SALES OF CYCLIC INTERMEDIATES
Production Quantity Sales Quantity Sales value
Year (million Ibs.) (million Ibs.) (million $) Unit Value
1955 6,016 2,284 407 1.18
1960 9,612 3,964 662 .16
1965 16,865 7,551 814 .10
1970 28,257 12,976 1,260 .10
1975 31,413 14,780 3,169 .21
1977 43,726 17,138 4,008 .23
Source: U.S. international Trade Commission, Synthetic Organic Chemicals
(Washington, D.C.: Government Printing Office, various years).
TABLE 3
WHOLESALE PRICE INDEX FOR BASIC AND INTERMEDIATE CYCLICS
(Group definitions do not correspond exactly with Census definitions.)
Year Basic Cyclics Cyclic Intermediates
1968 80.8 79.7
1970 79.2 74.0
1972 102.7 89.0
1974 109.3 102.2
1976 243.4 234.7
1978 271.0 241.1
Note: The base year for the Wholesale Price index figures changes in 1974
from 1958 to 1973. Adjusting for this difference would have an effect of only
one or two points, and would have no influence on the qualitative
interpretation.
Source: U.S. Department of Commerce, Wholesale Price index, 1979.
-------
E-212
TABLE 4
VALUE OF SHIPMENTS
Value of Shipment
Year (millions of dollars)
1954 $ 466
1958 531
1963 758
1967 1,066
1972 1,538
1977 4,001
Sources: U.S. Department of Labor, Bureau of the Census, 1972 Census of
Manufactures and 1977 Census of Manufactures (Washington, D.C.:
Government Printing Office, 1975 and 1979).
For example, 63 percent of all cumene reduced is used to synthesize phenol.
Fourteen percent of the phenol (which also comes from other sources) is then
used to manufacture bisphenol A, a precursor of numerous resins.4/ since
all three compounds are among the highest volume cyclic intermediates, the
magnitude of multiple reporting is quite significant, consequently, the value
added by the segment is a better indicator of its importance, but complete
data is not available. However, for the 49 establishments which concentrate
in cyclic intermediates, values added amounted to $504.4 million, or 43
percent of the value of shipments, in 1972.5/
I/Gloria M. Lawler, ed., chemical Origins and Markets (5th ed., Menlo
park, CA: chemical information Services, Stanford Research Institute, 1977)
JL/U.S. Department of Commerce, Bureau of the census, 1972 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1975).
-------
E-213
INDUSTRY STRUCTURE
The cyclic intermediates industry has been characterized by high and
increasing competition. In 1977» 85 companies had industry shipments of over
$100,000.17 The top eight firms held a market share of 62 percent, compared
to 81 percent in 1954 (Table 5). More recently, there have been indications
of a reversal in this trend. The five largest producers of benzenoid
chemicals (which include a substantial amount of acyclic compounds that can be
manufactured from cyclic precursors) increased their market share from 25
percent in 1973 to 37 percent in 1977.2/
Of course, these figures are not sufficient evidence on which to base
conclusions about the extent of competition in the industry. The reason is
that the market structure varies widely depending upon the chemical in
question. The fundamental, high-volume compounds like phenol, phthalic
anhydride, and styrene typically have more than ten major producers. However,
the ITC lists only one producer for 65 percent of the 950 cyclic intermediates
that it examines..§/ The extent of competition between the smaller-volume
chemicals is not clear. Since there are many ways to produce most cyclic
compounds, there is probably significant competition between the substances in
their use as synthetic intermediates. The same does not necessarily hold for
their end uses, however.
TABLE 5
CONCENTRATION RATIOS
Year Percent of Value of Shipments Accounted for by X Largest Firms
1954
1958
1963
1967
1972
Source: U.S. Department of Commerce, Bureau of the Census, 1972 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1975).
X = 4
55
52
53
47
43
8
81
72
58
63
62
20
94
90
87
83
84
50
„
99
98
97
97
6/Ibid.
2/U.S. international Trade commission, Synthetic Organic chemicals, 1977
(Washington, D.C.: Government Printing Office, 1977).
8/ Ib id. However, previous ICF studies on pesticides indicate that ITC
information on producers may not be complete.
-------
E-214
Besides the factor of competition, another important influence on the
operation of the industry is its relation to the petroleum industry. Oil
companies command a significant market share—particularly in the production
of elementary, high volume cyclics—despite the fact that chemical products as
a whole account for only 3 to 28 percent of the sales of major petroleum
producers (Table 6). They have been attracted into the industry by the
potential for high profits and the close relation of many cyclics to refinery
products. Conversely, many of the large chemical companies have diversified
backwards into the oil industry to protect and supplement their supplies of
raw materials.9/
EMPLOYMENT
Exact employment figures for the cyclic intermediate industry are not
available, but can be approximated by using a variety of census data.
Together with manufacture of cyclic crudes and organic dyes, production of
cyclic intermediates employed 33,000 people in 1977.iQ/ One way to estimate
what proportion of this labor force actually worked in the cyclic intermediate
industry is by noting that this sector accounted for 74 percent of the
combined values of shipments.ii/ However, one cannot assume a priori that
the three industries are equally labor intensive. Table 7 shows the 1972
values of shipments and employment figures for establishments concentrating in
each of the sectors, using these figures as a proxy for labor productivity,
employment in the cyclic intermediate industry can be estimated at 19,200.127
i/Meegan, Kline Guide.
iP_/U.S. Department of commerce, Bureau of the census, 1972 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1975).
jj/Ibid.
12/The estimate was made by assuming a constant ratio of productivities,
where productivity is defined as the value of shipments per employee.
Mathematically,
(V772) / (V72) =
where vlf is the value of shipments in cyclic intermediates, EI is the
employment in cyclic intermediates, V2 and E2 are the corresponding
figures for the aggregate of other industries, and the superscripts indicate
the year. The 1972 statistics are only for respective areas, while 1977 data
are for the entire industry.
-------
E-215
TABLE 6
THE ROLE OF OIL COMPANIES AMONG THE TOP 20 CHEMICAL PRODUCERS
(Separate data for cyclic intermediates are not available.)
Rank by
World
Chemical
Sales
Company
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Dupont
Dow Chemical
Union Carbide
Monsanto
Celanese
Allied Chemical
Shell Oila/
Occidential Petroleums/
Standard Oil (Ind.)a/
WR Grace
Hercules
Eastman Kodak
Phillips petroleum.3/
American cyanamid
Gulf Oiia/
Texaco a/
Stauffer
PPG Industries
Atlantic Richfielda/
World
Chemical
Sales
($ million)
7,300
4,320
4,000
3,577
3,238
1,855
1,738
1,574
1,536
1,432
1,385
1,375
1,247
1,230
1,096
1,062
1,000
910
904
826
Total
Sales
($ million)
8,361
5,652
6,346
4,270
48,631
2,123
2,630
9,230
5,534
11,532
3,615
1,596
5,438
5,698
2,094
16,451
26,452
1,100
2,255
8,462
Percent
Chemical
Sales
87.3
76.4
63 0
83.8
6.7
87.4
66.1
17.1
27.8
12.4 '
38.3
86.2
23.0
21.6
52.3
6.5
3.8
82 7
40 1
9.8
a/Oil companies.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
-------
E-216
TABLE 7
EMPLOYMENT AND SHIPMENT VALUES FOR ESTABLISHMENTS
CONCENTRATING IN THREE INDUSTRIES
Cyclic intermediates
Dyes and pigments
Cyclic Crudes
Number Employees
11,300
15,600
800
Value
(millions of dollars)
$1,176.4
766.8
69.3
Source: U.S. Department of commerce, Bureau of the Census, 1972 Census of
Manufactures (Washington, D.C.: Government printing Office, 1975)
TABLE 8
FOREIGN TRADE OF CYCLIC INTERMEDIATES
imports
Exports
Quantity
(million Ibs.)
Unit
Value value
(million $)
Quantity
(million Ibs.)
1973
1974
1975
1976
1977
603
827
486
645
867
186
332
276
354
390
.31
.40
.57
.55
.45
2,971
2,957
2,693
3,418
3,340
Unit
Value Value
(million $) (/lb.)
356
732
564
764
740
.12
.25
.21
.22
.22
Sources: U.S. Department of commerce, U.S. imports, FT 210, various years,
and U.S. Exports, FT 610, various years.
-------
E-217
FOREIGN TRADE
The United States maintains a positive balance of trade in cyclic
intermediates. Between 1973 and 1977 the value of exports exceeded that of
imports by a factor of 1.9 to 2.2 (Table 8). A total of 819 benzenoid
chemicals were imported in 1977, the most important ones being phthalic
anhydride and cyclohexane. imports from member nations of the Organization
for Economic Cooperation and Development (OECD) accounted for 89 percent of
the total value of imported cyclic intermediates. Exports, on the other hand,
went principally to the Netherlands, Canada, Brazil, Mexico, and Belgium. The
main items exported in 1977 were styrene, toluene diisocyanates, detergent
alkylates, and cyclohexane.13/
Close inspection of the trade figures reveal further information about the
nature of the other traded chemicals. Exports as a group have consistently
exhibited a lower unit value than imports (Table 8). This relation holds true
despite the fact that the values of individual chemicals, as assessed at the
respective site of export, are typically lower overseas.14/ Apparently, the
U.S. imports a significantly greater proportion of high-priced, specialty
cyclics than it exports.
13/n.s. international Trade Commission, Synthetic Organic Chemicals,
1977.
ii/Ibid.
-------
E-218
Miscellaneous Organics
-------
E-219
MISCELLANEOUS ORGANIC CHEMICALS
DESCRIPTION
The miscellaneous organic chemicals are all the synthetic products which
are not classified elsewhere. Acyclic organics dominate the group, accounting
for over 90 percent of production and sales value.I/ Like the cyclic
intermediates, these chemicals consist of various reactive functional groups
which are either attached onto or built into a carbon framework. However,
instead of containing ringed structures, the skeleton of acyclics are strictly
linear or branched. The compounds are frequently used as intermediates, but
also find end uses such as gasoline additives, refrigerants, preservatives,
oil-well chemicals, foods, antifreeze, and biocides.
Unfortunately, the acyclic chemicals cannot be treated independently due
to inconsistencies in reporting practices by the International Trade
Commission (ITC) and Bureau of the Census.^/ in addition to acyclics, the
miscellaneous organic chemicals category includes "end use" cyclic compounds
such as gas and oil additives, photographic chemicals, tanning materials,
paint driers, enzymes, and some flavorings.
PROCESSES FOR PRODUCING ACYCLIC ORGANICS
Acyclic carbon frameworks are typically synthesized by joining small units
together. Consequently, most of these compounds are derived from simpler
acyclics reduced either inside or outside of the industry. As with cyclic
organic chemicals, changina the functionalism requires some combination of
organic and inorganic reagents, often in the presence of a catalyst, since a
molecule can be "pieced together" in many different ways—most of which are
based on well known synthetic techniques—the choice of a production process
depends primarily on economic considerations.
1/U.S. International Trade commission, Synthetic Organic Chemicals, 1975
(Washington, D.C. Government Printing Office, 1975) and U.S. Department of
Commerce, Bureau of Census, 1972 Census of Manufactures (Washington, D.C.:
Government Printing Office, 1975)
2/The ITC and Bureau of the Census changed the methods of classification
between 1975 and 1976 so that acrylic chemicals are no longer separate.
Furthermore, the ITC does not have any category corresponding to SIC 28695.
Finally, the Bureau of the Census removed urea from this group of industries
in 1972 while the ITC did not.
-------
E-220
INNOVATION
One can isolate a large portion of the industry in which there are
essentially no new products being introduced. Because of the way in which
acyclics are synthesized, there are a few "building block" compounds that have
always dominated the industry. Table 1 shows that 24 of these have
historically accounted for 55 to 60 percent of production volume and 25 to 35
percent of sales value. This portion of the industry will likely remain
non-innovative. There is a good deal of innovation, however, in the end use
portion of this segment, where the rate of introduction of new "specialty
chemicals" has been high. Slight modifications are frequently made in the
structure of these compounds in order to bring about marginal changes in their
functional properties.
QUANTITY AND VALUE OF TRADE
Production of miscellaneous organic chemicals has increased steadily in
response to rising demand for the end products that are derived from these
chemicals (Table 2). This demand has been generated from other chemical
industry segments and from outside the chemical industry. Due to both
economies of scale and excessive competition, prices continued to decrease
until the 1973 oil embargo forced a sharp reversal in the trend (Tables 2 and
3). Even when prices were declining, shipment values were increasing as a
result of increased volumes (Table 4).
As in the case of cyclic intermediates, calculating value of shipments
involves extensive duplication because many chemicals simply represent
successive steps in a production process, value added statistics would avoid
this problem, but complete data is not currently available. Nevertheless, for
establishments concentrating in miscellaneous organics in 1972, value added
amounted to $4 338 million, or 55 percent of the value of shipments.I/
INDUSTRY STRUCTURE
It is difficult to draw generalizations about such a diverse group of
roducts and markets as miscellaneous organic chemicals . Although the
concentration ratios in Table 5 indicate a moderate and increasina degree of
competition, the actual degrees for specific chemicals range widely.
Synthesis of high-volume compounds is usually quite competitive, with as
many as 13 producers involved in the same market.^/ (One notable exception
is the $400 million fluorocarbon industry, which Dupont dominates with a 45
percent share.)5/ ^he leading manufacturers are often different from
3/U.S. international Trade Commission, industrial inorganic Chemials
(Washington, D.C.: Government Printing Office, 1975).
4/U.S. International Trade Commission, Synthetic Organic chemicals, 1977.
I/Mary K. Meegan, ed., Kline Guide to the chemical industry (3rd ed.,
Fairfield, New Jersey: Charles Kline & Co., 1977).
-------
TABLE 1
PRODUCTION AND SALES FOR 24 BASIC ACYCLIC CHEMICALS: VARIOUS YEARS
Quantity of Production (1000 Ibs)
Chemical
Acrylonitrile
Acetic Acid
Acetic Anhydrile
Adipic Acid
Maleic Anhydride
Acetone
Methyl-Ethyl
Ke tone
Formaldehyde
n-Butanol
Ethanol
iso-Propanol
Methanol
Ethylene Glycol
Propylene Glycol
Carbon
Terrachloride
Ethyl Chloride
Chloroform
Ethylene
dichloride
Methylene
chloride
Pechloroethylene
Trichloro-
ethylene
Vinyl chloride
Ethylene oxide
Propylene oxide
Total
Percent
of Industry
Total
65 70
772 1039
1347 1932
1532 1589
866 1082
128 215
1124 1615
318 480
3107 4427
429 468
2039 1957
1538 1919
2869 4932
1798 3038
213 428
594 1011
686 678
152 240
2456 1460
211 402
429 707
435 611
2000 4040
2190 3865
604 1179
27808 45185
57.6 61.9
75
1215
2197
1458
1343
215
1640
425
4558
490
1429
1521
5176
3809
391
906
575
262
7977
497
679
293
4196
4467
1524
47061
59.9
Sources: U.S. International Trade Con
Gloria M. Lawler , ed., Chemi
Institute, 1977) ; and
77
1646
2570
(1500)
1536
294
2219
511
6046
840
1339
1888
6453
3675
489
809
612
302
10997
478
614
297
5986
4364
1866
57229
59.5
Quantity of Sales (1000 Ibs)
65
303
294
180
70
94
741
301
1189
292
1315
582
1345
1198
189
509
274
123
309
195
385
428
688
256
69
11385
58.2
mission. Synthetic
cal Origins
Gessner G. Hawley
70
547
389
161
127
151
1124
427
1381
278
1060
861
1861
2210
395
841
273
175
1314
358
640
569
2720
411
172
18439
60.4
Organic
75
524
599
(150)
107
170
1311
432
1598
328
1110
813
2409
2848
366
484
280
192
726
435
589
290
2245
409
(200)
18669
57.0
77
526
600
139
181
224
1556
509
2790
420
943
1282
3630
2958
487
385
296
285
1526
475
527
295
4127
549
(200)
24945
59.8
Value of Sales
65 70
48
20
18
16
11
34
32
30
27
77
36
44
104
20
37
19
10
14
17
32
36
42
26
8
754
27.0
Chemicals (Washington,
and Markets (5th ed.
, ed..
The Condensed
, Menlo
Chemical
75
60
23
14
20
24
45
39
33
22
67
49
53
146
36
44
17
11
38
29
45
40
107
29
15
1005
25.5
D.C.:
($1000)
122
65
(25)
39
57
156
77
61
60
145
92
136
586
97
65
28
30
62
68
83
44
221
105
(30)
2454
32.6
77
128
no
31
62
69
211
95
128
73
171
162
210
557
121
49
41
49
123
87
K3
47
508
129
(30)
3208
32.5
Government 1
Park, CA: Chemical Ii
Dictionary (8th ed . ,
nformat
New Yo:
tlses
80% monomer; intermediate; funiaant
90* intermediate (vinvl acetate, cellulose
acetate, TPA, nw, etc.)
intermediate (vinvl arefafe, resins, err.
90% monomer (nvlon)
intermediate (resins, pesticides) ; preservative
50* intermediate (methvl methacrvlat-e, etc.);
20* solvent
Solvent; intermediate
50% monomer; 4D* intermediate; hiocide;
corrsion inhibitor
7D* intermediate; dehvdratina accent
Solvent; intermediate; beverage; antiseptic
intermediate; solvent; antiseptic; dehydrating
agent; preservative
90* intermediate (formaldehvde, DMT, etc.); 10%
solvent
50* antifreeze; intermediate; solvent; hrake
fluid; coolant
70% intermediate (resins, etc.); solvent;
coolant; feed additive; preservative
90% intermediate (fluorocarhons); rodenticide;
solvent; fire extinguisher
intermediate (tetraethvl lead, etc.); solvent;
anesthetic
80% intermediate (fluorocarbons, druasl ;
solvent; insecticide
95% intermediate (vinvl chloride,
perchloroethylene, trichloroethylene)
60* solvent; 20% propellant; intermediate
80% solvent (especiallv for drv cleaning); 15%
intermediate (fluorocarbons)
95% solvent (especially for metal degreasing);
intermediate; anesthetic
95% + monomer
intermediate (ethylene and higher glvcols,
detergents); rocket propellant
intermediate (glvcols and detergents); funigant
to
to
Van Nostrand Reinhold
Company, 1971) .
-------
E-222
TABLE 2
PRODUCTION AND SALES OF MISCELLANEOUS ORGANIC CHEMICALS
Year Production Quantity Sales Quantity Sales value Unit value
(thousands of pounds) (thousands (thousands (dollars/
1965 48,263
1970 73,019
1975 78,645
1977 96,172
Source: computed from data in U.S. international Trade Commission, Synthetic
Organic Chemicals (Washington, D.C.: Government printing Office,
various years).
of pounds)
19,573
30,542
32,760
96,172
of pounds)
2,791
3,940
7,542
9,897
pounds)
.143
.129
.230
.237
TABLE 3
WHOLESALE PRICE INDEX FOR ORGANIC CHEMICALS OTHER
THAN BASIC AND INTERMEDIATE CYCLICS
(The group definition does not correspond exactly with the Census definition)
Year Price
1968 91.9
1970 89 0
1972 98.3
1974 102.1
1976 224 5
1978 228 7
Note: The base year for the Wholesale price index figures changes in 1974
from 1958 to 1973. Adjusting for this difference would have an effect of only
one or two points, and would have no influence on the qualitative
interpretation.
Source: U.S. Department of commerce. Wholesale price index, various years.
