Appendix — EI Du Pont De Nemours & Co. v. Train
Supreme Court brief1977
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APPENDIX
EXHIBIT VOLUME
-
Supreme Cour? U. &
FILED
JUL 16 1976
' MICHAEL RODAK, JR. CLERK
in the Supreme Court of the United States
OCTOBER TERM, 1976
No. 75-978
E. I. pu Pont pE NEMOURS AND
ComPANY, et al., Petitioners,
Vv.
RusseE_i E. TRAIN, as Administrator,
Environmental Protection Agency,
et al., Respondents
On Writ Of Certiorari To The United States Court
Of Appeals For The Fourth Circuit
Petition for Certiorari Filed January 12, 1976
Certiorari Granted April 19, 1976
A
_——
in the Supreme Court of the United States
OCTOBER TERM, 1976
No. 75-978
E. I. pu Pont pE NEMOURS AND
ComMPANY, et al., Petitioners,
Russe E. Train, as Administrator,
Environmental Protection Agency,
et al., Respondents
On Writ Of Certiorari To The United States Court
Of Appeals For The Fourth Circuit
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ADMINISTRATIVE RECORD IN THE {
ENVIRONMENTAL PROTECTION AGENCY |
Economic Analysis of Effluent Guidelines for the te tee Herts we ose: OF
Inorganic Chemicals Industry [5419A-5570] _.... saaaiiteniniasiiiasieitabiita hosel . 5419A* { ) to ate AoA MS + be-
Development Document for Effluent Limitations | : AGES ody ahs pl wat po Peas ;
Guidelines and New Source Performance Se ae: ae = Stee Se s , p= MP ssn sre oe
Standards for the Major Inorganic Products se tT Sa pete OR - te el EEA Ere, eS “A
Segment of the Inorganic Chemicals Manufacturing 3
Point Source Category [5571-5936] aasibdaiaimalaiaaanal .. 5571*
* The pagination of the Administrative Record by EPA is adopted for the Exhibit Volume. | . or SS gt a et st =
: J
“wy. s. ‘ENVIRONMENTAL. PROTECTION AGENCY .
, S Office of Planning and Evaluation
\ Red F | Washington, D.C. 20460
: : 7 | BYIKA
PREFACE
The attached document is a contractor's study prepared with the
EPA-230/2-74-015 supervision and review of the Office of Planning and Evaluation of the
U.S. Environmental Protection Agency (EPA). Its purpose is to provide
a basis for evaluating the potential economic impact of effluent
limitations guidelines and standards of performance established
by EPA pursuant to sections 304(b) and 306 of the Federal Water Pollu-
tion Control Act.
ECONOMIC ANALYSIS OF EFFLUENT GUIDELINES
FOR The study supplements an EPA technical "Development Document"
THE INORGANIC CHEMICALS INDUSTRY issued in conjunction with the promulgation of guidelines and standards
for point sources within this industry category. The Development
Document surveys existing and potential waste treatment and control
methods and technologies within this category and presents the invest-
ment and operating costs associated with various control technologies.
| This study supplements that analysis by estimating the broader economic
effects (including product price increases, continued viability of
affected plants, industry growth and foreign trade) of the required
application of certain of these control technologies.
This study has been submitted in fulfillment of Contract No.
April 1974 68-01-1541, Task No. 30 by Arthur D. Little, Inc. Work was completed
as of April 1974. The study is based primarily upon an earlier study,
"
Contract No. 68-01-1541 also prepared by Arthur D. Little, Inc., entitled "Economic Analysis
of Proposed Effluent Guidelines for Inorganic Chemicals, Alkali and
Chlorine Industries." The earlier report was circulated in conjunction
with the publication in the Federal Register of a notice of proposed
rulemaking under sections 304(b) and 306 for the subject point source
"fama Gene ee category. The analysis contained in the original study has been revised
Washington, D.C. 20460 based upon information received during the period of time between
publication of the notice of proposed rulemaking and the promulgation of
the final regulation. Because of the constraints of time, the control
and treatment costs analyzed in this study may not in all instances be
identical to those associated with the requirements of the promulgated
regulation. However, those differences, when they exist, are minor
insofar as the final conclusions of the study are concerned.
