HOUSTON — Industry consultant Norman Brockmeier presented a rosy financial outlook for metallocenes at Metcon 97, held June 4-5 in Houston, but manufacturing officials said such optimism needs to be reined in somewhat because of uncertainties in the growing field.
In Brockmeier's scenario, metallocene-based linear low density polyethylene production can achieve a 16 percent profitability rate by 2005. That rate would result from 19 metallocene LLDPE plants, each with capacity of about 450 million pounds, generating cash flow of $335.7 million globally.
The rate also would allow manufacturers to recover the $300 million that Brockmeier estimates has been spent to date on metallocene PE research.
Brockmeier did a similar projection for metallocene-based ethylene propylene impact copolymer, a material Brockmeier believes has growth potential similar to metallocene LLDPE.
Some 25 metallocene ethylene propylene plants, each with 225 million pounds of annual capacity, would generate $241 million annually by 2005, recouping the estimated $190 million invested in that area.
For Brockmeier's projection to hold true, sales of metallocene LLDPE would have to increase from his current estimate of 880 million pounds annually to 13.5 billion in that same time period. Metallocene ethylene propylene sales would have to climb from 330 million to 8.47 billion pounds to reach that material's profit goal.
Brockmeier, president of Oakwood Consulting Inc. of Glen Ellyn, Ill., said projected annual growth rates of 30 percent for metallocene LLDPE and 20 percent for metallocene ethylene propylene give him reason to believe research and development costs can be recovered.
``There's a pot of gold at the end of the rainbow of $600 million for just these two resins,'' Brockmeier said.
But metallocene executives at Dow Chemical Co. and Univation Technologies aren't seeing leprechauns just yet.
William Fraser, executive vice president of technology for Univation, said he would give Brockmeier's projection ``plus or minus 50 percent accuracy.''
``This kind of analysis is only as good as the assumptions that are made,'' said Fraser, whose company is a joint venture between Exxon Chemical Co. and Union Carbide Corp.
``I'm not familiar with the details of [Brockmeier's] research, but we're at the stage where that kind of analysis needs to be done, both as a producer and licensee.''
Fraser added he was glad that Brockmeier acknowledged the cost of research, but Dow R&D director Kurt Swogger and other attendees said Brockmeier's combined investment estimate of $490 million was low. Several industry sources have put the actual figure at $3 billion to $4 billion, while one speaker at Metcon '97 argued the number could be as high as $10 billion.
Brockmeier defended his total, saying that he had limited the investment estimate to the two resins he analyzed because it is ``unfair to expect one or two resins to recover the entire amount.''