-------
E-223
TABLE 4
VALUES OF SHIPMENTS FOR MISCELLANEOUS ORGANIC CHEMICALS
(millions of dollars)
Year Value of Shipments
1954 $ 1,655.2
1958 2.391.3
1963 3,546.7
1967 4,606 7
1972 6,180.5
1977 15,213.9
Sources: U.S. Department of Commerce, Bureau of the census, 1972
Census of Manufactures and 1977 Census of Manufactures
(Washington, D.C.:
1979).
Government Printina Office, 1975 and
TABLE 5
CONCENTRATION RATIOS
1972 SIC
Code
28691
(cyclics)
28692
(acyclics)
28695
(NEC)
Year
1972
1967
1963
1958
1954
1972
1967
1963
1958
1954
1072
1967
1963
1958
Percent of value
of shipments accounted for by X largest firms
X = 4
33
31
29
39
44
8
48
45
34
60
66
20
75
70
71
85
88
50
96
94
94
99
—
43
47
51
59
64
28
30
32
42
58
62
65
72
77
43
46
48
62
79
82
84
90
92
69
73
69
80
94
95
96
98
92
93
90
94
Source: U.S. Department of Commerce, Bureau of Census, 1972 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1975)
-------
E-224
chemical to chemical, so that the two largest producers of each of the top 100
organic intermediates—both cyclic and acyclic—total nearly 50
companies.6/ Many of these are oil companies that have integrated forward
into the chemical industry.!/
Among the over 1,250 smaller volume chemicals, roughly 60 percent have
only one producer listed with the ITC..§/ While many of these compounds
compete with other products when used as synthetic intermediates, they may not
face competition in some of their end uses.
EMPLOYMENT
Although no complete employment statistics are available, they can be
estimated through analysis of a variety of census figures. in 1977 the
Industrial Organic Chemicals sector (SIC code 2869) employed 112,000
people.JL/ Within this sector miscellaneous organic chemicals accounted for
83 percent of the value of shipments.M/ Table 6 suggests comparable labor
productivities (value of shipments per employee) between this industry and
those that comprise the other 17 percent of shipments, consequently, the
labor force for miscellaneous organics can be estimated to be 83 percent of
total employment, or 93,000.il/
FOREIGN TRADE
The United States consistently maintains a positive balance of trade in
the miscellaneous organic chemicals category. Since 1973 exports have
outpaced imports by a factor of 2.1 to 3.1 (Table 7).
6/U.S. Department of Commerce, 1977 Census of Manufactures.
2/Meegan, Kline Guide.
J/U.S. International Trade Commission, Synthetic Organic Chemicals,
1977. However, previous ICF studies on pesticides indicate that ITC
information on producers may not be complete.
Jl/U.S. Department of Commerce, 1977 Census of Manufactures.
M/Ibid.
ii/It is assumed that the ratio of productivities for establishments
concentrating in the two aggregated "industries" during 1972 is indicative of
the ratio for all establishments in these areas during 1977. The 1972 ratio
is unity, so the 1977 productivities must be equal. Since the same number of
employees are required to produce a given value of shipments in and out of the
industry, miscellaneous organics must account for the same proportion of
employment as the proportion of the value of shipments.
-------
E-225
TABLE 6
EMPLOYMENT AND SHIPMENT VALUES FOR FIRMS
CONCENTRATING IN INDUSTRIAL ORGANIC CHEMICALS
SIC Code Employees value of Shipments
(million of dollars)
28691 5,700 $ 378.4
28692 78,600 7,399.4
28695 3,100 152.3
Miscellaneous Organics 87,400 $7,930 1
28693 9,700 713.9
28694 3,200 462.1
Other industrial organic
chemicals 12,900 $1,176.0
Source: U.S. Department of commerce, 1972 Census of Manufactures,
(Washington, D.C.: Government Printing Office, 1975).
TABLE 7
FOREIGN TRADE OF MISCELLANEOUS ORGANIC CHEMICALS
(millions of dollars)
Year imports Exports
1973
1974
1975
1976
1977
223.1
531.1
453.7
460.4
549.3
696.1
1,129.9
1,118.5
1,394.4
1,452.5
Source: U.S. Department of commerce, U.S. imports, FT 210 and U.S. Exports,
FT 610.
-------
E-226
Synthetic Organic Dyes an pigments
-------
E-227
SYNTHETIC ORGANIC DYES AND PIGMENTS
OVERVIEW
This section describes the chemistry of the two major product segments of
this industry and gives a brief history of the industry's development.
ORGANIC DYES
The synthetic organic dye and pigment industry had its start in England in
1856. There, William Perkin synthesized the purple dye, mauvine, by allowing
the interaction of coal-tar-derived aniline with potassium dichromate and
sulfuric acid. Though the synthesis was an accident, Perkin recognized its
commercial potential and shortly thereafter established a plant to produce
aniline dye.
Developing rapidly through Europe in the 1860s, the dye industry provided
the basis for several of today's largest chemical companies, including BASF,
Hoechst, Bayer, ICI, Ciba-Geigy and Sandoz. A German pioneer in dye
synthesis, Friedrich Bayer, established the first U.S. aniline plant at
Albany, New York in 1865.
Although domestic dye production started in 1865, during the later half of
the nineteenth century the majority of dyes were imported from Germany, which
then produced more than 85 percent of the world's dye sales.!/ it wasn't
until 1914, when World War I caused imports to cease, that large scale manu-
facturing began. As a result, the vast industrial and chemical experience
Germany had accumulated created strong marketing and manufacturing advantages
which exist to this day.
The original use of aniline dyes was to color fabric. Success in the
synthesis of dyes led to a rapid advancement of chemical knowledge in many
related areas and to the development of hundreds of coal tar (aniline) based
dyes. With the advent of large-scale petroleum production, entirely new
classes of dyes sprang forth. Today's internationally recognized reference
work, the colour Index, lists more than 8,000 distinct dye products..?/
I/Mary K. Meegan, ed., Kline Guide to the chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977), p. 155.
2/society of Dyers and Colourists. Colour Inoex, vols. 1-6 (3rd ed.,
Bradford, England).
-------
E-228
Dyes can generally be classified using two .different bases: application
and properties, or chemical structure. The following is a brief description
of the most common categories according to their characteristics of
application:
e Acid dyes. Also known as anionic dyes, these dissociate
in aqueous solutions to yield negatively charged colored
ions. Many chemical types belong to this category,
including azo, anthraquinone, azine, nitro, nitroso, and
triarylmethane compounds. They are used mostly to color
polymide fibers, wool, and silk. Colors generally are
bright and have good fastness properties.
• Azoic dyes. These comprise a two-component system that
results in deposit of an insoluble azo compound on the
substrate. They are used to dye and print cellulosic
fibers, particularly cotton. They usually impart hues of
maroon, orange, and red. Light-fastness of the dyed
fabric is extremely good.
• Basic dyes. These are also known as cationic dyes. When
originally synthesized, they were used to color natural
fibers. Now, a wide range of chemical types have been
made that have good light-fastness characteristics on
acrylic fibers, usual hues imparted are bright orange and
red.
• Disperse dyes. As the name suggests, these are applied as
aqueous dispersions, being essentially insoluble in
water. Compounds belong to three main chemical
classes—azo, anthraquinone, and nitroarylamine. They are
used widely to color man-made fibers, acrylic, cellulose
acetate, polyamide, and polyester. Some are used to
surface-color plastics.
• Direct dyes. These chemicals are anionic, and are used
primarily with cellulosic fibers. They are applied from
an aqueous solution containing an electrolyte. Dyes of
this class also are used to color leather and paper.
• Mordant dyes. This class requires a mordant to fix the
dye to the fiber in the form of a complex. Mordants are
usually metal compounds.
• Reactive dyes. These chemicals form covalent bonds with
the substrate. First introduced commercially by imperial
Chemical industries (ICI) in 1956, they were used
originally with cellulosics. Since then, compounds have
been made that are suitable for coloring polymides and
wool. They have good fastness properties because they are
chemically linked to groups on the substrate chain.
-------
E-229
• Solvent dyes. These are soluble in organic solvents.
Principal uses are in lacquers and varnishes, printing
inks, and plastics. They also are used to color
cosmetics, candles, soaps, and the like. The chemicals
are related to disperse dyes and are now being developed
for use with polyester fibers. Solvent dyeing speeds
drying time and obviates the need to grind insoluble
disperse dyes to fine mill sizes.
• Sulfur dyes. These are water-insoluble compounds that
contain sulfur both as an integral part of the chromophore
(the group that gives rise to the color of the chemical)
and are a component of polysulfide pendant chains. They
are reduced to a water-soluble form before being applied
to the fiber. Subsequent oxidation causes the compounds
to revert to their original colored state. They are used
mainly with cellulosic fibers.
• yat dyes. Like sulfur dyes, these are insoluble in
water. The reduced, water-soluble form is applied to the
fiber and then oxidized to its insoluble form. A large
number of chemicals belong to this class. Principal uses
are the dyeing and printing of cotton, but they may be
applied also to celluose acetate, silk, and wool, vat
dyes have outstanding fastness properties.!/
Unlike many other segments of the chemical industry, the dye industry is
characterized by a large number of products in terms of colors, methods of
application, and the form in which they are sold to users. Many firms have
over 1,000 products for sale, and Bayer offers more than 2,000.I/ As a
result, unlike the inorganic pigments whose production may be measured in
thousands of tons per day, the largest quantities of individual organic dyes
produced each year are much smaller. Table 1 illustrates this by showing six
leading individual organic pigments made from dyes produced in 1970 and 1976
in the U.S. and, as a comparison, the amounts for three of the largest
inorganic pigment colorants.
I/General descriptions from Chemical & Engineering News, February 26,
1979.
i/Ibid., p. 19.
-------
E-230
TABLE 1
SALES VOLUMES OF LEADING ORGANIC PIGMENTS (FROM
DYES) AND INORGANIC PIGMENTS: 1970 AND 1976
Colorant
Organics
Benzidine yellow
Phthalocyanine Blue
Lithol Red
Phthalocyanine Green
Permanent Red 2B
Red Lake c
inorganics
Titanium Dioxide
Red Monoxide (Litharge)a/
Chrome Yellow and Orange^/
Production
(thousands of tons)
1970
4.2
3.9
3.8
1.7
1.4
1.1
655.3
157.0
32.0
1976
6.0
5.3
4.2
1.7
1.4
1.7
711.7
93.2
32.5
a/Data is for 1972 and 1977.
Sources: U.S. Department of commerce, Bureau of the census, 1977 Census of
Manufactures (Washington. D.C.: Government Printing Office. 1979);
Stanford Research institute, Chemical Handbook, 1978; and U.S.
Department of Interior, Bureau of Mines, Minerals Yearbook
(Washington, D.C.: Government Printing Office, 1971 and 1976).
-------
E-231
The relative maturity of the dye industry has acted to concentrate the
producers both domestically and abroad. in 1976 there were 41 producers, but
the four leading producers accounted for nearly 55 percent of all U.S.
sales.5/ Table 2 shows the seven leading U.S. producers in 1976 and their
sales volumes.
TABLE 2
MAJOR U.S. SUPPLIERS OF DYES: 1976
Rank Company
1 Dupont
2 Ciba-Geigya/
3 Mobay
4 Sandozl/
5 Crompton & Knowles^/
6 American Cyanamid
6 American color & Chemical
Other
Total
Million of Dollars
650
5/Sales include dyes produced by Toms River Chemical.
Source: Mary K. Meegan, Kline Guide to the Chemical Industry
(3rd. ecu, Fairfield, NJ: Charles Kline & Co.,
1979) .
Approximately two-thirds of the dyes consumed in the U.S. are used for
textile application on synthetic and natural fibers. Approximately 20 percent
of sales goes to the paper industry, and the remainder goes to color plastics,
leather, food, and to the manufacture of organic pigments.6/ A later
section will describe the production, price and sales trends, and the
competitive situation.
ORGANIC PIGMENTS
Organic pigments are insoluable precipitates from dyes and organic
intermediates that are applied in a liquid vehicle. The two most common
varieties are lakes (originally, pigments derived from lac dyes), which are
1/Meegan, Kline Guide, p. 158.
i/Meegan, Kline Guide; and Stanford Research Institute, Chemical
Handbook, 1978.
-------
E-232
organic ayes precipitated on an inorganic substrate, and toners, which are
full-strength organic pigments with no inorganic diluent. Because pigments
are insoluable, their application technology is different from dyes, even
though they are derived from organic dyes.
Because organic pigments are essentially a subset of the organic dye
industry, their development closely parallels that of the larger dye segment.
Like dyes, pigment production is concentrated. There were 33 producers of
pigments in 1976, with the four largest producers supplying 48 percent of
sales in that year..I/
The majority of organic pigments are used in printing inks, accounting
for 47 percent of total sales in 1977. Paints follow closely with 33 percent
of sales. Unlike the organic dyes, sales of pigments are concentrated with
six individual colors constituting over 55 percent of sales. These individual
products as well as the volumes and amounts of total U.S. production will be
discussed in detail in the next section.
RAM MATERIALS, PRODUCTION AND PRICES
As their name implies, organic dyes and pigments are produced from organic
raw materials, most notably petroleum derivatives. Because of the large number
of products and relatively small quantities of each product, batch processing
is widely used. Producers are highly subject to changes in textile fashions,
and are called upon to produce new hues annually. For example, id's manager
of dye production stated recently that half of iCI's present synthetic organic
colorants were not available 10 years ago, and the company introduced several
significant new products just within the last 18 months. The level of product
innovation is quite high although few patents are issued on them because of
the short market life span for the majority of products.8/ Because the
products are sold based on performance rather than what they contain, there is
a great deal of product differentiation and industrial secrecy concerning
their formulation. As a result, public data is not available concerning the
types and amounts of feedstocks that are consumed for dyes and organic
pigments.
As previously mentioned, the sale of dyes is closely tied to the sales of
textiles. Figure 1 illustrates the relationship between dye and textile sales
for the years 1960 to 1975.
I/These four were: DuPont, Chemetron, American Cyanamid, and Sun
Chemical (Meegan, Kline Guide).
JL/Chemical and Engineering News, February 26, 1979.
-------
E-233
FIGURE 1; U.S. SHIPMENTS OF DYES AND TEXTILES, 1960-1975
($ Millions)
800
600 —
400 -
($ Billions)
40
1965
1970
1975
1980
1965
1970
1975
1980
Year
DYES
Year
TEXTILES
Source: U.S. Department of Commerce, Bureau of the Census, Survey of Current
Business various years; and U.S. International Trade Commission,
Synthetic Organic Chemicals, 1976 (Washington, D.C.: Government
Printing Office, 1976).
Table 3 illustrates the dollar amounts of dyes and pigments sold from 1967
through 1977. During this period synthetic fibers increased their market
share of all fibers sold. Because synthetic fibers require more expensive
dyes, dollar sales in the 1960s and 1970s grew faster than volume. The future
should see a slowing of growth in synthetic fibers, and thus, a slower growth
for dyes.£/ While the sales volumes of organic pigments is smaller, their
projected growth rate is larger due to a wider use by differing industries.
9/Meegan, Kline Guide.
-------
E-234
TABLE 3
U.S. SHIPMENTS OF DYES: 1967-1977
Total Organic Total Dye
Year pigment Shipments Shipments'*/
(millions of dollars) (millions of dollars)
1967 162 326
1968 189 360
1969 199 389
1970 169 397
1971 178 435
1972 225 474
1973 273 510
1974 333 573
1975 304 499
1976 410 650
1977 445 690
1980b/ 745
1985&/ 840
^/includes interplant transfers.
^/Estimates.
Sources: U.S. international Trade commission, Synthetic
Organic Chemicals (Washington, D.C.: Government
Printing Office, various years); U.S. Department
of Commerce, Bureau of Census, 1967 Census of
Manufactures (Washington, D.C.: Government
Printing Office, 1970); U.S. Department Commerce,
Bureau of Census, Annual Survey of Manufactures
(Washington, D.C.: Government Printing Office,
various years); and estimates by Charles Kline &
Co.
As previously mentioned, sales of organic pigments are much more
concentrated than dyes. Table 4 gives a breakdown of the largest volume sales
by type of pigment.
The pressure of increased raw material costs after 1971 has pushed
organic dye prices upwards. Table 5 illustrates the price indices for the
eleven major dye categories for the years 1967 to 1976. in 1972 average
prices were only 12.8 percent higher than they were five years earlier. They
were 31 percent higher in 1976 than in 1972. Raw material costs have
continued to increase since then, and it is expected that prices will rise
dramatically.
-------
E-235
TABLE 4
U.S. PRODUCTION AND SHIPMENTS OF ORGANIC PIGMENTS
BY TYPE: 1974, 1975, and 1976
Toners
Red
Lithol Red R
Permanent Red 2B
Lake Red C
Toluidine
Eosin
Lithol Red 2G
Lithol Rubine B
Naphthol reds
Other
Subtotal
Blue
Phthalocyanine
Other
Subtotal
Yellow
Benzidines
Hansa
Other
Subtotal
Green
Phthalocyanine
Other
Subtotal
Violet
Orange
Black and Brown
Subtotal
Lakes
Red
Blue
Other
Subtotal
GRAND TOTAL
Production
(millions of pounds)
Production
(millions of dollars)
+Plus additional amounts.
£/included in other.
Source:
1974
6.0
2.6
3.7
2.2
1.6
1.7
1.6
1.1
3.7
24.2
11.1
4.4
15.5
13.9
3.4
1.5
18.8
3.3
0.7
4.0
2.9
1.9
0.3
5.1
0.5
a
1.8
2.3
69.9
id.,
1975
5.2
2.2
2.7
1.7
—
1.9
1.5
10
3.9
20.1
7.0
2.4
9.4
8.6
1.9+
1.1
11.6
2.3
0.4
2.7
2.2
1.4
0.3
3.9
0.3
1.1
0.5
1.9
44.6
Kline Guide
1976
6.1
2.9+
3.3
2.2
—
2.2
2.5
1.3
5.1
25.6
10.6
3.6
14.2
12.0
3.2
1.8
17.0
3.3
0.5
3.8
3.0
1.9
0.5
4.4
0.4
0.7
0.6
1.7
67.7
to the
1974
10.2
8.4
7.7
5.3
—
5.3
4.6
4.8
25.5
71.8
39.3
12.3
51.6
33.6
6.2+
9.8
49.6
16.2
3.8
20.0
22.2
7.2
0.5
29.9
1.6
a
3.4
5.0
227.9
1975
11.2
6.6
6.3
4.3
—
5.6
5.0
4.7
21.9
65.5
28.1
11.7
39.8
20.8
6.4 +
9.1
36.3
11.7
2.6
14.3
20.0
5.0
0.9
25.9
1.1
2.3
0.5
3.9
185.8
Chemical industry (3rd
1976
10.2+
9.8+
7.2
5.7
—
—
—
6.4
42.8
90.3
43.1
13.6
56.7
27.7
10.0+
12.4
50.1
17.7
4.0
21.7
28.6
8.5
0.8
37.9
1.4
2.1
0.9
4.4
261.1
ed. ,
Fairfield, NJ: Charles Kline & Co., 1977).