This report represents the conclusions of the contractors. It
has been reviewed by the Office of Planning and Evaluation and approved
for publication. Approval does not signify that the contents necessarily
reflect the views of the Environmental Protection Agency. The study has
been considered, together with the Development Document, information
received in the form of public comments on the proposed regulation,
and other materials in the establishment of final effluent limitations
guidelines and standards of performance.
iii
— = ee
TABLE OF CONTENTS
List of Tables
List of Figures
I. SUMMARY
A. INTRODUCTION
B. IMPACT ANALYSIS METHODOLOGY
C. INITIAL AND MAJOR STUDY PRODUCTS
D. ADDITIONAL STUDY PRODUCTS
II. INDUSTRY CHARACTERIZATION--MAJOR STUDY PRODUCTS
A. CA)CLUM CARBIDE
B. SODIUM SULFATE
C. TITANIUM DIOXIDE
D. SODIUM CHROMATE AND BICHROMATE
E. POTASSIUM CHROMATE AND BICHROMATE
III. IMPACT ANALYSIS--INITIAL STUDY PRODUCTS
A. ALUMINUM CHLORIDE
B. ALUMINUM SULFATE
C. CHLORINE AND CAUSTIC SODA
D. HYDROCHLORIC ACID
E. HYDROFLUORIC ACID
F. HYDROGEN PEROXIDE
G. LIME
H. NITRIC ACID
I. SULFURIC ACID
100
101
102
103
104
IV.
a |
~~
TABLE OF CONTENTS (Continued)
IMPACT ANALYSIS--MAJOR STUDY PRODUCTS
CALCIUM CARBIDE
SODIUM SULFATE
TITANIUM DIOXIDE
SODIUM CHROMATE AND BICHROMATE
IMPACT ANALYSIS--ADDITIONAL PRODUCTS
SODIUM BICARBONATE
SOLAR SALT
EVAPORATED SALT
SODIUM SILICATE
SODIUM METAL
SODIUM SULFITE
CALCIUM CHLORIDE
SYNTHETIC SODA ASH
POTASSIUM SULFATE
vii
135
138
r. hg
LIST OF TABLES
WATER TREATMENT COSTS BY LEVELS OF CONTROL
MANUFACTURING COSTS AND PLANT ECONOMICS
IMPACT ANALYSIS MATRIX
CALCIUM CARBIDE PRODUCTION, IMPORT/EXPORT, AND APPARENT
CONSUMPTION
TOTAL MARKET VALUE OF CALCIUM CARBIDE PRODUCTION
USE PATTERN OF CALCIUM CARBIDE BY APPLICATION
CAPTIVE VS. COMMERCIAL CONSUMPTION OF CALCIUM CARBIDE
CALCIUM CAREIDE PRODUCERS--LOCATION AND LAPACITY
ESTIMATED COST OF MANUFACTURING CALCIUM CARBIDE
CALCIUM CARSIDE PRICES--PUBLISHED VS. ACTUAL
SODIUM SULFATE PRODUCTION, IMPORT/EXPORT, AND
APPARENT CONSUMPTION
USE PATTERN OF SODIUM SULFATE BY APPLICATION
GEOGRAPHIC USE PATTERN OF SODIUM SULFATE
CAPTIVE VS. COMMERCIAL CONSUMPTION OF SODIUM SULFATE
PRODUCTION OF SODIUM SULFATE BY PROCESS
SODIUM SULFATE PRODUCTS--LOCATION AND CAPACITY
SODIUM SULFATE PRICES--PUBLISHED VS. ACTUAL
TiO. APPARENT CONSUMPTION AND INDUSTRY SHIPMENTS
2
TiO, MARKET CONSUMPTION
TiO, CAPTIVE CONSUMPTION
60
63
Table
No.
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
LIST OF TABLES (Continued)
T10, MANUFACTURING LOCATIONS AND CAPACITIES
TiO, MANUFACTURING ECONOMICS--SULFATE PROCESS
T1i0., PIGMENT PROFITABILITY--SULFATE PROCESS
TiO, MANUFACTURING ECONOMICS--CHLORIDE PROCESS
TiO, PIGMENT PROFITABILITY--CHLORIDE PROCESS
TiO, INDUSTRY PLANT CAPACITY UTILIZATION
Ti0,, COMMERCIAL SHIPMENT VALUES
APPARENT U.S. CONSUMPTION OF SODIUM CHROMATE AND
BICHROMATE
ESTIMATED 1971 USE PATTERN FOR SODIUM CHROMATE
AND BICHROMATE
PRODUCTION OF CHROMIUM PIGMENTS AND CONSUMPTION OF SODIUM
BICHROMATE EQUIVALENT, 1971
SHIPMENTS OF SODIUM CHROMATE AND BICHROMATE
ESTIMATED MANUFACTURING COST, SODIUM BICHROMATE
PRODUCERS OF SODIUM BICHROMATE
ACTUAL VS. LIST PRICES FOR SODIUM BICHROMATE
ESTIMATED MANUFACTURING COST, POTASSIUM BICHROMATE
92
94
I. SUMMARY
LIST OF FIGURES
Figure oie A. INTRODUCTION
No. =288
LE 8 The following report is submitted in compliance with Task Order
1 INCREMENTAL WATER TREATMENT COSTS FOR BEST nn No. 30 to BOA No. 68-01-1541, "Economic Impact of 1972 Federal Water
TECHNOLOGY VERSUS SELLING PRICE AND PROFIT MAR Pollution Control Amendments on the Inorganic Chemical Industry." As
10 outlined in our proposals, this report deals with 24 inorganic chemicals,
‘2 ‘INCREMENTAL en Le aa including the nine discussed in the initial study;1
TECHNOLOGY VERS
Aluminum Chloride
3 SCHEMATIC FLOW DIAGRAM--PRODUCTION OF CALCIUM CARBIDE 33 Aluminum Sulfate
; Chlorine and Caustic Soda
4 RECOVERY OF SODIUM SULFATE FROM NATURAL BRINES 49 Hydrochloric Acid
Hydrofluoric Acid
5 PRODUCTION OF SODIUM SULFATE IN VISCOSE RAYON PROCESS 50 Hydrogen Peroxide
Lime
6 PRODUCTION OF SODIUM SULFATE IN THE MANNHEIM PROCESS Nitric Acid
Sulfuric Acid
7 TiO, PIGMENT MANUFACTURING PROCESSES 65
