HOUSTON - The production of polymers relies entirely on chemical feedstocks and monomers whose availability and costs play a direct role in the prices and availability of resins. Following are brief synopses of outlooks for primary feedstocks, derived from talks by industry analysts and executives at the Dewitt Petrochemical Review and the CMAI's 1996 World Petro-chemical Conference, both held in Houston March 20-21.
Ethylene is a primary feedstock for polyethylene, PVC, PET, acrylics and other resins. Ana-lysts predict supplies will be slightly tight in 1996 and most of 1997, and very plentiful beginning in 1998 as new plants open.
Ethylene suppliers are building or have announced plans to build 55 billion pounds of capacity by 2000, increasing worldwide ca-pacity by 33 percent compared with that of 1985.
Demand is expected to grow 23 percent in the same period. The effect of the added capacity will be a worldwide oversupply beginning in late 1997.
That will cause ethylene producers to operate their plants at 85-88 percent of their rated ca-pacities, and will contribute to prices for ethylene remaining between 19 and 24 cents a pound, the analysts said. In North Amer-ica, expansions are slated to add 4.5 percent more capacity for ethylene per year, through 2000, while demand is expected to increase at a rate of 2.9 percent.
``Nameplate operating rates will fall to a low of 83 percent in 1999, a lower level than has been experienced since the early 1980s,'' Gary Adams, an industry analyst with CMAI said. ``Of course, several of the additions could and probably will be delayed if operating rates fall this low. ... Nonetheless, the late 1998-2000 period in the United States will be characterized by rampant expansions and marginal returns if all the seriously contemplated plans are enacted.''
However, Earl H. Armstrong, Dewitt & Co. group vice president, and Adams said through 1996 and 1997, ethylene producers will operate at higher rates, and prices may rise in the next 18 months before dropping.
Propylene is used to make polypropylene and other chemicals and polymers, such as acrylonitrile. Propylene is a co-product, made when ethylene is produced, so ethylene expansions provide proportional expansions for propylene.
However, propylene demand is growing faster than co-production capacities, and refiners are expected to use new technologies and sources to provide adequate supplies during the next five
years. There may be regional shortages that will be offset by imports from areas where propylene is in good supply, according to Peter J. Jordan, Dewitt senior vice president, and Andrew Pett-man, an analyst with CMAI's Euro-pean office. Both believe prices peaked in 1995 and will stay lower through the decade.
Styrene is used as the primary in polystyrene and in combination with a number of other monomers to form copolymers.
Producers began adding capacity in 1995, and in the last six months new plants have led to oversupplies. Prices have de-clined and several expansions have been delayed or canceled.
Alex Lidback, a CMAI analyst, expects demand to grow steadily in North America at a rate of 2.3 percent, and throughout the world at 4.7 percent. That will soon use the oversupply of sty-rene, but a U.S. economic recession expected in 1999 likely will induce suppliers to maintain their current capacities, he said.
Lidback said his projection of 4.7 percent annual worldwide growth in demand for styrene may be conservative, adding that the low prices he forecasted for the next 18 months may stimulate demand at higher levels.
Butadiene is used to make synthetic rubber and provides flexibility in combinations with styrene, acrylonitrile, vinyl chloride and other monomers.
Butadiene prices dropped 32 percent from October through March 1, and Wayne Feller, an analyst with CMAI, said prices are so low producers cannot reinvest in needed new capacity. Feller believes the low prices could lead to tightness or shortages of butadiene in the next five years.
``The near-term price collapse for butadiene must be quickly corrected, or plans for new extraction capacity in other countries of the world may be put on hold or shelved completely.''
Phil Chapman, a vice president for Dewitt, however, does not see a severe problem with the low pricing levels, and he believes prices will recover to give producers incentive to add capacity.
Supplies of acrylonitrile will be sufficient for the expected growth in production of ABS, styrene acrylonitrile and acrylonitrile styrene acrylonitrile over the next five years. Production of acrylonitrile is expected to grow 18 percent, and operating rates should remain at 90-92 percent of capacity worldwide, said Susan Murley, a CMAI analyst.
Allen Palmer, sales director for Sterling Chemicals Inc. of Hous-ton, said sufficient pricing levels and high operating rates will in-duce investment in capacity to keep it in adequate supply.