-------
TABLE 5
INDICES OF AVERAGE MANUFACTURERS' PRICES OF SYNTHETIC ORGANIC DYES: 1967-1976
1967 = 100
Textile types!*/
Vat
Disperse
Direct
Acid
Basic
Azoic^/
Reactive
Mordant
Weighted Average
Optical brighteners
Solvent
Food, drug, cosmetic
Weighted Total
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100,0
100.0
108.6
99.2
104.6
105.0
103.1
101.5
102.8
96.0
106.6
87.5
105.3
102.7
108.2
101.2
104.6
109.1
110.4
103.1
100.9
100.6
110.6
79.8
102.4
98.4
101.3
104.5
109.9
106.3
105.8
108.4
100.7
97.5
110.4
78.8
104.1
97.5
96.9
117.0
113.2
113.6
110.0
115.4
82.3
108.1
118.1
73.6
104.1
106.3
104.3
113.8
113.2
115.8
105.8
123.3
100.7
93.2
121.4
66.8
110.0
117.9
113.0
109.3
110.6
115.8
103. .1
120.7
103.5
—
124.8
64.9
121.8
122.0
112.0
123.1
128.5
132.6
109.3
146.4
109.7
164.6
136.5
61.1
142.4
170.1
120.4
138.9
131.8
137.6
119.7
146.5
118.4
178.3
144.6
76.4
165.3
175.8
136.5
153.8
165.1
146.1
129.0
132.0
126.6
203.1
159.5
70.1
180.4
170.5
100.0
103.5 105.3 104.5 110.0 112.8 116.8 126.3 137.7
148.5
^/Excludes sulfur and miscellaneous textile dyes.
b/Includes fast color bases and salts.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
-------
E-237
During this same period, the trade balance of organic dyes has been
decidedly negative, with 75 percent of imports in 1976 coming from Germany and
Switzerland.10/ (see Table 6) . in 1977 DuPont dropped its vat dye line after
losses of $25 million (pretax) on sales of $105 million. In 1978 it continued
with unspecified losses on $85 million in sales. in June 1979 DuPont
announced a total withdrawal from the market, leaving American Cyanamid as the
only American producer .ii/ it is estimated that the trade balance will
continue to deteriorate.
TABLE 6
U.S. IMPORTS AND EXPORTS OF SYNTHETIC ORGANIC DYES: 1969-1965
(millions of dollars)
Year
1969
1970
1971
1972
1973
1974
1975
1976
imports
63
70
97
101
100
106
80
132
Exports
21
29
29
34
57
84
61
77
Trade
Balance
-42
-41
-68
-67
-43
-22
-19
-55
Source: U.S. Department of Commerce, U.S. imports, FT 135; and U.S.
Exports, FT 410.
Unlike the dyes segment, synthetic organic pigments enjoy a slightly
positive foreign trade balance, and may continue to do so.ii/ Table 7 shows
the history of foreign trade in organic pigments from 1969 through 1977.
iO/Stanford Research institute, Chemical Handbook, 1978.
jj/Chemical and Engineering News, June 11, 1979.
12/u.s. Department of Commerce. 1978 U.S. industrial Outlook
(Washington, D.C.: Government Printing Office, 1978).
-------
E-238
TABLE 7
U.S. IMPORTS AND EXPORTS OF SYNTHETIC
ORGANIC PIGMENTS: 1969-1976
(millions of dollars)
Trade
Year imports Exports Balance
1969 — 12.0
1970 12.4 14.3 1.9
1971 14.7 16.2 1.5
1972 15.0 19.2 4.2
1973 21.2 29.1 7.9
1974 31.7 33.1 1.4
1975 25.4 25.1 -.3
1976 32.3 36.5 4.2
1977 36.0 36.0 0.0
Source: U.S. Department of Commerce, 1978 U.S. Industrial
Outlook (Washington, D.C.: Government Printing
Office, 1978).
COMPETITION AND INNOVATION
Rapid expansion of production facilities both domestically and abroad in
the late 1960s and early 1970s, coupled with large price increases and a
depressed textile market in the middle 1970s, have created at present an
overcapacity in organic dyes. 13/ This has led to price cutting, exits from
the industry by large producers, and for some, such as DuPont, large losses
prior to exit. Foreign competitors claim that because U.S. dye managers are
more geared to mass production at high volume, they have less flexibility to
develop new products to support flagging sales during the cyclical downswings
of the textile industry .
Coupled with this problem is the emergence of more stringent environmental
regulations regarding waste products. As a result, the Dyestuffs Environmental
and Toxicology Organization (DETO) was formed in 1977. Each member company
provides funds and key personnel to DETO to conduct studies on toxicology and
ecology. While there is no publicly available data, it is reasonable to
assume this will add to overall manufacturing costs and may result in delaying
or deferring the introduction of some new dyes and pigments. This may lower
innovation in this segment, which is already quite low.
A^/Chemical and Engineering News, February 26, 1979.
IVIbid., p. 20.
-------
E-239
Plasticizers
-------
E-240
PLASTICIZERS
DESCRIPTION
Plasticizers are organic chemicals which are physically incorporated into
vinyl and other polymers, either to improve workability during fabrication or
to increase flexibility in the end-use products. The first plasticizer was
used in the 1860s, but the modern plasticizer industry really began with the
development of polyvinyl chloride (PVC) plastic in the 1920s and 1930s; the
production of PVC now constitutes about two-thirds of all plasticizers
consumed in the U.S. About 85 percent of all plasticizers are used in the
plastics industry, and most of the rest is used in the production of rubber
and cellulose products.
USES OF THE CHEMICAL
plasticizers are by definition intermediate products, being consumed in
the production of end-use chemical products. Polyvinyl chloride, which
consumes about two-thirds of plasticizer production, has a wide variety of
uses, as shown in Table 1. Flooring, wire and cable coating, wrapping films,
textile and paper coatings, and moldings and extrusions are all important uses.
TABLE 1
CONSUMPTION OF PLASTICIZERS IN PVC: 1975
Application of PVC
Film and sheet
Flooring
Molding and extrusion
Textile and paper coating
Wire and cable coating
Others
Total
Amount of plasticizers of pounds)
244.3
164.0
178.4
147.0
169.5
174.2
1,077.4
Source: "Plasticizers." Modern Plastics, September 1975, p. 47.
-------
E-241
There are no natural substitutes for plasticizers themselves although
there are substitutes for the end-use products.
RAW MATERIALS
Plasticizers are produced from a number of chemical intermediates. Their
production consumes a miniscule percentage of the supply of most of these
intermediates. However, plasticizer production does account for about 50
percent of the use of phthalic anhydride, from which about two-thirds of all
plasticizers are produced.
PUBLIC DATA
Table 2 displays the quantities of plasticizers produced and their
relation to the production of PVC, the major consumer of plasticizers. In
1978 more than two billion pounds of plasticizers, selling for more than $800
million, were produced. There has been a long-term increase in production of
both plasticizers and PVC. Although the 1975 recession proved devastating for
both, production has since recovered.
As shown by the steady decrease in the ratio of plasticizer production to
PVC production, the output of plasticizers is growing much more slowly than
the output of PVC. This is due to the increased proportion of PVC being used
for rigid end-products, which consumes less plasticizer than PVC used for
flexible end-products.i/
Table 3 displays a more detailed breakdown of plasticizer production
during the 1960s and 1970s. There are few substantial changes between 1961
and 1976. Phthalic anhydride esters continue to hold over 60 percent of the
market, with di(2-ethylhexyl) phthalate as the most important single product.
The complex polymers, which are substitutes for traditional plasticizers, hold
about three percent of the market.
imports are a negligible component of U.S. consumption, amounting to only
6.2 million pounds in 1977, 0.4 percent of domestic consumption.^/ Exports
account for a significant amount of U.S. production: in 1977 the U.S.
exported 152.5 million pounds of plasticizers worth $50.8 million. These
exports were 8.5 percent of the U.S. volume and about 7 percent of the value
of U.S. sales (see Table 4). in recent years, exports have been declining in
importance; in 1972 they equalled 9.9 percent of production volume and 10.6
percent of production value, and in 1967 they equalled 11.7 percent of volume
and 21.9 percent of value.
I/Mary K. Meegan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield, New Jersey: Charles Kline & Co., 1977), p. 89.
2/U.S. international Trade commission, Synthetic Organic Chemicals, 1977
(Washington, D.C.: Government Printing Office, 1977), p. 254.
-------
E-242
TABLE 2
PRODUCTION OF PLASTICIZERS AND POLYVINYL CHLORIDE (PVC)
Plasticizer
Production polyvinyl Chloride (PVC) Ratio of plasti-
(millions Production cizer Production
Year of pounds) (millions of pounds) to PVC Production
1978 2,086
1977 1,792
1976 1,699
1975 1,352
1974 1,892
1973 1,873
1972 1,708
1971 1.494
1970 1,336
1969 1,382
1968 1,331
1967 1,263
1966 1,209
1965 1,073
1964 951
1963 835
1962 781
1961 630
Source: U.S. international Trade Commission, Synthetic Organic Chemicals
(Washington, D.C.: Government Printing Office, various years).
5,878
5,267
4,545
3,695
4,774
4,594
4,322
3,437
3,115
3,032
2,635
2,142
2,164
1,838
1,637
1,386
1,215
977
.35
.34
.37
.37
.40
.41
.40
.43
.43
.46
.51
.59
.56
.58
.58
.60
.64
.64
-------
E-243
TABLE 3
PLASTICIZER PRODUCTION, SELECTED YEARS
1976 1971 1966 1961
Volume
(millions Ibs.
Total
Cyclic
Phosphoric acid
esters
Cresyl diphenyl
phosphate
1,587.4
1,185.9
74.9
4.5
Percent
, ) of Total
100.0
74.7
4.7
0.3
Volume
(million Ibs.
1,494.0
1,130.4
91.4
20.4
Percent
) of Total
100.0
75.7
6.1
1.4
Volume
(million Ibs,
1,208.9
897.2
68.6
20.0
Percent
. ) of Total
100.0
74.2
5.7
1.7
Volume Percent
(millions Ibs.) of Total
629.7
473.6
47.0
13.0
100.0
75.2
7.5
2.1
Phthalic anhydride
esters 1,042.9 65.7 978.2 65.5 754.5 82.4 376.5 59.8
Dibutyle
phthalate
Diethyl phthalate
Diisodecyl
phthalate
Dimethyl phthalate
Dioctyl phthalates
Di (2-ethylhexyl)
phthalate
Di-tridecyl
phthalate
Acyclic
Adipic acid
esters
Di (2-ethylhexyl)
adipate
Complex linear poly-
esters & polymers
13.7
16.1
143.1
8.8
314.0
296.7
10.5
401.5
59.6
39.3
52.9
Epoxidized esters 117.4
Oleic acid esters
Phosphoric acid
esters
Sebacic acid esters
Stearic acid esters
9.9
25.7
1.7
12.1
0.9
1.0
9.0
0.6
19.8
18.7
0.7
25.3
3.8
2.5
3.3
7.4
0.6
1.6
0.1
0.8
23
16
135
10
437
386
20
363
63
35
46
99
12
22
9
11
.0
.9
.7
.6
.3
.3
.3
.6
.4
.1
.2
.0
.5
.7
.6
.8
1.5
1.1
9.0
0.7
29.3
25.9
.1.4
24.3
4.2
2.3
3.1
6.6
0.8
1.5
6.4
7.9
20
21
103
4
376
253
.2
.5
.3
.4
.8
.0
19.4
311
51
22
47
86
10
13
12
7
.7
.8
.3
.9
.6
.4
.6
.6
.-_
1.7
1.8
8.5
0.4
31.2
20.9
1.6
25.8
4.3
1.8
4.0
7.2
0.9
1.1
1.0
0.6
5
17
48
4
181
138
2
156
25
8
16
15
8
10
11
7
.6
.3
.3
.1
.5
.3
.7
.1
.7
.5
.5
.9
.9
.6
.5
.4
0.9
2.7
7.7
0.7
28.8
22.0
0.4
24.8
4.1
1.3
2.6
2.5
1.4
1.7
1.8
1.2
Source: U.S. International Trade Commission, Synthetic Organic Chemicals (Washington, D.C.: Government Printing
Office, various years).
-------
E-244
TABLE 4
PLASTICIZER EXPORTS
phthalic Cyclic percent of
plasticizers Dioctyl Anhydride plasti- Total
except Cyclic Phthalates Esters, NEC cizers, NEC Total Production
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
NEC -
Source
54.8
48.1
31.8
50.6
58.3
36.3
32.9
24.0
21.3
19.2
17.0
14.0
11.7
9.7
29.9
20.3
23.7
14.6
16.8
14.6
36.0
14.3
25.1
22.9
15.9
23.5
83.9
75.5
50.9
69.3
78.4
105.8
47.6
36.5
107.7
89.4
101.2
79.3
83.0
4.1
10.0
8.6
12.7
10.7
10.4
8.1
8.5
7.1
6.2
6.8
5.6
3.9
152.5
163.5
111.6
156.3
162.0
169.3
103.2
105.0
150.4
139.9
147.9
114.8
122.1
8.5
9.6
8.3
8.3
8.6
9.9
6.9
7.9
10.9
10.5
11.7
9.5
11.4
not elsewhere classified.
: U.S.
Department of
Commerce, U.S.
Exports:
Commodity by
Country,
FT 410, various years.
-------
E-245
Table 5 displays the average price for all plasticizers produced. During
the late 1950s the prices of plasticizers dropped and continued an overall
decline until 1943 when they started to rise. in the inflationary environment
of 1974 they increased sharply and continued to rise more slowly in the late
1970s. The price declines correspond to declines in the price of phthalic
anhydride, the raw material for the phthalic anhyaride esters, the most
important plasticizer. Table 6 presents the prices of a number of phthalate
anhydride derivates during this period. Each of the products' prices shows
the same trends as the prices of the entire group and of phthalic anhydride.
COMPANIES IN SEGMENT
There are more than 50 producers of plasticizers; the census of
Manufactures lists 49 firms with shipments of $100,000 or more in 1977 and the
U.S. international Trade Commission lists 54 in 1976. in 1961 the ITC listed
53 firms in the industry and the number remained virtually constant during the
1960s and 1970s. The stability in the number of firms in the industry.
combined with the reduction in the number of firms producing each product
discussed earlier, suggests that these firms are becoming more specialized.
It appears that most of the producers are large, diversified corporations or
subsidiaries thereof, and plasticizers compose only a tiny fraction of their
business. Therefore, it seems impossible to estimate the profitability of
this sector from the limited information available.
Mergers and acquisitions have helped change the roster of producers over
the years. Monsanto, W.R. Grace, Rohm & Haas, FMC, and Eastman were among the
leading producers in both the early 1960s and the late 1970s. But Allied
Chemicals and Celanese. both among the leading producers in the early 1960s,
no longer produce plasticizers, and Union Carbide no longer produces phthalate
derivatives. U.S. Steel, Exxon, Stauffer, Tenneco, and BASF Wyandotte have
become major plasticizer producers, either by buying small producers and
expanding, or by beginning production from scratch.!/
An examination of more narrowly defined markets also reveals some turnover
among the leading firms. in the phthalate markets, Monsanto, Grace, and
Eastman have remained leaders, but Union Carbide and Allied Chemical have
dropped out and Exxon and BASF Wyandotte have entered. Union Carbide and Rohm
& Haas have remained leading producers of epoxidized esters, Witco has
entered, and Swift and Archer-Daniels-Midland have dropped out. FMC and
Monsanto remain leading phosphate ester producers, Stauffer has entered the
market, and Celanese has dropped out.4/
3/Comparisons made between Meegan, Kline Guide and Chemical and
Engineering News, November 13, 1961, pp. 134-5.
I/Comparisons made between Chemical and Engineering News, November 13,
1961, pp. 134-135, and "Additives for Plastics - plasticizers", Plastics
Engineering, January 1977, pp. 32-38.
-------
E-246
TABLE 5
PLASTICIZER PRICES
Price of
Price of plasticizers Phthalic Anhydride
year (dollars per pound) Jdollars per pound)
1978 -40
1977 .38 .23
1976 .39
1975 .35 .21
1974 .31
1973 .20
1972 .18
1971 .16
1970 .19 .09
1969 .21
1968 .23
1967 .22
1966 .21
1965 .21 .08
1964 .21
1963 .22
1962 .25
1961 .29
1960 .30 .18
1959 .30
1958 .31
1957 .31
1956 .32
1955 .31 .19
Source: U.S. international Trade Commission, Synthetic Organic Chemicals
(Washington, D.C.: Government Printing Office, various years).
-------
E-247
TABLE o
PRICES OF PHTHALIC ANHYDRIDE DERIVATIVES: SELECTED YEARS
(dollars per pound)
1956 1961 1966 1971
Phthalic Anhydride esters .29
Dibutyl phtalate
Diethy phtalate
Diisodecyl phthalate
Dimethy phthalate
Dioctyl phthalates
Di (2-ethyhexyl)
phthalate
Di-tridecyl phthalate
1976
.29
.26
.25
.29
.26
.28
.28
N/A
.25
.27
.24
.24
.25
.23
.24
.29
.16
.19
.18
.15
.20
.14
.14
.22
.13
.16
.18
.12
.20
N/A
.11
.19
.30
.37
.42
.29
.37
.26
.26
.35
N/A - not available.
Source: U.S. international Trade Commission. Synthetic Organic pesticides
(Washington, D.C.: Government Printing Office, various years).
-------
E-248
The Kline Guide to the Chemical industry estimates that in 1976, the
leading four firms produced just over 50 percent, and the leading eight firms
produced just over 70 percent of all plasticizers. There is not much captive
production of plasticizers (somewhat less than 10 percent), so the vast
majority is traded on the market. In 1961, Chemical Engineering News
estimated the four-firm concentration ratio at about 35 to 40 percent and the
eight-firm ratio at about 55 to 60 percent.JL/ jt appears that concentration
has increased slightly, but the difference may be due simply to different
methods of estimation.
As usual, the more narrowly defined the market, the higher the
concentraton ratios. The 1961 Chemical and Engineering News data yields
estimates for narrower markets that are lower than the estimates for the more
broadly defined markets. As can be seen in Table 7, the markets which are
larger and more inclusive (phthalates, the combined market) are less
concentrated than the smaller markets. When we descend to the level of
individual products, production is more concentrated still. Most products are
made by three or fewer firms, though the more popular ones are manufactured by
a greater number. There has been a reduction in the number of firms making
individual products over time. For example, of the 15 phthalic anhydride
derivatives listed in both 1961 and 1976, 12 were produced by fewer firms in
1976, and the other three were produced by the same number. Di(2-ethylhxyl)
phthalate, the single product with the greatest production volume in both 1961
and 1976, went from 18 producers in 1961 to 11 in 1976.
During the 1960s, there was an increasing trend toward backward
integration from plasticizers into the alcohols and phthalic anhydride, from
which plasticizers are made. Before i960 such integration was rare but by
1970 most of the large producers made either alcohols, phthalate anhydride, or
both.
^/Derived from data presented in Chemical and Engineering News, November
13, 1961. Estimates were obtained by aggregating the three tables on pages
134-135. These estimates cover only about 75 percent of the entire market.
Note that the true concentration ratio for the entire market is probably lower
still.
-------
E-249
TABLE 7
ESTIMATED CONCENTRATION RATIOS IN PLASTICIZER MARKETS: 1961
Market
phthalatesl/
Polymeric
Epoxidized
Phosphate esters
Total
Four-Firm Ratio
40-45%
63-71
66-68
70-75
35-40%
Percent of Total
Eight-Firm Ratio plasticizer Production
60-65%
84-88
85-87
95-96
55-60%
59.8%
2.6
2.5
9.3
74.3%
Note: The data given in the source refers to production capacity. The
concentration ratios are constructed by assuming that all producers use about
the same percentage of their capacities during the year.
5/Phthalate capacity can also be used to make adipates, sebacates,
azelates, and other monomeric plasticizers.
Source: Chemical and Engineering News, November 13, 1961, PP. 134-135. The
data in the last column, "Percent of Total Production" is taken from
U.S. international Trade Commission, Synthetic Organic pesticides
(Washington, D.C.: Government Printing Office, 1961).