as well as the six inorganic chemicals studied in depth;
Calcium Carbide
; Sodium Sulfate
Titanium Dioxide (Chloride)
Titanium Dioxide (Sulfate)
Sodium Chromate and Bichromate
Potassium Bichromate
and the nine additional products briefly reviewed in a subsequent
analysis;
Sodium Bicarbonate
Solar Salt
Evaporated Salt
Sodium Silicate
Sodium Metal
Sodium Sulfite
Calcium Chloride
Synthetic Soda Ash and
Potassium Sulfate.
BI i) ei» iy ois LAS aim Ll lea
| lwinitial Analysis of the Economic Impact of Water Pollution Control
° Costs Upon Ten Inorganic Chemicals," report to Environmental Protection
Agency by Booz, Allen Public Administration Services, Inc.,
January 5, 1973.
xiii 1°
The objective of this study was to analyze the economic impact
of the costs of water pollution abatement requirements for the specified
products, using the data for the nine initial study products contained
in the initial impact study, new water treatment cost data provided by
EPA and the industry information developed for the major study products
and the additional study products by the contractor.
B. IMPACT ANALYSIS METHODOLOGY
In order to assess the impact of water treatment costs on the
inorganic chemicals covered in this report, we have developed an analytical
framework to arrive at the impact judgment. In addition to providing
us with a systematic method to weigh each of the factors affecting the
impact judgment, the methodology also provides a tormat by which the
basis for our conclusions are clearly presented.
The basic premise behind the methodology is that a producer faced
with new investment in water treatment facilities could (1) continue to
operate by (a) passing on the additional costs through price increases,
or (b) absorbing the costs (thereby reducing profits); or (2) shut his
plant down. This premise, of course, reduces the impact of increased
costs due to water treatment to the simplest terms. In the real world,
the result of higher costs most probably would be some combination of
these alternatives, e.g., a price hike by the most efficient producer
sufficient to recover part of his costs (but not enough to cover
most of the costs of the marginal producer), reduced profit margins
for the most efficient producer partially offset by an increased market
share resulting from plant shutdowns by the marginal producer(s).
The approach we have taken in assessing the impact on each of
the inorganic chemicals is to first examine the likelihood that the
higher costs imposed on the industry by virtue of new water effluent
guidelines will be defrayed, wholly or in part, by higher product
prices. If the conclusion is that treatment costs cannot be passed
on through price increases, the second part of the impact analysis is
to examine the likelihood that some plants in the industry would be
forced to shut down, taking into account both economic and noneconomic
factors.
l. Price Increase Constraints
The treatment costs per ton before taxes indicate the magnitude
of the unit price increase necessary to fully recover all treatment costs
(i.e., repay the investment and cover operating costs). The larger the
ratio of before-tax unit treatment cost to actual unit selling price,
the more difficult it will be to fully recover treatment costs, all things
being equal. As indicated, the first question we have addressed is whether
conditions in the specific competitive situation would permit price in-
creases. In general, the products’ price history and the nature of those
prices--whether firm or widely dispersed and discounted--provide a clue
428
as to the possibility of price increases. More specifically, however,
the following factors are those that we have used in arriving at the
judgment as to whether price increases are feasible. Except in unusual
circumstances, no one factor would be overriding. Rather, the judgment
is based on a combination of factors.
Substitute Products (or Processes)--If substitute products exist,
price increases to cover the (full) costs of water treatment would be
difficult.
Capacity Utilization--If capacity utilization for the industry
is low, price increases to cover the (full) costs of treatment would
be difficult.