-------
E-250
INNOVATION
We believe that the consensus among trade journal articles is that
considerable innovation exists in the plasticizer industry. One recent
article states that in 1934, 56 different plasticizers were commercially
available, of which eight are still produced. In 1943, 150 were in use, of
which 60 remain in use today. By the mid 1960s, 300 products were available,
and by the mid 1970s, 500 were available.6/ There have been a particularly
large number of new polymeric plasticizers introduced in recent years.
^/"Additives for Plastics - plasticizers", plastics Engineering, January
1977, pp. 32-38.
-------
E-251
Rubber-Processing Chemicals
-------
E-252
RUBBER-PROCESSING CHEMICALS
DESCRIPTION
Rubber-processing chemicals include a wide variety of substances that are
used to modify rubber so it can be used in commercial applications. Rubber-
processing chemicals have been in use since the 1840s, when the development of
vulcanization (treating rubber with sulfur) by Charles Goodyear greatly
improved the properties of rubber and expanded its markets. The early
twentieth century saw the beginning of the development of a wide variety of
rubber-processing chemicals. Today there are more than 20 different types of
chemicals and over a thousand products used to process natural rubber and the
many types of synthetic rubber.
USES
There are many different varieties of rubber-processing chemicals which
are designed to prevent the deterioration of rubber and modify its
properties. Not all of the chemicals which are used in rubber production are
included in this category; such products as sulfuric acid, salt, alum, sulfur,
zinc oxide, fatty acids, silicas, clays, carbon black, nylon, rayon, and
pigments have many uses outside the rubber industry, and, therefore, are not
discussed here. The major categories of rubber processing chemicals that are
included here are:
• Accelerators. Accelerators cause rubber to vulcanize faster and they
often retard aging. The first accelerators, aniline derivatives,
were developed during the first decade of this century. Thiazole
compounds, which today account for about two-thirds of accelerator
production, were first developed during the 1920s.
• Activators. Activators increase the efficiency of vulcanization.
Zinc oxide is the most widely used activator. Fatty acids, fatty
acid amines, ana zinc stearate are also used as activators.
• Antioxidants. Antioxidants protect rubber from deterioration due to
the action of oxygen and oxidizing chemicals. in the nineteenth
century the rubber industry used a variety of naturally occurring
materials to retard oxidation, including cresote, naphthalene,
asphalt, and coal tar pitch. The accelerators developed early in the
twentieth century also protected rubber against oxidation, and
replaced the earlier substances, in the 1920s the first nonacce-
lerating antioxidants, which made rubber last about 67 percent longer
than earlier antioxidants, were developed, and from then until World
-------
E-253
War II there was a burst of innovation in antioxidants. After the
war a whole new class of antioxiciants which did not discolor rubber
was developed. Both discoloring and non-discoloring antioxidants are
used today; the discoloring antioxidants are generally more effective
at preventing deterioration.
• Antiozonants. During World War II it was discovered that ozone also
ages some synthetic rubber products quite rapidly, although other
synthetic rubbers are more resistant. A number of effective
antiozonants were developed during the 1950s, and in addition to
protecting rubber from ozone, they help protect against oxygen,
prevent cracking, and deactivate metallic impurities which can weaken
the rubber.
Although these four are the major categories, there are many other types
of chemicals used in rubber-processing; in 1958, 28 different types were
listed in one trade journal. Many of the antioxidants and antiozonants used
primarily in rubber processing are used for the same purposes in plastics,
petroleum products, and food. About 70 percent of the antioxidants and
antiozonants are used in rubber products.
PUBLIC DATA
Table 1 displays data on U.S. production of rubber-processing chemicals
for the period 1961 to 1978.
As can be seen, production shows a long term increase over the period
covered, with surges during periods of economic expansion and reductions in
growth or actual declines during periods of recession (1969 to 1970, 1974 to
1975). The production of rubber-processing chemicals is dependent on the
production and use of both synthetic and natural rubber as well as on general
economic conditions. Table 2 displays the U.S. production of synthetic rubber
and imports of natural rubber. The fluctuations in production of rubber seem
to be about as close to fluctuations in production of rubber-processing
chemicals as possible, given the changes in inventories and imports for which
we have no data. There does seems to be a long-term decrease in the volume of
rubber-processing chemicals used per unit of rubber, which may be attributable
to technological improvements (although more data on imports and inventories
could possibly contradict this observation). Table 3 displays the value and
the production volume of exports of rubber-processing chemicals, and the
volume of exports as a percentage of total production volume. During this
decade exports as a percentage of production have risen steadily, exceeding 20
percent in both 1976 and 1977.
-------
E-254
TABLE 1
PRODUCTION OF RUBBER-PROCESSING CHEMICALS
Volume Average price
Year (millions of pounds) (dollars per pound)
1978 365.8 1.26
1977 402.2 1.23
1976 384.4 1.10
1975 279.0 1.02
1974 383.9 .83
1973 400.9 .64
1972 361.0 .63
1971 323.5 .65
1970 298.3 .65
1969 303.5 .63
1968 312.6 .64
1967 264.1 .68
1966 283.3 .66
1965 251.9 .64
1964 260.6 .67
1963 233.6 .67
1962 228.4 .66
1961 205.1 .67
Source: u.S International Trade Commission Synthetic Organic
Chemicals (Washington, D.C.: Government Printing Office,
various years).
-------
E-255
TABLE 2
PRODUCTION OF RUBBER PROCESSING CHEMICALS
AS A PERCENTAGE OF RUBBER PRODUCTION
Year
Domestic consump-
tion of Rubber-
Processing
Chemicals3
(millions
of pounds)
Domestic
Production
of
Rubberb
(millions of
of pounds)
Rubber-Processing
Chemicals as
Percentage of
Rubber
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
323.9
7588.2
306.3
229.5
323.7
332.2
318.8
277.0
254.2
267.1
271.4
6982
6049
7268
7430
6262.8
5988.6
5669.6
5835.2
5478.1
4.3
4.4
3.8
4.5
4.5
5.1
4.6
4.5
4.6
5.0
a/ Domestic consumption equals production minus exports. Adjustments for
imports and changes of inventory could not be made because of the
unavailability of data.
b/ Production of rubber is the sum of synthetic rubber production and natural
rubber imports; the latter is presumably processed in the United States.
Source: Production: U.S. international Trade Commission, Synthetic
Organic Chemicals (Washington, D.C.: Government Printing Office,
various years).
Commodity by
Exports; U.S. Department of Commerce, Exports;
Country, FT 410, various years.
imports; U.S. Department of Commerce, U.S. General imports;
Commodity by Country, FT 135, various years.
-------
E-256
TABLE 3
EXPORTS OF RUBBER
PROCESSING CHEMICALS
Export volume as
Exports Exports percentage of Total
Year (millions of dollars) (millions of pounds) Production
1977 59.5 73.4 20.6
197.6 67.3 78.1 20.3
1975 45.8 49.5 17.7
1974 38.8 60.2 15.7
1973 37.9 68.7 17.1
1972 25.5 42.2 11.7
1971 27.4 46.5 14.4
1970 25.4 44.1 14.8
1969 21.6 36.4 12.0
1968 24.6 41.2 13.2
Source; U.S. Department of commerce, Exports; commodity by Country, FT
140, various years.
-------
E-257
The Census of Manufactures does not provide concentration ratios for this
sector, but something can be said about the degree of concentration in the
industry by piecing together information from several sources. The Census of
Manufactures states that in 1977 there were 31 firms producing
rubber-processing chemicals and in the same year the International Trade
Commission lists 23 firms.!/ Four of the producers listed by the USITC are
major synthetic rubber manufacturers (B.F. Goodrich, Uniroyal, DuPont ana
Goodyear) which produce rubber-processing chemicals for their own use. As
shown in Table 4, captive production may be related to the exit of Union
Carbide from the industry after 1975. If Union Carbide sold its
rubber-processing chemical business to one of the rubber producers, there
would be an explanation for the increase in captive production. However,
inspection of Union Carbide's annual reports during this period shows no such
sale. According to the USITC, Goodyear, Goodrich, DuPont and Uniroyal must
share at least 40 percent of production. However, there is no other available
information on the shares of production held by other firms. The Kline Guide
to the Chemical industry states that the four firms, along with American
Cyanamid, Monsanto, Pennwalt, and vanderbilt, dominate the market, with
Goodrich, Goodyear, and Uniroyal producing about 50 percent of the total. One
should note that the synthetic rubber industry is itself highly concentrated,
with a four-firm concentration ratio of 54 percent and an eight-firm ratio of
73 percent in 1972..£•/ The high degree of concentration among buyers should
negate the advantage that a high degree of concentration usually gives sellers.
As one begins to look at markets that are more precisely defined than
"rubber processing chemicals" one finds the markets to be more concentrated.
There are only one or two producers of the vast majority of rubber-processing
chemicals, although any given chemical meets competition from other chemicals.
In recent years, the number of firms producing rubber-processing chemicals
seems to have been decreasing, falling from 31 in 1969 to 21 in 1978,
according to the international Trade commission. Allied Chemical and General
Tire are two large firms that left the industry during that period. Yet, over
the last two decades, there also appears to have been a slight decrease in the
number of firms that produce specific chemicals in general.
!/One possibility is that some firms do not report to the international
Trade Commission. This might account for the apparent long-run decline in
rubber-processing chemicals as a percentage of rubber production mentioned
above. One indication that the ITC list is not comprehensive is that
Uniroyal, absent in 1975 to 1976, is present in 1969 to 1974 and 1977 to
1978. It seems more plausible that Uniroyal would have failed to submit
information for two years, as opposed to halting production for two years.
2/U.S. Department of Commerce, Bureau of the census, 1972 Census of
Manufactures, (Washington, D.C.: Government Printing Office, 1975).
-------
E-258
TABLE 4
PERCENT OF PRODUCTION OF RUBBER-PROCESSING
CHEMICALS USED INTERNALLY BY PRODUCER
Year
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
1963
1962
1961
percent of Production
37.5
40.8
41.7
26.9
25.4
22.2
22.4
23.9
23.6
24.4
24.5
24.0
26.1
23.1
29.3
24.2
24.6
24.1
Note: The percent of captive production was determined by dividing
"production sales" by production.
Source: U.S. international Trade Commission, Synthethic Organic Chemicals
{Washington, D.C.: Government Printing Office, various years).
-------
E-259
The price data in Table 1 show that the price pattern of rubber-processing
chemicals looks much like the price patterns of other petrochemicals—
stability during the 1960s and early 1970s, and sharp price increases in the
mid-1970s as a result of the rise in oil prices. But not all chemical prices
conform to the overall trend. AS shown in Table 5, the prices of all the
products and categories did jump during the mid-1970s, but during the 1960s
there were a number of chemicals whose prices were not stable, in particular,
the cyclic dithiocarbamic acid derivatives increased in price by about 60
percent between 1961 and 1971, while the acyclic dithiocarbamic acid
derivatives decreased by about 20 percent.
COMPANIES IN SEGMENT
The number of companies making rubber-processing chemicals ana the
identities of the leading producers were discussed above. With few exceptions
rubber-processing chemicals are just one small part of each firm's business,
so no conclusions can be drawn about their profitability. The few exceptions
appear to be closely held firms, since no data on them is available from the
Standard and poor's indices.
INNOVATION
We believe that, through 1960, there was a great deal of development of
new rubber-processing chemicals. As discussed earlier, the 1940s and 1950s
saw a host of new antioxidants introduced and the introduction of a major new
category of rubber processing chemicals, the antiozonants. One industry
source states that in 1930, there were 12 different types of rubber-processing
chemicals with 203 distinct products; in 1940 there were 14 different types
featuring 246 different products, but by 1958 there were 28 different types of
rubber-processing chemicals encompassing 1,274 distinct products.2/ There
is no quantitative information currently available to indicate the degree of
innovative activity in the industry during the last twenty years. However,
there has been substantial innovation in the area of specialty elastomers, and
a large portion of this innovation may have resulted from the development of
new rubber-processing chemicals.
^/''Rubber chemicals: Growth with Stability," Chemical Engineering, June
16, 1958, pp. 84-86.
-------
E-260
TABLE 5
PRICES OF RUBBER PROCESSING CHEMICALS
(dollars per pound)
Year
1961
Cyclic Chemicals
Accelerators, activators, &
vulcanizing agents .62
Aldehyde-amine reaction
products .89
Dithiocarbamic acid deri-
vatives 1.64
Thiazole derivatives .55
N-Cyclohexyl - 2-
benzothiazolesulf enamide .66
2,2-Dithiobis (benzothiazole) .50
Other .81
Antioxidants, antiozonants, &
stabilizers .69
Amino compounds .64
Phenol, alky lated .57
Retaraer: N-Nitro sodi-
phenylamine .57
Acyclic chemicals
Dithiocarbamic acid deri-
vatives .97
Dimethydithiocarbamic
acid, zinc salt .76
Bis (dimethylthio
carbamoyl) disulfide .92
N/A - not available
Source: U.S. International Trade Commission,
1966
.60
1.06
1.87
.53
.62
.50
.78
.69
.68
.51
N/A
.62
.47
.42
Synthetic
1971
.61
.91
2.58
.57
.92
.54
.80
.69
.70
.50
.63
.78
.46
.36
1976
1.04
1.66
3.66
.96
1.19
.86
1.51
1.18
1.18
.74
.97
1.35
.91
.78
Organic Chemicals
(Washington, D.C.: Government Printing Office, various years).
-------
E-261
CATALYSTS
-------
E-262
CATALYSTS
DESCRIPTION
A catalyst is a chemical which promotes a chemical reaction without being
consumed by the reaction, i.e., after the reaction is over the catalyst is
once again available to promote another reaction. Although some chemicals
have been made using catalysts since the nineteenth century, the prominence of
catalytic processes in the chemical industry is a twentieth century
phenomenon. The Haber-Bosch process for producing ammonia, developed before
World War I was one of the first important triumphs in the study of
"catalysis", and the introduction of catalytic cracking into the petroleum
industry in 1937 provided another boost to the use of catalysts.
Many commodity chemicals that have a wide range of uses are also used as
catalysts: sulfuric acid, phosphoric acid, hydrofluoric acid, and caustic
soda are prominent examples. More commonly, however, the term "catalysts"
refers to chemicals that have catalytic properties as their most important
attrbute. Many catalysts contain precious metals such as cobalt, nickel,
molybdenum, vanadium, platinum, aluminum, palladium, and copper.
USES
In 1978 about 35 percent of the value of all catalyst shipments was used
in petroleum refining (see Table 1) . Of this 35 percent, 39 to 40 percent was
used in catalytic cracking, 35 percent in alkylation, 11 to 13 percent in
hydroheating, 7 to 8 percent in catalytic reforming, and 5 percent in
hydrocracking. These processes are summarized below:
1) catalytic cracking; heavier crude oil fractions are broken
apart to make lighter fractions, the most important being gasoline.
2) Alkylation; light hydrocarbons are combined to form gasoline.
3) Hydroheating; sulfur, oxygen, and nitrogen in the petroleum
feed stock are hydrogenated, and olefins and aromatics are saturated.
4) catalytic reforming; naphthenes and straight-chain hydrocarbons
are converted into the aromatics and into branched-chain hydrocarbons used in
high-octane gasoline.
5) Hydrocracking; larger moledules are "cracked" into smaller
molecules, and impurities are hydrogenated.
Catalytic converters in automobiles accounted for slightly less than 25
percent of the dollar value of all catalyst uses in 1978. In terms of
production volume, catalyst use in catalytic converters is far less than in
petroleum refining, but the greater use of precious metals (platinum and
palladium) in converters accounts for the high value. That high dollar value
may not be indicative of the ultimate market for catalytic converters,
however, since in theory the metal can be recovered and reused (although it
-------
E-263
isn't clear how this would be accomplished in practice). if the precious
metals could be successfully recovered, this would substantially reduce the
value of the automotive catalyst market in future years.
TABLE 1
USE OF CATALYSTS IN PETROLEUM REFINING, 1978
Operation Amount (million $) Percentage of Total
Catalytic Cracking 144.3 39.2 - 40.1
Hydrotreating 40.0 - 48.0 10.9 - 13.3
Catalytic Reforming 27.4 7.4 - 7.6
Hydrocracking 19.5 5.3-5.4
Alkylation 128.8 35.0 - 35.8
Total: 360 - 368
Source: Catalysts I: A $600 Million Market In Cars and Refineries," Chemical
Week, March 28, 1979, p. 50.
In 1978 the use of catalysts in the rest of the chemical industry
amounted to about $400 million, or 40 percent of the total use of catalysts.
More than 75 percent of that $400 million was used in six important chemical
operations (see Table 2). polymerization catalysts were the biggest market,
taking more than 25 percent of total chemical industry use of catalysts.
Organic synthesis, a broad category which includes the production of such
products as pigments, agricultural chemicals, Pharmaceuticals, rubber
processing additives, and a wide range of other chemicals, accounted for about
5 percent less. Oxidation catalysis used in making products such as ethylene
oxide, nitric acide, sulfur trioxide, phthalic anhydride, and maleic
anhydride, used about 11 to 12 percent of chemical industry catalysts. About
13 percent of chemical catalysts were used in hydrogenaton to make butadiene,
styrene, and other products, and about seven percent were used in the
hydrogenation of edible and inedible oils and in the hydrogenation of a
variety of other substances. Steam reforming of natural gas to produce
hydrogen, ammonia- and methane used about 6 percent of all chemical catalysts.
Table 3 presents some of the changes that have taken place in the market
for petroleum catalysts during the last two decades. The volumes of
reforming, catalytic cracking, and alkylation catalysts have remained stable
(though substantial price increases have driven the value of catalysts in the
latter two categories upward). Hydrotreating and hydrocracking have shown the
largest gains in volume. The use of automotive catalysts is entirely a result
of the environmental legislation of the 1970s. As noted earlier, the current
value of automotive catalyst production may exaggerate the size of future
markets if the precious metals can be economically recovered from the
catalytic converters.
-------
Steam reforming
Hydrogenation
Dehydrogenation
Oxidation
Organic synthesis
Polymerization
Other
TOTAL
TABLE 2
USE OF CATALYSTS IN THE CHEMICAL INDUSTRY, 1963-1978
1963
Value
(million
3.8 -
5.5 -
4.8 -
11.4 -
6.8 -
21.6 -
27.9 -
Percent
$)
4.
6.
5.
11.
6.
22.
41.
5
0
1
9
9
7
1
4
5
5
12
7
22
32
Total
.0 -
.8 -
.1 -
.0 -
.1 -
.8 -
.8 -
of
Value
(million
5
7
6
14
8
26
43
.3
.1
.0
.0
.1
.9
.3
12
3
20
30
90
10.4
.3 -
.0 -
.5 -
8.7
.0 -
.0 -
1972
$)
13.
3.
21.
34.
95.
3
5
1
0
1
Percent of
Total
5.8
6.8 - 7.4
1.7 - 1.9
11.4 - 11.7
4.8
16.7 - 18.9
50.0 - 52.8
1978
85 - 95
180
Value
(million $)
23.0
23.5
5.3
45.2 - 49.8
89.8
109.9-115.9
97.7-103.3
400
Percent of
Total
5.8
5.9
1.3
11.3 - 12.4
22.5
27.5 - 29.0
23.2 - 25.8
w
CTi
SOURCE: "CU Report: Catalysts," Chemical Week, August 24, 1963, 52-64; Donald P. Bruke, "Catalyst," Chemical Week,
November 8, 1972, 33-45; Donald P. Burke, "Catalyst II: Chemicals Make It a $1 Billion a Year Market,"
Chemical Week, April 4, 1979, pp. 46-64.
-------
E-265
TABLE 3
USE OF CATALYSTS IN PETROLEUM REFINING: 1963-1978
Operation
Catalytic Cracking
Hydro-treating
Catalytic Reforming
Hydrocracking
Alkylation
TOTAL:
Value
(millions of dollars)
Vo lume
(millions of pounds)
1963
45.6
3.5
20.1
NA
32.2
1972
68.8
10.4
30.3
12.8
45.7
1978
144.3
40.0-48.
27.4
19.5
128.8
1963
305.0
0 4.1
4.7
2,510.0
1972
274.0
10.0
5.0
2.5
3,122.0
1978
286.0
20.0-24.0
5.0
1.5-2.0
3,728.0
101.4 168.0 360.0-368.0 2,823.8 3,413.5
Source: "catalysts I: A $600 Million Market in Cars and Refineries,"
Chemical Week, March 28, 1979, p. 50.
-------
E-266
Table 2 displays changes in sales of chemical catalysts over tints. The
largest increase was in organic synthesis, while the value of dehydrogenation
catalysts increased very little, in most cases a substantial part of the
increase in value was due to rising prices rather than increases in volume.
One exception was steam reforming, in which the increase in the volume of
catalysts used was particularly high. Dehydrogenation actually used fewer
catalysts in 1978 than in 1963 because butadiene, whose production formerly
consumed a substantial volume of catalysts, is now more frequently obtained
more as a byproduct of ethylene synthesis.
With the exception of the case in which a chemical made by catalysis
can also be made by another process, there are really no effective substitutes
for catalysts. Technically, the reactions promoted by catalysts would all
take place in their absence; however, they would take place too slowly to be
economical.
RAM MATERIALS
The raw materials used in catalysts fall into several categories. Pre-
cious metals constitute an important component of many catalysts. Use of a
number of important metals is shown in Table 4. The most interesting point to
note is the rise in use of silver, cobalt, palladium and platinum. The
increases in the latter two were brought about by the introduction of
catalytic converters, in addition to the metals shown in Table 4, nickel is
an important component of many catalysts. Compounds which contain copper,
zinc, iron, chrome, and tin are also used as catalysts.
Other important materials used in catalysts are alumina (Al203),
alumina-silica compounds, other silica compounds, clays, and diatomaceous
earth (kieselguhr). These compounds are often used as supports for metals,
and may also be employed as catalysts themselves. Originally, naturally
occuring compounds were utilized, although now synthetic compounds are used as
well. The most important synthetic compounds are the zeolites, which are
synthetic alumina-silica compounds whose regular crystalline structures
provide efficient catalytic action; these are used primarily in petroleum
refining. Ceramics and powdered carbon are also used as supports for
catalysts.
The raw materials for the commodity chemicals that find uses as
catalysts (sulfuric acid, phosphoric acid, etc.) are discussed elsewhere.
PUBLIC DATA
The concentration ratios for product class 28198, Chemical Catalytic
Preparations, are given in the Census of Manufactures (Table 5). As can be
seen, according to the census of Manufactures, concentration ratios seem to
have been decreasing in recent years, particularly the four-firm ratio.
However, this data must be viewed with caution for several reasons. First,
1976 concentration ratios constructed from production estimates supplied by
the Kline Guide to the chemical industry show a four-firm concentration ratio
of 55 percent and an eight-firm ratio of 80 percent. Although it is possible
-------
E-267
Table 4
U.S. CONSUMPTION OF SELECTED METALS FOR CATALYSTS, 1969-1976
1969 1976
Rare Eartha/ 10,584 12,040
Molybdenum*}/ 1,514 1,843
Vanadiumb/ 392 490
Cobaltb/ 286 1,446
Platinun£/» d/ 234 624
palladium£/» &/ 216 329
Other platinum group£/» §/» e/ 37 28
Silvers/ 4,081 11,758
Mercury!/ 2,958 1,264
a/ Thousand pounds of oxide equivalents.
b/ Thousand pounds of continued element.
c/ Thousand troy ounces.
d/ includes non-catalyst and catalyst used by the chemical and
petroleum-refining industries and, in 1976, the automotive industry.
e/ iridium, osmium, rhodium, ruthenium.
f/ Flasks, 76 pounds each.
Source: U.S. Department of interior. Bureau of Mines, Minerals Yearbook
(Washington, D.C.: Government Printing Office, 1972 and 1979).
-------
E-268
TABLE 5
CONCENTRATION RATIOS FOR PRODUCT CLASS 28198
CHEMICAL CATALYTIC PREPARATIONS
4 Firm 8 Firm 20 Firm 50 Firm
1972 38 63 93 100
1967 46 72 96 100
1963 50 70 97 100
1958 61 78 99 100
Source: U. S. Department of commerce, Bureau of the Census, 1972 Census of
Manufactures, (Washington, D. C.: Government Printing Office, 1975).
that the 15-year trend evidenced in the Census of Manufactures was reversed in
four years, such a reversal seems unlikely. Second, both the Census of
Manufactures and the Kline Guide exclude from their calculations captive
consumption and commodity chemicals used as catalysts . But, these catalysts
comprise a substantial percentage of catalyst production. A comparison of the
production estimates for 1963 given in Tables 1 and 3 ($185-$195 million) with
the figure for value of shipments from the 1963 Census of Manufactures ($75.2
million) suggests that captive production and commodity chemicals encompass
the majority of production, although the Kline Guide suggests that in 1976
these categories were somewhat less than 40 percent of all catalyst production.
Another reason to question the validity of the concentration ratios
provided by the census of Manufactures is that "Chemical Catalytic
Preparations" is not the relevant market- a catalyst that is used for
catalytic cracking, for example, does not compete with a catalyst used for
hydrogenation. The relevant markets are really much narrower segments of the
chemical industry, in some cases corresponding to the segments discussed in
the section on the uses of catalysts, and in other cases corresponding to
subdivisions of those segments. Without going into great detail for each
market, it is safe to say that, based on reports in trade journals, catalyst
markets are highly concentrated. It is not unusual for one firm to account
for more than half of the sales in a particular market, and for three firms to
account for virtually all sales. Although the catalysts sold in any given
market may change quite rapidly in a short period of time because of the
development of new products, the same firms tend to remain dominant.
Moreover, even though there is some entry into and exit from each market (a
prominent example being the exit of American cyanamid and Nalco from the
catalytic cracking markets after the introduction of zeolites), the roster of
firms in each market was relatively stable during the 1960s and 1970s.
No data on catalyst imports are available and nothing in the trade
journals suggested that such imports are important. Thus, the united states
appears to be one of the technological leaders in this area. As shown in
Table 6, exports were somewhat more than 10 percent of the value of U.S.
catalyst production during the 1970s.
-------
E-269
TABLE 6
EXPORTS OF CATALYTIC COMPOUNDS
(millions of dollars)
Catalysts, compounds
Year catalysts, nickel compound other than nickel
1976 16.3 95.4
1975 13.7 78.6
1974 6.8 46.4
1973 6.6 52.8
1972 6.8 38.5
1971 10.0 41.8
Source: U.S. Department of Commerce,
Exports; commodity by Country, FT 410, various years.
The large increase in the dollar value of catalyst production is due in
part to increased catalyst usage, particularly through the creation of a large
new market for catalytic converters. But much of the increase in sales is
attributable to price increases. As can be seen by examining Tables 7 and 8,
catalyst prices have greatly increased since 1963, especially during the
1970s. The precious metals used in catalysts have seen particularly sharp
increases during the 1970s.
COMPANIES IN SEGMENT
The Census of Manufactures lists 37 companies with shipments of $100,000
or more. This estimate does not include firms that produce: catalysts for
automobiles, commodity chemicals that have uses as catalysts, and catalysts
that they use themselves. Excluding captive production and commodity
chemicals, the Kline Guide estimates that there are 20 producers of catalytic
preparations, chemical Week lists 24 firms which produced catalysts in 1972,
and 23 in 1979.
It is difficult to determine the profitability of catalyst production
because catalysts are a very small part of the sales of most of the leading
catalyst producers. The exceptions are closely held concerns, whose financial
data are not available. Table 9 gives estimated sales, not including
commodity chemicals and captive production, for the major U.S. catalyst
producers. Of these firms, Filtrol had by far the greatest ratio of catalyst
sales to total sales in 1970, slightly more than 30 percent. All of the other
firms could only attribute well under 10 percent of their sales to catalysts.
-------
E-270
TABLE 7
PETROLEUM CATALYST PRICES
(dollars per pound)
Operation Year
1963 1972 1978
Fluid bed catalytic cracking .15 .24 .50
Moving bed catalytic cracking .12 .30 .55
Hydrotreating .85 1.04 2.00
Reforming 4.28 6.06 5.48
Hydrocracking — 5.12 9.75-13.00
Source: "Catalysts I: A $600 Million Market in cars and Refineries,1
Chemical Week, March 28, 1979, p. 50.
TABLE 8
CHEMICAL CATALYST PRICES
(dollars per pound)
Year
Operation catalyst 1963 1972 1979
Hydrogenation Nickel (25% in oil) .77 .75-.87 2.05-2.16
Dehydrogenation Chrome-alumina .67 1.00 2.00
Promoted iron oxide .38 .48 1.40
Organic synthesis Aluminum chloride .12 .15 .36
Sources: "Catalysts," Chemical Week, August 24, 1963, pp.
52-64;"Catalysts," Chemical Week, November 8, 1977, pp. 35-45;
and "Chemicals Make it a $1 Billion a Year Market," chemical
Week, April 4, 1979, pp. 46-63.
-------
E-271
TABLE 9
ESTIMATED SALES, MAJOR U.S. PRODUCER OF CATALYSTS: 1976
Sales
Companya/ (millions of dollars)
Engelhard Minerals & Chemicals 85
American Cyanamid 70
W. R. Grace (Davison Division) 60
Air Products and Chemicals (Houdry Divsion) 50
UOP 45
Matthey Bishop 30
Filtrol 25
Kewanee industries (Harshaw Division) 20
Union Carbide 20
Girdler 15
Nalcot}/ 15
^/Ownership is given as of 1976. Since then, UOP has become part of The
Signal Cos., inc., Filtrol has become part of U.S. Filter, Kewanee
Industries has become part of Gulf Oil, and Girdler has become part of
United Catalysts, inc.
incudes $10 million in sales of Katalco, jointly owned by Nalco and
1C I.
Source: Mary K. Meegan, ed., Kline Guide to the Chemical industry, (3ru
ed., Fairfield. NJ: Charles Kline & Co., 1977).
INNOVATION
It appears that Catalyst producers are some of the most secretive in the
chemical industry. The catalysts themselves represent only a small fraction
of the cost of producing the final product, but a small improvement in the
catalyst can bring about a significant decrease in costs of production. For
example, one new catalytic cracking catalyst was estimated to reduce the cost
of a gallon of gasoline by l/3£ per gallon. Extrapolating this to all
catalytic cracking capacity leads to a savings of more than $250 million per
year, about 60 percent of the value of the entire petroleum catalyst market.
Because of the secrecy surrounding catalysts, details about the introduction
of new catalysts are sketchy, although it is apparent from the trade
literature that innovation is high, it seems that refiners are often
reluctant to experiment with new catalysts for fear of the economic
consequences of failure (e.g., a cost increase of 1/3$* per gallon) but once
the value of a new catalyst is demonstrated, refiners quickly adopt the new
product. For example, zeolites, introduced in 1962, accounted for 90 percent
of all catalysts used in catalytic cracking in 1972.
-------
E-272
OTHER CHEMICAL PRODUCTS
-------
E-273
Other Chemical Products Segment Summary
Cellulosic Man-maae Fibers
polishes and Sanitary Goods
Paints and Allied Products
Adhesives and Sealants
Explosives
Printing ink
Carbon Black
Gelatin
Salts, Essential Oils, and chemical Preparations. NEC
Other Chemical Products includes those portions of the industry that are
not classified elsewhere due to the presence of chemicals which either belong
to more than one other segment or have unique characteristics barring them
from any of the other segments. Most of the components are not very
innovative, though some develop new formulations basea on new chemicals
developed in other industries. For example, a new surfactant may be usea lor
new formulations in the polishes and sanitary goods industry. Two industries,
adhesives/sealants and printing ink, do exhibit a large amount of innovation.
Adhesives are bonding agents that hold similar or dissimilar substrata
together. The closely related sealants are used to fill gaps or joints, and
may also function as waterproofing agents. in the last ten years a number of
important products in this area have come under suspicion because of safety
and health concerns. One of the intermediates used in making almost all epoxy
adhesives is a suspected carcinogen, and workplace emissions of this
-------
E-274
intermediate have been regulated by OSHA. Formaldehyde emissions from the
urea formaldehyde adhesives used in construction have also come under
government scrutiny. Concern about the carcinogenity of materials and the
high levels of energy needed to produce many existing adhesives have prompted
a search for new products, and a number of new products have been recently
introduced.
The adhesives and sealants industry appears to be very unconcentrated. in
1977 there were 750 manufacturers, with the top 50 accounting for 68 percent
of industry sales. The large companies usually have a wide product line,
while the smaller companies specialize in specific product or market areas.
We believe that the printing ink industry has long had a very low degree
of innovation, but that recently a new process and new products have been
developed. Previously, inks dried on paper through the evaporation 01 a
solvent. But now ink is being "cured" with infrared heat. Unlike most firms
in the industry, the firms developing the new technology and products are not
simply blending existing ingredients—they are developing new products.
-------
E-275
Cellulosic Man-Made Fibers
-------
E-276
CELLULOSIC MAN-MADE FIBERS
DESCRIPTION
There are two types of cellulosic man-made fibers: rayon and cellulose
acetate. These fibers are used primarily for apparel and home furnishing
fabrics. Other uses include material for cigarette fibers, fillings for
pillows, and strengthening material for hoses, tires, and industrial belts.
The major end uses of cellulosics are summarized in Table 1. As indicated by
the table, rayon and acetate are substitutes for many natural and synthetic
^ibers.
The manufacture of these fibers is influenced by two major factors: tne
cost of raw materials, and the demand for cellulosic fiber commodities.
Although the cellulosics industry is substantial, with total product shipments
for 1977 valued at $853 million.!/ it comprises only a small portion of ail
textile manufacturing (See Figure 1). Since the vast majority of cellulosic
man-made fibers are used for common fabrics, it is clear that these fibers are
highly substitutable.
HISTORY
intended originally as a low cost replacement of silk, rayon was the first
man-made fiber, commercial manufacturing began in France in the late 1800s
and was soon followed by production in Germany, Switzerland and Belgium.
England also joined in and introduced the "viscose process", allowing for
cheaper production. By 1912 rayon hosiery was being produced in quantity and
four years later knitted rayon fabric for outerwear became available. World
War I inspired still more production and several new plants were built shortly
thereafter. As a result of technical advances in the production process,
rayon became entrenched in the American fabric industry.
British celanese Limited (now celanese Corporation) made the first
feasible acetate fiber in 1920, and in 1924 began the first United States
acetate production in Cumberland, Maryland, in 1954 Celanese developed an
economical process for the production of triacetate and commercialized it
under the trade name "Arnel". Although acetate and rayon demand decreased
during the mid-1950s, it was revitalized in the early 1960s with the
introduction of textured acetate doubleknit fabrics and solution-dyed
acetate. Demand for acetate also increased for its use as tow in cigarette
filters, cellulose acetate successfully infiltrated the textile industry, as
had rayon.
i/U. S. Department of Commerce, Bureau of the Census, 1977 census of
Manufactures (Washington, D. c.: Government Printing Office, 1979).
-------
TABLE 1
MAJOR END USES OF CELLULOSIC MAN-MADE FIBERS
Rayon
Cellulose Acetate
Apparel
Women's and Children's Apparel
Lingerie
Dresses
Suits
Blouses
Sportswear
Coats
Ra inwear
Accessories
Milinery
Underwear
Men's and Boy's Wear
Sport shirts
Summer and year-round suits
Slacks
Rugged outwear
Jackets
Raincoats
Work clothes
Ties
Home Industrial
Furnishings Products
Draperies Automobile
Slip covers tires
Upholstery Hoses
Table cloths V-belts
Bed spreads Conveyor belts
Blankets
Carpets
Mattress Covers
Sheets
Wall coverings
Other
Household
Products
Tapes
Ribbons
Cleaning
Cloths
Baby diapers
Sleeping bag
liners
Hospital
Goods
Scrub suits
Dividers
Drapes
Other;
Casket linings
Book-bindings
Filters
Apparel
Women's and Children's
Apparel
Pantsuits
Lingerie
Knitted Jerseys
Uniforms
Sportswear, blouses
Dresses
Evening Gowns
Men's and Boy's
Wear
Uniforms
Home Industrial
Furnishings Products Other
Carpets Automobile Tow for cigarette
Rugs Upholstery filters (large
Curtains volume)
Draperies
Fillings for
pillows
M
I
N)
Uniforms
Sources: American Fabrics Magazine, Encyclopedia of Textiles (2nd ed., Englewood Cliffs, NJ: Prentice-Hall, Inc., 1973); and
Mary K. Meegan, ed., Kline Guide to the Chemical Industry (3rd ed., Fairfield, NJ: Charles Kline & Co., 1977).
-------
FIGURE 1
BREAKDOWN OF TEXTILE PRODUCTS BY QUANTITY
Nat uralFibers (30%)
Man-Made Fibers (70%)
Wool (1%)
Cotton (29%)
Noncellulosics (62%)
Cellulosics (8%)
Polyester (at least 31%)
Nylon (12%) Acrylics (polyacylonitile),
Modacrylics, Oletin,
polypropylene, and others
12% or less
H
oo
Source: U.S. Department of Commerce, 1978 U.S. Industrial Outlook (Washington, D.C.:
Government Printing Office, 1978).
-------
E-279
PRODUCTION PROCESSES
Viscose and c up r ammonium processes, from which most rayon is currently
made, consist of the following major steps: sheets of bleached cellulose
sulfate pulp are steeped into a solution of caustic soda; the alkali cellulose
sheets that result are crumbled, stored for aging, combined with carbon
disulfide, and again dissolved in caustic soda, yielding a viscous solution
called viscose, which is passed through a dilute solution of sulfuric acid ana
extruded through the holes of a spinneret. Fine filaments are formed which
are spun into yarn or cut into staple. The cuprammonium process is similar,
except ammonium copper oxide is used, and the filaments are stretched to yield
the finest (thinnest) filaments to be manufactured commercially.
In the production of cellulose acetate, cellulose is combined with acetic
acid in a process called acetylation. Hydrolysis and precipitation reactions
yield solid cellulose acetate which is then washed, dried, and liquefied with
acetone. As with rayon production, filaments are formed by streaming the
solution through a spinneret.
Cellulose production presents certain health risks from the exposure to
toxic reagents. The final products are non-toxic, however.
ECONOMIC OUTLOOK
Producers
Standard and poors (1978) reported only 22 manufacturers of cellulosic
man-made fibers. The 1977 Census of Manufactures, however, stated that the
total number of establishments for the industry was 10. TO add to the
confusion, the Kline Guide to the Chemical industry (1977) listed seven major
cellulosics producers. These companies are listed in Table 2.
TABLE 2
CAPACITIES OF MAJOR U. S. PRODUCERS OF CELLULOSIC MAN-MADE FIBERS
(millions of pounds per year)
Company Acetate Capacity^/ Rayon Capacity^/
Akzona —
AvTex 45 455
Beaunit — 75
Celanese 373
Courtaulds — 185
Dupont 50
Eastman Kodak 265 _ ™
Total 733 825
a/1976 data
b/1975 data
Source: Mary K. Meegan, ed., Kline Guiae to the Chemical industiy (3rd
ed., Fairfield, NJ: Charles Kline & Co., 1977).
-------
E-280
These discrepancies are most likely due to differences in the classifi-
cation of the businesses and establishments associated with the industry.
yet, regardless of such differences, it appears that the industry is
concentrated. Furthermore, Table 2 shows that celanese possesses 51 percent
of the production capacity for acetate fibers and that Avtex possesses 55
percent for rayon fibers.
Production
Table 3 presents the production output of man-made fibers.
These data reveal large drops in production for most categories during the
1974 to 1975 period. This was largely due to rising energy costs and a
general economic recession.
Sales vs. costs
Data presented in the 1977 Census of Manufactures indicate that from 1972
to 1977 the annual percentage increase (in constant 1972 dollars) of the cost
of raw ma'terials for the cellulosics industry was 8.65 percert. Nevertheless,
the annual percentage increase (constant 1972 dollars) from 1972 to 1977 in
the price of cellulosics was 0.27 percent.^/
The sales volumes for 1972 and 1977 (in constant 1972 dollars) also
indicate that the industry's real growth is stagnant. Furthermore, the number
of firms competing in the industry has been reduced during this period as
several marginally profitable firms, faced with the aforementioned marginal
squeeze, left the industry (See Table 4). The major reascn for the marginal
squeeze has been competition from other synthetics. The drastic price
advantage of these synthetics (illustrated in Table 4-5) has contributed
heavily to sales stagnation and industry consolidation.
The differences between the Kline Guide and the Producer Price index are
primarily due to differences in the way these data were collected. The PPI
data reflect the manufacturer's list prices for items, while the Kline Guide
data attempt to reflect actual market prices.
An aspect of the industry that has improved over the last few years is
foreign trade. Table 4 shows the compound average annual growth rates from
1967 to 1976 for the real value of cellulosic exports and imports. Although
the foreign market appears to be continually improving, Table 6 also shows
that this market is only 8.7 percent of all industry shipments.
.2/GNP price deflator from: Executive Office of the U.S., Economic
Report of the President (Washington, D.C. : Government Printing Office, 1979).
-------
TABLE 3
PRODUCTION OUTPUT OF MAN-MADE FIBERS
Product
Year
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
Per Annum
Annual Change
(percent)
1977-78 1968-78
CELLULOSIC FIBERS
Acetate^/
Rayon
308
597
290
598
298
543
313
436
382
817
462
895
429
965
476
915
498
875
498
1078
490
1104
-5
-6
SELECTED NONCELLULOSIC FIBERS
Acrylic^/
NylonS./
Polyester!/
726 709
2550 2326
3800 3642
621
2075
3340
525
1857
2995
631
2124
2926
742
2175
2888
626
1974
2328
545
1595
1142
492
1355
1022
533
1411
939
521
1350
827
2
10
4
3
7
18
NJ
CD
3/includes diacetate and triacetate; excludes production for cigarette filtration.
Is/includes modacylic.
S/includes aramid.
{•[/excludes yarn and raonofilaments.
Source: Chemical and Engineering Mews, June 11, 1979.
-------
E-282
TABLE 4
ECONOMIC INDICATORS: 1967
Variable
77
Year
Total Number of Establishments
Value of product Shipments
(1972 constant dollars, in millions)
1967
23
1977
10
602.1
Sources: Executive Office of the U.S., Economic Report of the President
(Washington, D.C.: Government Printing Ofiice, 1979); and U.S.
Department of commerce, Bureau of the Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979)
Year
TABLE 5
INDICES OF AVERAGE PRODUCER PRICES OF MAN-MADE FIBERS
Source
Kline Guide to the Chemical industry3/
Producer Price
Synthetic
Cellulosic
Synthetic
Cellulosic
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
100.0
92.5
86.2
82.1
78.3
65.6
74.6
74.0
81.9
-
-
-
—
100.0
96.1
98.0
98.6
99.6
99.8
111.6
152.5
218.8
100.0
98.8
98.7
98.5
98.0
98.0
97.9
100.8
101.5
102.2
106.5
107.6
117.8
100.0
100.4
100.9
100.9
102.4
106.2
109.0
129.2
145.8
a/Mary K. Meegan, ed., Kline Guide to the chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
j-yU.S. Department of Commerce, Producer Price index, various years.
-------
E-283
The major factor leading to the apparent downturn and consolidation of
the cellulosics industry seems to be the inability of manufacturers to
underprice the other synthetic fiber competition. The recent large increases
in petroleum costs seem to have made cellulosic production too expensive to
sucessfully compete with the less expensive but equally substitutable
synthetics. Because raw material costs constitute a large fraction of total
production costs, it is very difficult for manufacturers to produce cellulosic
fibers that can be sold at cheaper prices. However, if production or raw
material costs increase substantially for the noncel-iulosic man-made fibers,
then cellulosics could experience a comeback, althouch it would be a very slow
one. It appears unlikely, given the fixed nature or manufacturing processes
and the emphasis on reducing processing costs, that nan-made cellulosics will
be affected by TSCA.
-------
E-284
TABLE 6
VOLUME AND GROWTH OF FOREIGN TRADE OF CELLULCSICS: 1967-1976
Factors Averages
Exports as a percent of
industry shipments 8.7
imports as a percent of
apparent consumption. 7.9
Compound average annual
rate of growth 1967-76
(percent):
Value of shipments
(current $) 0.5
Value of exports
(current $) 12.3
Value of imports
(current $) 7.4
Source: U.S. Department of Commerce, 1P78 U.S. Industrial Outlook
(Washington, D.C.: Government printing Office, 1978).
-------
E-285
polishes and Sanitary Goods
-------
E-286
POLISHES AND SANITARY GOODS
DESCRIPTION
This section gives a general description of SIC 2842 and its relation to
other industrial segments. A later section discusses industry structure and
production.
This SIC includes a diverse set of products, producers, and markets and
cannot be classified as a homogeneous segment. The "industry" includes
producers of polishes; waxes; deodorants; household, institutional, ana
industrial disinfectants ; dry cleaning solutions; household bleaches; and
other sanitation preparations.
Shipments were valued at $2,610 million in 197?1/ and were distributed
to a wide range of users. Bureau of the Census data indicates there were 1015
establishments in this SIC in 1977, with 780 (76.8 percent) having less than
20 employees. Census data also indicate that there were 1108 establishments
in 1972.
The use of industrial cleaning products extends to almost every other
segment of the economy. Table 1 shows sales only to major market segments,
some of which are for further resale.
PRODUCTION
The elements for the formulation of cleaning and polishing products for a
wide variety of uses come from a relatively limited group of chemicals. The
following list of products shows their chemical sources and some general usess
• Bleaches—sodium hypochlorite or calcium hypochlorite, used in
laundries.
• Alkaline Cleaning Compounds—mixtures of inorganic alkalies such
as hydroxides, carbonates, silicates, often with soaps,
detergents or bleaches. Their major uses are in metal cleaning,
dishwashing, paint-stripping and laundry alkalies.
« Scouring Cleaners—basically inorganic abrasives like pumice,
silica, felspar or volcanic ash, often containing detergents,
bleach or phosphates.
• Synthetic Detergents—usually organic surfactants, the active
ingredient in laundry detergents, and used as a mixer in many
products. (The surfactants are described in a separate chemical
profile and will not be discussed here.)
1/U.S. Department of Commerce, Bureau of the Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
-------
E-287
• Hand Soaps—based on synthetic detergents or natural products
using tallow, used in lavatories.
• Acid cleaners—mixtures of inorganic acids and bisulfates, often
with a minor amount of synthetic detergfnts. They are used in
metal cleaning and dairy processing.
• Deodorants—a mixture of perfume oils, occasionally with a
disinfectant, either for aerosol or natur?! diffusion
application.
• Disinfectants—various fungicides, bactericcides and
mildewcides, used in combination with surfactants and deodorants.
o Waxes—natural vegetable or synthetic polyolefin substances,
used on furniture, floors, leather, and exterior finishes.
TABLE 1
SALES OF CLEANING AND POLISHING PRODUCTS BY
USER MARKETS: 1977
Market Segment Percent of Total
Retail stores 12.8
Commercial laundries and dry
cleaners 11.1
Contract cleaners 9.2
Industrial and office buildings 9.2
Public food service 9.2
Hospitals and nursing homes 8.9
Food processors and farms 8.9
Transportation services 8.2
Schools and colleges 4.9
Metal processors 4.9
Hotels and motels 4.6
Government 4.6
Other 3.5
Total 100.0%
Source: Mary K. Meegan, ed., Kline Guide to the Chemical incustry (3rd
ed., Fairfield, New Jersey: Charles Kline & Co., 1977), p. 137.
Industry Structure
As previously suggested, the industry is highly diffuse witn less than 30
companies operating on a national basis. There are no publicly available data
that comprehensively list all of the producers or even major suppliers, since
there are broadly divergent market groups and more than 1,000 manufacturers.
-------
E-288
One large market group, industrial and institutional cleaning compounds (which
includes acid cleaners, deodorants, disinfectants, bleaches and synthetic
detergents), is relatively concentrated; the top 10 producers h?d about 44
percent of total sales in 1976. Table 2 lists these producers end their 1976
sales volumes.
TABLE 2
SALES VOLUMES MAJOR U.S. PRODUCERS OF INDUSTRIAL
AND INSTITUTIONAL CLEANING COMPOUNDS, 1976
Rank
1
2
3
4
5
6
7
8
9
10
Company
Economics Laboratory
S. C. Johnson
Chemed
National Chemsearch
National Service industries
West Chemical Products
BASF Wyandotte
Procter & Gamble
Diversey
Purex
Sales volume
(millions of dollars)
135
110
80
65
60
50
45
45
40
35
Total Sales of all Producers in the Industry: 1976
Source:
1,525
Mary K. Meegan, ed., Kline Guide to the Chemical industry (3rd
ed., Fairfield, NJ: Charles Kline & Co., 1976), p. 338.
Although this market segment can be broadly categorized by type of
product, final products in retail markets are diverse. Many of the larger
firms have their manufacturing and sales organized along product lines. For
example, Economics Laboratory is divided into four divisions: institutional
(food service and janitorial), Klenzade (dairy farms, food processors), Magnus
(metal finishing and transporation) and Magnus Maritec (marine).^/
The major categories of substantial raw materials used by this Jndustriy
are indicated in Table 3.
.2/Mary K. Meegan, ed., Kline Guide to the chemical industry (3rd ed.,
Fairfield, New Jersey: Charles Kline & Co., 1977), p. 138.
-------
E-289
In addition to chemical synthesis, the production of polishes and sanitary
goods requires a great deal of mechanical mixing. However, PMN submiosion
requirements only affect new processes of chemical synthesis. Therefore, only
firms that formulate and/or synthesize the ingredients would be affecttct. This
involves a minority of firms, as most merely purchase and mix ready-madf
components. in fact, with respect to polishes and sanitation goods, BAoF
Wyandotte and Proctor & Gamble are probably the only major firms that would be
directly affected by TSCA.
Many materials are unlikely to undergo changes in chemical synthesis
because their composition and application are relatively simple. As an
example, it is unlikely that the chemical formula for bleach could be changed
and still have it retain its oxidation power, the source of its
effectiveness. (Stronger oxidizing agents such as perchlorates are much more
expensive and do not compete commercially on a large scale with the common
household and industrial bleaching agents.) Furthermore, it appears extremely
unlikely, for chemical and processing reasons, that a less expensive but
equally strong bleaching agent would be substituted. Of the materials
associated with the industry, surfactants, because of their diversity arc
innovativeness, would primarily be involved in chemical changes. (See
Chemical Profile on Surfactants.).
TABLE 3
MAJOR GROUPS OF RAW MATERIALS USED IN POLISHES
AND SANITARY GOODS PRODUCTION, 1977
Sales volume
Item (millions of dollars)
Surfactants and wetting agents 80.3
Perfumes 24.2
Builders 10.7
Sodium Silicates -8
Labels, containers 344.6
Oils & Greases 5.0
Caustics 36.0
Other, not classified 690.0
Total 1,181.7
Source: Department of commerce, Bureau of the Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office,
1979).
-------
E-290
paints and Allied Products
-------
E-291
PAINTS AND ALLIED PRODUCTS
DESCRIPTION
Paints and allied products are categorized into two types: trade sales
paints and industrial finishes. Trade sales paints are often sold in retail
markets and are used as coatings for buildings, ships, etc. industrial
finishes are made to user specifications are are sold to manufacturers for use
on automobiles, appliances, furniture, and other items. From 1966 to 19V6 the
industry experienced relatively slow and steady growth, as indicated in Tarle
1. Between 1973 and 1976 inclusive, production gains slowed due to the
general recession in 1974 and 1975. Thus, the large gains in sales from 1°73
to 1976 were primarily due to price increases.
paint technology remained static for many years prior to World War I,
consisting basically of mixing a limited number of vegetable oils with
solvents, minerals, and some synthetic dyes. After the war, many new
synthetic raw materials and additives were developed, producing a wide variety
of consumer and industrial coatings.
The paint segment is relatively more mature than most of the other
chemical segments but is also relatively small in terms of revenue. Its spall
size is illustrated in Table 2. which compares the sales of paints with
several other representative segments.
Although paints are often categorized by market, the chemistry of coatings
is largely determined by the product specification desired and, thus, by the
components within the paint necessary to obtain the desired characteristics.
All paints are composed of at least two and usually three major components:
(1) the film-forming binder, consisting of resins or oils, (2) the dispersion
medium, which maintains fluidity (usually water or an organic solvent) and (3)
a pigment system, to impart color and opacity. The first two components are
sometimes called the vehicle. When applied, the solvent evaporates, leaving
the binder and pigment.
Because coatings are designed with different substrates, application
techniques, curing methods, costs, durabilities, and a host of other
specifications, the variety and specialization of finished products are among
the highest in any of the chemical industries.A/ These many varieties and
specializations result from various combinations of the aforementioned
components.
oan Huber, ed., Kline Guide to the paint industry, (5th ed., Fairfield,
NJ: Charles Kline & Co., 1978), p. 28.
-------
E-292
TABLE 1
U. S. PRODUCTION AND SHIPMENTS OF TRADE SALES PAINTS
AND INDUSTRIAL FINISHES, 1966-1976
Production
Shipments
millions of dollars
Year
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1966-1971
1971-1976
V
Trade
Sales
Paints
415.9
398.4
423.7
430.3
427.6
431.1
451.5
424.0
474.6
451.5
473.5
111^-Ai.k^*^!' '-'•--. v
Industrial
Finishes
421.1
383.1
419.5
450.1
399.2
443.5
475.3
473.0
457.3
438.1
455.2
Total
837.0
78.5
843.2
880.4
826.8
874.4
926.9
897.0
932.0
889.6
928.7
Trade
Sales
Paints
$1,312.4
1,329.5
1,427.5
1,473.5
1,497.6
1,562.8
1,659.3
1,658.9
1,870.9
2,079.0
2,446.2
industrial
Finishes
$1,051.9
1,018.7
1,159.3
1,303.5
1,239.4
1,268.2
1,349.8
1,473.9
1,800.7
1,947.6
2,231.9
Total
$2,364.4
2,348.3
2,586.8
2,776.7
2.737.1
2,830.9
3,009.2
3,133.1
3,671.6
4,026.6
4,686.0
0.7
1.9
Average Annual Growth (in percent)
1.0
0.5
0.9
1.2
3.6
9.4
3.8
11.9
3.7
10.6
Source: U. S. Department of Commerce, Bureau of the census, Current
industrial Reports (Washington, D. C.: Government Printing Office,
various years).
TABLE 2
SALES COMPARISON OF THE PAINT INDUSTRY WITH OTHER CHEMICAL SEGMENTS, 1977
Segments Revenue in Millions
Paints
Basic organics
Inorganics
Agricultural chemicals
Plastics
5,100
21,755
10,350
9,685
11,615
Source: Mary K. Meegan, Kline Guide to the Chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977).
-------
E-293
RAW MATERIALS, CLASSIFICATION
Natural Oils and Resins
Natural oils and resins account for approximately 20 percent of all
binders used. They include oils such as linseed, soybean, tall, tung, fish
(menhaden), castor, coconut, and safflower. The only natural resin, shellac,
has been largely replaced by synthetics. Natural oils, once the onl/ drying
oils available for coatings, are used singly or in combination with other
natural or synthetic binders. Their use has declined from 624 million pounds
in 1965 to 419 million pounds in 1972, and is expected to continue to
decline.2/
Natural oils are slower drying and less durable than synthetics. Their
primary advantage is that they are less expensive and non-toxic, and their
properties are well known. Linseed oil is the largest selling natural oil,
comprising 35 percent by volume of all natural oils used in 1977. It has
excellent exterior durability, and is relatively fast-drying.^/ Fish,
castor, coconut, tall, and soybean are semi-drying oils, and are used in
combination with other binders. Their main advantage is lower price.
Synthetic Resins
Synthetics were first used in 1923 when cellulosic nitrate was introduced
to lacquer. Since then, their growth has been at the expense of natural
oils. The major categories, in order of their volume of use, are alkyds,
acrylics, vinyls, epoxies, aminos, urethanes, cellulosics, styrenes, and
phenolics.4/ These resins are used singly or in combination, and new
mixtures are constantly being devised.
Alkyds are relatively low in cost, have a high degree of compatibility
with other resins, and are often used in combination with other synthetics and
natural oils. They are the products of saturated polycarboxylic acids and
polyfunctional alcohols modified by fatty acids. They are used in interior
and exterior enamels and coatings, but are hardly used in water-based
coatings. Alkyds lost some price competitiveness during 1974 and, as a
result, lost some of their market share.I/ Research is currently being
conducted to develop water-based alkyds.
Acrylics are predominantly copolymers of esters and polymers of acrylic or
methacrylic acid. Because a number of esters can be copolymerized together,
there are many varieties of resins available. Acrylics are used extensively
j/lbid., p. 31.
3/ibid., p. 32.
i/Ibid., p. 29.
1/lbid.
-------
E-294
in exterior and interior high-gloss and semi-gloss coatings, as well as in
automobile finishes. Acrylics are used both in solvent and latex-based
coatings.
Vinyl resins are formed from the polymers and copolymers of vinyl acetate
and vinyl cloride by copolymerizing with fumarates, maleates, acrylates, and
methacrylates. Vinyls are used primarily in interior latex paints, since they
are less expensive than acrylics ana more durable than styrenes.
Epoxy resins are made by the reaction of bisphenol with epichlorohydrin,
followed by cross-linking with hardeners. They are experiencing increases in
a wide variety of applications due to their excellent adhesion, chemical
resistance, and overall durability. They are used in solvent, aquatic, and
powder coatings. The interest in developing a replacement for solvent-based
coatings will result in powder coatings doubling their market share by 1982,
according to the American Paint and Coatings journal.6/
Amino resins are urea-formalaehyde and melamine formaldehyde, and are
always used in combination with other binders. They have excellent color and
gloss retention, and are used in high-gloss baking finishes.J/
Urethane resins, a newer form of binders, are formed by reacting isocya-
nates with hydroxyl compounds. They have excellent durability, corrosion
resistance and adhesion. They are more costly than acrylics, and are being
used in automotive finishes.]*/
The remaining binders, cellulosics, styrenes and phenolics, are older
products whose growth has been slowed by replacement from the newer
synthetics. They are lower in cost, but their price advantage is not enough
to offset their eventual decline.9/
Pigments used in paints are described in detail in the profile "inorganic
Pigments", and no discussion of their chemistry is made here.
Solvents are used in large quantities in all paints to add fluid
properties and to affect drying time, flow characteristics, and consistency of
application. The most widely used solvents are water, ketones, esters,
alcohols, mineral spirits, toluene, xylene, naptha, and glycols. Data on
their use is incomplete. The solvent used depends on its ability to dissolve
the binder and mix with the pigment, along with its cost. Solvents do not
react chemically with the binder and pigment other than to dissolve the
binder, so the choice of solvent until the late 1960s was based solely on
dissolving properties, volatility, and price.
VAmerican paint and Coatings journal, June 16, 1979.
2/Meegan, Kline Guide, p. 31.
8/Ibid.
i/ibid.
-------
E-295
The advent of federal and state air quality regulations has had a great
impact on the choice of solvents now in use. While petroleum solvent-based
paints presently enjoy a 60 to 70 percent market share of industrial coatings,
they are steadily losing market share to water-based coatings, powders, and
high solids. iP_/ Research and development efforts are examining more
efficient processes of applying and curing finishes without the use of
petroleum solvents. These processes include powder coating,
electrodeposition, and thermal and radiation cur ing .ii/ it is projected
that, by the mid-1980s, regular solvent-based paints will have only 25 percent
of the market.
The paint industry is one of the few remaining chemical segments
characterized by many small firms. Table 3 shows the trends in the number of
producers in 1963, 1967, 1972, and 1977. The total number of producers has
been getting smaller, mainly due to mergers and acquisitions.il/ Because
the products are relatively heavy per unit of value they are not shipped long
distances. There high shipping costs have created a barrier to effective
nationwide distribution by large firms. Thus, smaller manufacturers are very
competitive on a regional basis. 14/
RAW MATERIALS, PRODUCTION AND SALES
As has most other segments of the chemical industry, the paint industry
has had large increases in the costs of raw materials since 1973. Table 4
illustrates this trend for several major raw materials . Producers of trade
sales paints face a mature competitive market, where price reductions to gain
and maintain market share commonly occur. Thus, margins on sales have been
reduced significantly during the 1970s.
Table 5 illustrates the reduction in average profit margins on paints as
compared to all manufacturing industries' average margin on sales.
Trade sales have suffered more than industrial finishes, because
industrial coatings are more specialized and can command higher margins.
Table 6 compares the price indices of trade sales and industrial finishes for
1967 through 1977.
i°/Ibid., p. 35.
2J/U.S. Department of commerce, 1978 U.S. industrial Outlook
(Washington, D.C.: Government Printing Office, 1978), p. 120.
ii/C. H. Kline & Co. estimate.
ii/U.S. Department of Commerce, 1978 U.S. industrial Outlook, p. 120.
ii/U.S. Department of commerce. Bureau of Census, 1972 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1975); and U.S.
Department of Commerce, Bureau of Census, Current Industrial Reports
(Washington, D.C.: Government Printing Office).
-------
E-296
TABLE 3
PRODUCERS AND CONCENTRATION IN THE PAINT INDUSTRY, FOUR SELECTED YEARS
Top Eight Producers'
Share of Market
Year Number of Producers (in percent)
1963 1,579
1967 1,459
1972 1,317 33
1977 1,275 44
Sources: Mary K. Meegan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield, NJ: Charles Kline & Co., 1977); U.S. Department of
Commerce, 1978 U.S. industrial Outlook (Washington, D.C.:
Government Printing Office, 1978) ; amd U.S. Department of Commerce,
Bureau of Census, 1972 Census of Manufactures and 1977 census of
Manufactures (Washington, D.C.: Government Printing Office, 1975
and 1979) .
-------
E-297
110.9
115.2
—
343.7
137.8
—
318.5
175.7
—
106.9
206.3
186.9
100.0
112.4
197.0
198.5
106.4
112.4
155.3
206.3
110.8
TABLE 4
PRICE INDICES OF SELECTED PAINT RAW MATERIALS, 1973-1978
1967 = 100
1973 1974 1975 1976 1977 1978
Paint resins
Linseed oil
Nitrocellulose
Epoxy, unmodified
Toluene
diisocyanate — — — 112.1 120.6 113.6
paint pigments — — — 102.7 104.4 105.2
Calcium carbonate 122.2 126.8 150.0 150.0 160.4 168.5
Titanium dioxide 100.0 117.4 152.4 170.9 178.0 178.1
Zinc oxide 130.1 235.4 262.4 260.7 253.2 237.0
Chrome yellow -- — — 108.5 117.4 124.5
Paint solvents — — — 101.9 105.5 112.0
Methyl ethyl ketone 81.7 118.7 149.0 161.8 168,9 175.7
Mineral spirits 105.2 NA 175.7 185.2 201.0 237.9
Xylol (mixed
xylones) 106.7 193.6 244.0 244.2 238.5 218.9
isopropyl alcohol — — — 100.2 110.6 119.6
Average paint
Materials 113.2 152.3 177.2 189.8 205.9 208.3
Source: U.S. Department of Labor, Bureau of Labor Statistics.
-------
E-298
TABLE 5
PROFIT COMPARISON BETWEEN PAINT COMPANIES
AND ALL MANUFACTURING FIRMS, 1950-1977
Year
1950
1955
1960
1965
1970
1972
1974
1975
1976
1977
Sources
Average Margin on Sales (percent)
Paint All Manufacturing
6.4
6.7
6.3
5.6
2.6
3.6
3.1
2.4
2.5
2.8
7.7
6.7
5.5
6.4
4.7
5.1
5.2
4.4
5.1
5.0
Mary K. Meegan, ed., Kline Guide to the Chemical industry
(3rd ed., Fairfield, NJ: Charles Kline & Co., 1977).
TABLE 6
AVERAGE MANUFACTURERS' PRICES FOR PAINTS, 1967-1977
(1967=100)
index
Year
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
Sources
Sales
Paints
100.0
101.0
102.6
104.9
108.6
110.1
117.3
118.1
137.9
154.8
160.3
Industrial
Finishes
100.0
104.9
108.9
116.8
107.6
106.8
117.2
148.1
167.2
184.3
194.1
Mary K. Meegan, ed., Kline Guide to the Chemical
Industry (3rd ed., Fairfield, NJ: Charles Kline &
Co., 1977).
-------
E-299
COMPETITION AND INNOVATION
The trend toward higher prices for industrial finishes is indicative of
the search for more sophisticated paint "systems," including both the coating
and the method of application and cure. As previously discussed reaulatory
pressures have caused reformulations that are easier and safer to apply by
home consumers and cause less environmental pollution.JL5/ in the industrial
finishes area, the manufacture of powdered or high solid coatings now calls
for more sophisticated technical requirements and greatly increased capital
expenditures.16/
The National Paint and Coatings Association estimated R&D for new products
at 2.2 percent of sales in 1977.12/ As research in more sophisticated
coatings increases, many smaller companies may not be able to afford the funds
necessary to develop and produce the new formulations that will meet both
regulatory standards and purchasers' needs.i8/ AS a result, the trends
toward industry consolidation already discussed will probably continue. (It
should be emphasized that the necessary innovation will involve new
formulations rather than new chemicals).
Foreign trade has never been a significant portion of business in the
paint industry, and amounted to $1.13 million in exports, about two percent of
total sales in 1977.H*/ Although the balance of trade is favorable, growth
is expected to be moderate since high shipping costs relative to the cost of
goods makes overseas distribution unattractive. Future import growth or
product substitution by imports will be low because of environmental
restrictions.
is/Regulations include: 1970 Clean Air Act; 1972 Fresh Water pollution
Control Act Amendment; 1976 National Education and Disease Preventon Act; 1970
Occupational Safety and Health Act; 1970 Hazardous Materials control Act.
M/U.S. Department of Commerce, 1978 U.S. industrial Outlook, p. 119.
i2/National paint and Coatings Association, Operating Cost Survey.
M/The top 34 companies accounted for 72.4 percent of sales in 1977,
leaving 1,241 very small firms with average sales of only $1.13 billion per
firm.
19/U.S. Department of Commerce, U.S. Exports, FT 410, 1978.
.2JL/C.H. Kline & Co. forecast.
-------
E-300
Adhesives and Sealants
-------
E-301
ADHESIVES AND SEALANTS
DESCRIPTION
An adhesive is a bonding agent that holds similar or dissimilar substrata
together. "Adhesive" is a generic term that applies to a wide variety of
chemical compounds including glues, cements, and mucilage. "Glue" orginally
referred to animal-derived adhesives used to bond wood together, but now
refers to all classes of adhesives. Mucilage is a solution of vegetable gums
generally used for bonding paper. Cements include a wide class of natural
rubber, thermo-plastic resin, and synthetic elastomer bonding agents.
Sealants (and caulks) are used to fill gaps or joints, and may also function
as waterproofing agents.
The base material of adhesives and sealants can be mineral, natural
organic, or synthetic. The industry is defined by application rather than by
chemical type, and measurements of the activity of the industry have varied
because of differing categorizations. The Bureau of the census1 definition
includes firms engaged in the manufacture of industrial and household
adhesives, sealants, and caulks for further resale; it excludes firms engaged
in "the manufacture of plastics and resins. . . for protective coatings,"!/
as will this discussion. Also, the manufacture of adhesives for captive
use^/ and inorganic adhesives such as Portland cement, soluble silicates,
hydraulic cements, phosphate cements, and thermosetting powdered glasses will
not be considered.
Natural Adhesives
Until the advent of petroleum derived adhesives, the industry was composed
of animal and vegetable based products. These included hide and bone glues,
protein adhesives, vegetable adhesives, coal tars, and rubber-type cements.
In general, these natural products are less expensive than their synthetic
counterparts, but they are also are less versatile. Table 1 shows the change
in product mix between natural and synthetic products in 1967, 1972, and 1977.
Currently, the animal glues are widely used in paper packaging and in some
wood furniture applications, vegetable adhesives such as dextrin are among
the lowest in cost per pound, and are used where water resistance is not
important, such as with can and bottle labels. Rubber cement, sold as such,
is used for rubber bonding and bonding where the ease of later removal is
important, e.g., with graphic arts.
1/U.S. Department of Commerce, Bureau of the Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979), p. 1.
2/Examples are shoe or plywood manufacturers who purchase raw materials
and make their own glues for use in the finished product only.
-------
E-302
TABLE 1
U.S. SHIPMENTS OF ADHESIVES BY TYPE: 1967, 1972, 1977
(millions of dollars)
U.S. Shipments
1967 1972 1977
Natural base adhesives
Animal 35 31 51
Protein 16 12 23
Vegetable 27 46 43
Other 20 31 _ 44
Subtotals: 98 (20.6%) 120 (14.4%) 161 (11.4%)
Rubber Cements 67 (14.1%) 94 (11.3%) 160 (11.3%)
Other 20 41 81
Synthetic Resins 290 (61.0%) 578 (69.4%) 1,016 (71.7%)
Grand Totals: 475 833 1,418
Source: U.S. Department of Commerce, Bureau of the Census, 1967 Census of
Manufactures (Washington, D.C. Government Printing Office, 1970) ;
1972 Census of Manufactures (1975) ; 1977 Census of Manufactures
(1979) .
The natural and rubber adhesive segments of the adhesives industry were
in existence long before the advent of synthetics and are naturally more
mature in terms of products and pricing. Generally, animal and natural rubber
base adhesives are pseudo-commodity products with low cost as an important
selling feature.I/ They must compete against more versatile synthetic
adhesives, and usually this is possible only with lower prices.
Synthetic Adhesives
The advent of synthetic products started with synthetic rubber-based
cements and spread to petroleum-based glues and cements. Currently there are
several major classes of synthetic cements, including epoxies, phenolics,
amino resins, polyvinyls, hot melts and specialty adhesives.
Table 2 shows the growth of the major classes of synthetic adhesives
between 1972 and 1977.
1/C. H. Kline & Co. defines pseudo-commodities as differentiated end
products but, like true commodities, they are sold in relatively large
volumes, are widely used, and may have the bulk of their sales concentrated in
a few large customers.
-------
E-303
TABLE 2
SALES OF SYNTHETIC ADHESIVES, 1972 and 1977
Adnesives Salesa/(miilions o£ gpiiars and percent of total)
1972 1977
Epoxies 48.2 (8.3%) 70.8 (7.0%)
Phenolics 53.4 (9.2%) 114.7 (11.3%)
polyvinyls 183.9 (31.8%) 258.7 (25.5%)
Hot melts 27.6 (4.8%) 114.0 (11.2%)
Synthetic Rubbers 149.8 (25.9%) 289.9 (28.5%)
Other specialty 115.4b/ (20.0%) 167.4 (16.5%)
TOTALS: 578.3 (100%) 1015.5 (100%)
Source: U.S. Department of Commerce, Bureau of Census, 1977 Census
of Manufactures, (Washington, D.C.: Government Printing
Office, 1979).
a/ Overall data may be 15-20 percent too low according to C.H.
Kline &
Co. estimates.
b/ Estimated.
Epoxies are among the most expensive adhesives per pound and accounted
for slightly more than $300 million in sales in 1978-i/ The markets for
epoxies are in stable, high performance areas, and growth projections ranged
from 3 to 8 percent over 1978.17 These market areas include automobiles,
appliances, protective coatings, electrical laminates and construction.
Ninety percent of sales are epoxies that are made from a reaction of biphenol
A with epichlorohydrin. OSHA currently has a 5 ppm (parts per million)
exposure standard for epichlorohydrin, and may lower this standard because of
carcinogenic concerns..§/ The long term economic effects of such an action
are unclear at this time, although formulation of epoxy without the use of
epichlorohydrin is more expensive.
Phenolics are the largest volume class of synthetic adhesives sold.
Their primary use, about two-thirds of their volume annually, is in plywood
and particle board applications; therefore, sales are tied to the construction
market. Phenolics, considered pseudo-commodities, were among the first
synthetic adhesives developed, and replaced animal glues in many wood
applications.
i/Chemical and Engineering News. August 16, 1979-
j/lbid., p. 14.
6/Ibid.
-------
E-304
The polyvinyls, including polyvinyl acetate and polyvinyl chloride, have
extensive uses in food packaging, furniture assembly, and general purpose
household glues.2/ Because of their variety of applications, they are
considered more like general purpose chemicals than like specific use
chemicals, and they are commodity items, in 1977 their tonnage of sales was
exceeded only by the phenolics.8/
The hot melts, introduced in the last 15 years, are the fastest growing
class of synthetic adhesives.2/ There are several types including nylon and
polyolefin. Hot melts typically contain up to 40 percent ethylene-vinyl
acetate copolymer in paraffin wax, and are melted to produce adhesion. This
makes them unique because there is no solvent to evaporate; thus, they are
becoming increasingly important in terms of lowered air pollution from
evaporated solvents. Hot melts have a wide range of applications including
packaging, bookbinding, shoemaking, metal bonding in cans, and furniture
assembly. Thet are also used in the aerospace, transportation, and
construction industries..10/
Sealants and caulks
The sealant industry is closely aligned with the adhesives industry.
There are a wide variety of natural and synthetic sealants including
bituminous asphalt, oleoresins, natural and synthetic rubbers, polymeric
resins, polysulfides, and silicones.
Bituminous asphalt sealants are used to seal concrete pavement and pipes
and have automotive applications as well. Oleoresins are used as putties and
architecural glazing compounds. The natural and synthetic rubbers have a wide
variety of applications in building construction and windshield sealing.
Polysulfide sealants have industrial applications in aircraft and fuel tanks
and in expansion joints for bridges, buildings and roadways. Silicone
sealants and caulks have high and low temperature applications for metal,
concrete, plastic, and wood. They are used extensively in automotive and
marine applications and in the aerospace industry to encapsulate electric
connections.
INNOVATION
Some firms in the adhesives and sealants segment seem to engage in little
new chemical entity creation. However, a large number of companies in the
segment produce chemicals for manufacturers seeking adhesives with special
properties. These companies do have a high rate of innovation.
2/Mary K. Meegan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield, New Jersey: Charles Kline & Co., 1977), p. 153.
il/U.S. Department of Commerce, Bureau of the census, 1977 census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
1/Meegan, Kline Guide.
jLS/Encyclopedia of Chemical Technology (3rd ed.. New York, N.Y.: John Wiley
& Sons, N.Y., 1978), vol. 1.
-------
E-305
PRICE AND PRODUCTION TRENDS
This section presents a discussion of industry structure, price and
production trends, the likely impacts of concerns over toxic substances, and
the increased costs of energy and raw materials.
Because of the wide variety of applications for adhesives and sealants,
the industry is relatively diverse and has a large number of medium and small
size firms. in 1977 there were 750 manufacturers, only 100 of whom had sales
in excess of $2 million. ll/ of these 750, however, 50 companies accounted
for 68 percent of the $954 million in industry sales for 1972 (an average of
approximately $13 million per firm) , leaving $305 million among 700
companies. 12/ The large companies usually have a multiple product line, and
the smaller companies specialize in product or market areas.
Recent prices reflect the impact of higher petroleum and process costs.
Table 3 shows the wholesale price indices of three major types of adhesives
from 1967 through 1977. The production of many adhesives, such as hot melts,
is energy intensive. This factor resulted in increased expenditures on R&D
over the past several years in an effort to find less energy intensive ways of
making and applying adhesives and less expensive raw materials.
In addition, increased concern over the carcinogenicity of materials and
solvents has prompted the search for new compounds whose intermediates are not
toxic and whose solvents are not as polluting .M/ For example, formaldehyde
emissions from the urea formaldehyde adhesives used in construction have come
under government scrutiny. This concern has prompted a high degree of
innovation. For example, in June 1979 General Electric 's Plastic Division
announced a one component epoxy that is set by heat, citing advantages of lack
of storage problems and the elimination of vapor emissions. However, prices
are 25 to 100 percent higher per pound than the industry averages for epoxies
presently used.iS/ "clue sniffing" in 'the past has received widespread
public attention, and manufacturers haye looked for substitute solvents and
compounds for general purpose glues.
ii/Meegan, Kline Guide, p. 134.
jj/lbid., p. 135.
jj/Encyclopedia of Chemical Technology, p. 155.
M/For example, the 4-4'-methylenebis (2-choloraniline) intermediate found
in several varieties of phenolics, which is listed as a carcinogen by OSHA.
!5/chemical and Engineering News, June 4, 1979, p.4.
16/Ibid., P- 156.
-------
E-306
TABLE 3
WHOLESALE PRICE INDICES FOR SELECTED ADHESIVES, 1967-1977
1967 = 100
Animal phenolic/ Rubber/
year Glues Vinyls Phenolics
1967 100.0 100.0 100.0
1968 100.0 102.2 100.4
1969 104.0 107.6 102.8
1970 105.6 113.5 107.6
1971 110.5 116.7 111.3
1972 110.5 116.9 111.7
1973 128.0 119.5 111.7
1974 196.1 138.1 137.2
1975 279.0 — 174.3
1976 221.1 — 178.8
1977 163.2 -- 184.9
Source: U.S. Department of Commerce, Wholesale price index, various years.
Production of adhesives, caulks, and sealants will parallel the consuming
industries, as previously mentioned. Although growth in the past has been
moderate and oriented towards traditional users, new applications in other
industrial areas will be the major fields of future growth. These areas
should include metalworking, aerospace, and transportation.17/
Table 4 illustrates the growth in sales of adhesives and sealants from
1967 through 1977 with estimates for 1980 and 1985 total sales.
In summary, pressure from rising raw material and recessing costs as
well as more stringent air quality standards may force major changes in the
products and manufacuring techniques for adhesives and caulks. TSCA's impact
may be somewhat felt in the area of epoxy but OSHA standards may ultimately
have more impact here. Thus, TSCA's eventual impact will probably be
overshadowed by broader, more compelling, and more urgent concerns of
pollution and rising input costs.
12/Meegan, Kline Guide, p. 133.
-------
E-307
TABLE 4
U.S. SHIPMENTS OF ADHESIVES, CAULKING COMPOUNDS
AND SEALANTS, 1967-1977
(millions of dollars)
Caulking
compounds
and sealants Adhesives Total
1967 $68 $475 $543
1968 76 a/ 524 600
1969 86 a/ 580 666
1970 96 a/ 548 644
1971 108 a/ 608 716
1972 121 833 954
1973 163 989 1,152
1974 232 1,172 1,404
1975 262 1,209 1,471
1976 300 1,350 1,650
1977 355 1,425 1,750
1980 a/ ~ — 2,175
1985 a/ — — 3,125
a/ Estimate.
Sources: U.S. Department of Commerce, Bureau of the Census, 1967
Census of Manufactures and 1972 Census of Manufactures
(Washington, D.C.: Government Printing Office, 1970 and
1975); and estimates by C. H. Kline & Co.
-------
E-308
Explosives
-------
E-309
EXPLOSIVES
OVERVIEW
This section gives the basic chemistry of widely used explosives and a
general description of their uses, it does not include government-owned
contractor plants, civilian ammunition, or fireworks and pyrotechnical
production. A later section discusses production, sales, and competition.
An explosive is a material that undergoes very rapia decomposition or
autocombustion (auto-oxidation) . There are two principal classifications for
explosives:
• low explosives, which autocombust at speeds less than 400
meters/second (the speed of sound) , and
• high explosives, which detonate at speeds ranging up to 8,500
meter s/second .
In addition, high explosives are subdivided into categories that
(a) explode when subjected to heat, impact or friction; thus they can be
used as detonating agents, and (b) those that are insensitive to external
forces and must be exploded using a detonating agent.
insensitive hiah explosives are called blasting agents, in 1856 Alfred
Nobel developed the first blasting agent — dynamite, which is nitroglycerine
soaked in cellulose or other inert material — and for a century it held the
major market share for mining explosives, in 1955, however, ANFO, a mixture
of approximately 90 percent ammonium nitrate and 10 percent fuel oil began to
replace dynamite because it was much less sensitive to shock, less expensive,
^* ft. *
and could be mixed on-site to yield greater explosive power. ±/ Other
blasting agents used today include Tri-nitrotoluene (TNT) , nitroglycerine,
ammonium picrate and cyclotrimethylenedinitramine (cyclonite) . initial
detonating agents include lead azide, mercury fulminate, and
diazodintrophenol. These agents are produced in smaller quantities than
blasting or low explosive agents due to their more hazardous nature.
Explosives are also categorized by function:
• Propellants — low explosives that generate large
volumes of gases and are used for rockets,
missiles, flares, shearing bolts, driving
turbines, and signaling. They can be liquid or
solid and can be individual compounds or
mixtures of several compounds.
1/Marv K. Meegan, ed., Kline Guide to the Chemical industry (3rd ed.,
Fairfield! New Jersey: Charles Kline & Co., 1977), p. 146.
2/stanford Research institute, chemical Handbook, 1978.
-------
E-310
• permissible explosives—approved for use in coal
mines because of their safety when used in a
coal dust atmosphere; usually modified
nitroglycerine.
• Military explosives—those used in shells and
bombs; TNT and ammonium picrate are widely used.
• Ammunition primers—formerly potassium nitrate,
now lead styphirate or tetracene.3/
• Blasting agents—ammonium nitrate and fuel oil
mixtures or slurries of TNT, sulfur aluminium
and ammonium nitrate.
None of the high or low explosives are toxic in use, although many are
extremely dangerous simply by the nature of their function and sensitivity.
With the exception of the ANFO mixtures, the actual chemicals in explosives
are tightly packaged for use and have little or no physical contact with
users. Production is made under carefully controlled and often isolated
conditions, where automated and remote control mixing, handling, and packaging
equipment removes much of the inherent physical danger from inadvertent
explosion.A/
PRODUCTION, SALES AND COMPETITION
As might be expected, there are no substitutes for explosives other than
cheaper, more powerful, and safer-to-handle explosives, and there is a very
restricted market for the majority of products. These markets, mining and
heavy construction, have exhibited a relatively slow and stable growth rate in
the past 15 years.5/ AS a result of this stability, volume growth of
explosive sales has averaged just over 5.8 percent yearly between 1967 and
1976. Table 1 illustrates the slow growth in production for the major
categories of industrial explosives.
Although it shipped $450 million worth of products in 1977, the industry
is small in comparison to most other chemical segments. Table 2 compares the
sales of the industrial explosives industry with several other representative
segments.
1/Meegan, Kline Guide, p. 148.
i/Illustrated Science and Invention Encyclopedia (New York, N.Y.: H.S.
Stuttman Co., 1977), Vol. 7, 1977.
1/U.S. Department of interior, Bureau of Mines, Minerals Yearbook
(Washington, D.C.: Government Printing Office, various years).
-------
E-311
TABLE 1
U.S. CONSUMPTION OF INDUSTRIAL EXPLOSIVES BY TYPE: 1967, 1972, 1977
(millions of pounds)
Blasting Agents
Cylindrical agents
Water gels
Other
Subtotal:
Fixed High Explosives
Permissible
Other
Subtotal:
Grand Total:
1967
69
305
374
1,895
1972
46
270
316
1976
66
167
1,288
1,521
266
226 a/
1,862
2,354
350
339 a/
2,393
3,082
45
202
247
3,329
a/ Classification changed from 1967, now excludes some explosives
formerly in that category which are not included in "Other"-
Source: U.S. Department of interior, Bureau of Mines, Minerals Yearbook
(Washington, D.C.: Government Printing Office, various years),
and U.S. Department of interior, Bureau of Mines, Mineral
industry Surveys, 1967, 1972, 1976.
TABLE 2
COMPARISON OF INDUSTRIAL EXPLOSIVES SALES WITH
OTHER CHEMICAL SEGMENTS: 1977
Segment
industrial explosives
Petrochemicals
inorganics
Plastics
Pesticides
Catalytic preparations
Organic dyes and pigments
Sales
(millions of dollars)
450
21,000
10,350
11,615
2,850
365
1,135
Source: Mary K. Meegan, ed., Kline Guide to the chemical
industry (3rd ed., Fairfield, New Jersey: Charles
Kline & co., 1977) , p. 4.
-------
E-312
The relatively mature nature of the market, coupled with the
pseudo-commodity nature of the products has acted to concentrate the
producers.6/ The three largest, Dupont ($110 million), Hercules ($90
million), and Atlas powder ($87 million), dominated the industry in 1977 with
66 percent of total sales. The top eight companies comprised 83 percent of
U.S. shipments in 1977.27
As previously mentioned, the markets for industrial explosives are both
concentrated and limited. Table 3 illustrates the relative consumption of
explosives by user industry for 1970, 1974, and 1976.
TABLE 3
INDUSTRIES CONSUMING EXPLOSIVES: 1970, 1974, 1976
(percent of total)
1970 1974 1976
Coal mining 44 49 54
Metal mining 20 17 15
Quarrying 19 20 15
Construction 17 13 16
Totals: 100 100 100
Source: Minerals Yearbook, 1970, 1974, 1976.
There have been rapid increases in the prices of explosives in the last
five years. Bureau of the Census data show annual price increases of 18.3
percent for ammonium nitrate slurry explosives and 15.0 percent for ANFO
explosives between 1972 and 1977. These two categories made up 31.6 percent
of total sales in 1977.8/ However, raw material prices of ammonium nitrate,
the main constituent in these explosives, increased 20.7 percent per year
during the same time period.^/ This margin squeeze has caused American
.6/C.H. Kline & Co. defines "pseudo-commodity" chemicals as those which
are differentiated end products but are formulated in large volumes and often
have the bulk of their sales concentrated in a few large customers.
2/Meegan, Kline Guide, p. 149.
1/U.S. Department of Commerce, Bureau of the Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
9/Ibid.
-------
E-313
Cyanamid, once a major explosives producer, to leave the industry. In fact,
the squeeze may continue to further concentrate the industry ..10/
We believe that no urgency to develop new explosives currently exists
since there is little risk of substitution by other products and sales growth
is expected to remain very slow. Rather than seek new ones, R&D seems to have
concentrated on improvements and refinements to existing products to make them
safer to handle and use. Efforts to hold down or reduce processing costs are
somewhat stymied by the batch processing nature of manufacture!!/ and the
elaborate safety precautions that must be taken to avoid premature
detonation. As a result of these restrictions, we feel that TSCA should have
little or no effect on this relatively isolated and mature industry.
iO/Meegan, Kline Guide, p. 149.
JL-L/Illustrated Science Invention and Encyclopedia.
-------
E-314
Printing ink
-------
E-315
PRINTING INK
The printing industry produces mixtures of pigments and binders made from
inorganic and organic pigments and organic dyes. The average firm employs 13
people and had slightly over $2.1 million in sales in 1977.i/
Most printing inks are colloidal mixtures, and chemical reactions are not
employed to make these items. Thus, aspects of this segment will not be
affected by TSCA and will not be discussed. Although the printing ink
industry has long had a very low degree of innovation, recently a new process
and new products have recently been developed. Previously, ink dried on the
paper as a solvent evaporated. Now ink is being "cured" with infrared heat.
Unlike most firms in the segment, the firms developing the new technology and
products are not simply blending existing ingredients; they are developing new
chemicals and will therefore be affected by TSCA.
1/U.S. Department of Commerce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
-------
E-316
Toilet Preparations
-------
E-317
TOILET PREPARATIONS
Major categories in the toilet preparations industry include:
Shaving preparations;
Perfumes;
Hair preparations;
Dentifrices;
Creams, lotions;
Lip, eye cosmetics;
Deodorants;
Manicuring preparations;
powders, and
Bath salts, oils, and bubble baths.
Section 3(B)(vi) of the Toxic Substances Control Act precludes regulation
by the Act of any cosmetic as defined and controlled by the pood, Drug and
Cosmetic Act of 1938. Section 201 of the Act defines cosmetics as:
"(1) articles intended to be rubbed, poured,
sprinkled, or sprayed on, introduced into, or
otherwise applied to the human body or any part
thereof for cleansing, beautifying, promoting
attractiveness, or altering the appearance, and
(2) articles intended for use as a component of any
such articles; except that such term shall not include
soap."
Therefore, SIC 2844 will not be affected by TSCA and will not be discussed.
-------
E-318
Carbon Black
-------
E-319
CARBON BLACK
Carbon black serves as a relatively cheap reinforcing agent for rubber.
It is a single element, carbon. The most common production process, which
accounted for 92 percent of production in 1976, i/ is furnace combustion.
Virtually all carbon black is synthesized from "carbon black oil," a liauid
petroleum refinery fraction which uses heat, does not use catalysts, and
produces no intermediates.
Because there is no chemical substitute for the element, there will be no
"new products". Therefore, this industry will not be discussed.
1/U.S. Department of Commerce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979).
-------
E-320
Salts, Essential Oils, and Chemical Preparations, NEC
-------
E-321
SALT, ESSENTIAL OILS AND CHEMICAL PREPARATIONS, NEC
SALT
This SIC includes evaporated salts from seawater and brine. Because there
is no chemical conversion, this industry will not be discussed here.
ESSENTIAL OILS
The SIC Essential Oils includes flavorants derived from natural sources
such as peppermint, lemon, orange, spearmint. Section 2(B)(vi) of the Toxic
Substances Control Act precludes any food additive, including essential oils,
that are controlled by the Food, Drug and Cosmetic Act of 1938 and amendments,
from coming under the provisions of TSCA. Therefore this industry will not be
addressed.
CHEMICAL PREPARATIONS, NOT ELSEWHERE CLASSIFIED
This SIC includes a widely divergent set of chemical products. It cannot
be easily classified by size, chemistry, market or producers. The approximate
volume for this diverse group was over $2.3 billion in 1977.17 Table 1
shows the major categories, the number of firms in each category with over
$100,000 in shipments, the average sales per firm, and the total sales for
each category.
TABLE 1
MAJOR CATEGORIES OF CHEMICAL PREPARATIONS NEC, TOTAL SALES, FIRMS,
AND AVERAGE SALES OF FIRMS IN EACH CATEGORY, 1977
Number of Firms
with shipments
Total greater than Average Sales
Category Category Sales $100,000 per Firm
($ millions) ($ millions)
Automotive Antifreezes 299.8 34 8.82
Plating Compounds 254.1 21 12.10
Boiler Compounds 218.3 38 5.74
Water Softening compounds 199.8 27 7.40
Metal Treating Compounds 169.7 3 56.57
Foundry Supplies 153.5 24 6.40
Drilling Heads 124.6 15 8.31
Sizes 103.4 10 10.34
Source: U.S. Department of Commerce, Bureau of Census, 1977 Census of
Manufactures (Washington, D.C.: Government Printing Office,
1979);and ICF estimates.
i/U.S. Department of Commerce, Bureau of the Census, JL977 Census of
Manufactures (Washington, D.C.: Government Printing Office, 1979); and ICF
estimates
-------
E-322
There are no publicly available data that identify the actual relative
standing by sales of firms, or that identify the total number of producers or
producers by name in any of these categories. With the exception of the metal
treating compound category, which appears to be highly concentrated, little
else can be surmised about the industry structure without going directly to
firms themselves for information.
Antifreeze compounds are ethylene and propylene gycols, which are made by
several methods. One such method includes the heating of ethylene or
propylene chlorohydrine in a bicarbonate solution, and the oxidation of
ethylene or propylene with air , followed by hydration with weak acid.
Processing is done in large quantities and is usually continuous..£/ Used
since before World War II, glycol antifreezes form a commodity product whose
growth closely follows that of the auto industry- No product substitution is
foreseen due to the low cost and excellent properties of glycols.
Plating compounds are ionic solutions of metals, either acidic or basic
and are plated onto a substrate by electrodeposition. The most common metal
is chrome, followed by copper. Other metals include silver, gold, tin,
nickel, barium, platinum, selenium, and palladium. No data are available for
amounts of each metal used in any year.
The chemistry of each plating compound may differ depending on the
primary metal being plated and the substrate. Because of the
nonsubstitutability of metals and the necessity for a particular solution for
any given plating process, the probability is small that changes will occur in
plating solution products.
Boiler compounds are used to scavenge oxygen and chlorine from feed water
as well as to inhibit the deposition of magnesium and calcium scale on tube
walls. These chemicals are added to the feed water at a boiler installation.
These chemicals are of two major varieties: acid cleaners, used to
remove scale and particle buildup from boiler tubes; and water treatment
compounds, used to scavenge free oxygen, chloride, and metallic ions from the
feed water. Acid cleaners are simply mixtures of acids and surfactants, whose
manufacture is discussed in separate chemical profiles. Metal scavenging
compounds are generally sodium polyphosphates or other complexing compounds.
These inorganic compounds cannot be substituted by other more effective
additives because they are suitable for the reaction sought. Therefore, it is
extremely unlikely that innovation will change the nature of these compounds;
thus, we believe that TSCA will have no impact on them.
2/Gessner G. Hawley, ed., The Condensed chemical Dictionary (8th ed.,
New York: van Nostrand Reinhold company. 1971).
-------
E-323
Water softening compounds are used industrially and in private homes to
remove calcium and magnesium ions that "harden" water. Typically, an exchange
medium like zeolite, a natural hydrated silicate of aluminum and sodium,
ionically exchanaes the calcium and magnesium ions in hard water for sodium
within the zeolite. Once the resin is saturated with these ions, it is
flushed with a strong salt solution to reverse the reaction and regenerate the
exchange medium.
Artificial exchange resins are made in a variety of forms but are
generally cross-linked polymers (organic resins of sulfonic, carboxylic,
phenol, or amino groups) in small bead form.!/ They are packed in towers or
tanks that water passes through and are regenerated in the same fashion as the
natural zeolites. Dow and DuPont are major suppliers, but no indivdual public
£ata are available on production for either company. The water softening
industry has been in existence more than 40 years, and generally the products
are sold not purely on a basis of price for the chemicals but for a service
package that includes installation and periodic regeneration.
Metal treating includes the use of acids, gases, and detergents. The
production of these items are discussed separately in different chemical
segment profiles.
Sizes include dextrin and resins. Dextrin is made by acid hydrolysis of
starch and has been in use for many years, its low cost and wide acceptance
make it unlikely that product substitution will occur. Resin is a natural
product and will not be discussed here. The use of sizes is closely tied to
the textile industry.
Foundry supplies include different oils. The production of these items
is discussed in a separate chemical profile.
Drilling muds are basically clay and water, occasionally with cellophane
flakes added. Because these muds are mixtures of naturally occurring products
(except cellophane which is discussed in a different chemical profile) they
will not be discussed here.
I/Ibid., p.474.
-------
TECHNICAL REPORT DATA
;Please read Inzmtc'iuns on ;he reverse before co/nnletini;!
i. PEPORT NO.
EPA-560/ 12-80-005
3. FECIPIENT'S ACCESSION>NO.
J. TITLE AND SU3TITLE
Economic Impact Analysis of Proposed
Section 5 Notice Requirements
5. REPORT DATE
September 1980
6. PERFORMING ORGANIZATION CODE
7. AUTHOR(S)
Robert Dresser, James Edwards, Joseph Kirk,
Stuart Fribush
3. PERFORMING ORGANIZATION REPORT NO.
}. PERFORMING ORGANIZATION NAME AND ADDRESS
ICF Incorporated
1850 K Street, N.W., Suite 950
Washington, D.C. 20006
10. PROGRAM ELEMENT NO.
2LS811
1 1. CONTRACT/GRANT NO.
68-01-5878
12. SPONSORING AGENCY NAME AND ADDRESS
Office of Pesticides and Toxic Substances
U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
13. TYPE OF REPORT AND PERIOD COVERED
Proposed Report
14. SPONSORING AGENCY CODE
'3. jiJrPLt vi£f-jTAH Y NOTES
EPA Project Officer; Sammy K. Ng
16. ABSTRACT
This report presents the analysis of the economic impact of TSCA section 5 rules on
the chemical industry. The industry will be impacted when it introduces new chemicals.
Of the six distinguishable consequences for the chemical industry, the most important
are the nonquantifiable uncertainty consequences. The more unclear EPA's rationale in
making section 5 notice decisions, the greater are the uncertainties.
There will likely be a short-run drop in the number of new chemicals introduced into
commerce as chemical companies shift their innovation activities into "safe" chemicals.
'urrent data do not allow a quantitative estimate to be made of the rate of chemical
introductions, or the extent of the reduction caused by the section 5 notice require-
ments; and, even if the data were available, it is doubtful that accurate quantitative
predictions could be made.
Smaller companies will face greater uncertainties and the direct costs will more often
be a factor in company decisions. In the long run, this regulation may cause the chemi-
cal industry to be composed of a fewer number of larger competitors better able to absorb
the direct costs and regulatory uncertainty associated with the requirements.
KEY WORDS AND DOCUMENT ANALYSIS
DESCRIPTORS
b.IDENTIFIERS/OPEN ENDED TERMS
COSATl Field. Group
'SCA Section 5 Notice Requirements
iconomic Impact Analysis
!. DISTRIBUTION STATEMENT
elease Unlimited
19. SECURITY CLASS (Tllis Report)
Unclassified
21. NO. OF PAGES
20. SECURITY CLASS (This page)
Unclassified
22. PRICE
EPA Form 2220-1 (9-73)
•U.S. GOVERNMENT PRINTING OFFICE: 1980-0-31(1-085/4603
------- |