Captive Usage--If there is negligible captive use, price increases
to cover the (full) costs of water treatment would be difficult.
Demand Growth--Price increases are more difficult to achieve in
a static or declining market than in a growing market.
Foreign Competition--If the market can be served by foreign
competitors (particularly if the foreign producers are not faced with
added water pollution abatement costs), price increases are less likely.
Abatement Cost Differences--If some plants in the industry will
incur substantially higher water pollution abatement expenditures than
other plants, they will be less able to pass on the added costs as price
increases.
Price Elasticity of Demand--For some products, substantial water
pollution abatement costs, if passed on as price increases, could result
in reduced demand for the product.
Basis for Competition--If the basis for competition in the in-
dustry is primarily price as opposed to service or technology, cost in-
creases will be more difficult to pass on, particularly if there is a
significant difference between unit treatment costs between large
producers and small producers.
Market Share Distribution--If the market share distribution is
fragmented (rather than concentrated, in which case there often is a
dominant price leader), price increases are less likely, particularly
if treatment costs do not affect all producers fairly equally.
Number of Producers--If the market is served by many producers
(increasing the likelihood of manufacturing cost differences, abatement
cost differences, etc.), a condition exists constraining price increases.
Although not explicitly listed in the generic model, we have been
alert to other factors which might prevail for individual products.
For example, the economic importance of a product in the manufacturing
costs of derivative products might act as a constraint on price increases.
3
%129
In assessing the possibiliy of water treatment costs being passed on
as titanium dioxide price increases, for instance, we took into account
the impact on titanium dioxide demand of the resultant increase in
the cost of paint.
2. Plant Shutdown Factors
If treatment costs cannot be passed on as price increases, the
simplistic model says that the producer either absorbs them or shuts down
his plant. The shutdown decision will involve both economic and
strategic (i.e., noneconomic) considerations as follows.
Profitability--The after-tax cost per ton of water treatment
compared with unit after-tax net income measures the producer's ability
or willingness to absorb the added cost.
Cash Flow--Plants will continue to operate temporarily at
essentially zero profitability (if necessary) if the plant is producing
a positive cash flow (and has a competitive process and is in a stable
or growing market).
Ratio of Investment in Treatment Facilities to Net Fixed
Investment--If the new investment in water treatment facilities bulks
large in comparison with existing plant investment (and other factors
are marginal), a shutdown decision may be in order. In some instances,
the availability (and cost) of capital to the producer may influence the
shutdown decision.
Integration--The degree of backward or forward integration is a
factor in the shutdown decision. A producer (or industry) with a sig-
nificant raw material position or one using the product for downstream
manufacture is less likely to curtail production than a non-integrated
producer (or industry).
Chemical Cowplex--An isolsted plant would be unable to take
advantage of common treatment facilities.
Other Environmental Problems--If a plant has already commited
funds for air pollution, it will be more likely to commit the additional
funds necessary for water pollution. Alternately, if a company faces
both water and air pollution abatement (and/or unusual OSHA) costs, the
magnitude of the environmental costs taken together may prompt plant
closing whereas any one taken alone would not.
Emotional Commitment--The emotional commitment of the company to
that particular product (taking into account protection of competitive
position, prestige, the importance of the product in the company’s long-
range strategy, etc.) may be a factor in the shutdown decision.
Ownership--Other things being equal (and negative), multi-
industry companies are more likely to shut down marginal plants than less-
diversified producers. The premise is that the multi-industry producer
has other (and better) investment opportunities than the single product
company (particularly a privately-held, family business).
430 4
C. INITIAL AND MAJOR STUDY PRODUCTS
l. Water Treatment Costs
All of the water treatment costs for the various levels of
effluent control shown in this report were taken from the Development
Document for Proposed Effluent Limitations Guidelines and New Source
Performance Standards for the Major Inorganic Products prepared for
the EPA under contract number 68-01-1513 dated June 1973. The water
treatment costs (on a before-tax basis) by product are summarized in
Table 1. Base-level practice (B.L.P.) represents water treatment practices
which, in the judgment of the Development Document, are followed by most
of the industry and exceeded by exemplary plants. Similarly, exemplary
plant practice (E.P.P.) reflects the unit cost of water treatment and
control practices at the exemplary plant. Proposed best practicable
technology (B.P.T.) reflects the Development Document's estimate of the
unit water treatment cost for the product in question based upon the
best technically and economically feasible treatment and control
technology. Finally, proposed best available technology (B.A.T.) reflects
the degree of effluent reduction which must be achieved by July 1, 1983.
The unit treatment costs used for any particular level of control in
the impact analysis is the incremental cost over B.L.P.
2. Manufacturing Costs and Profitability
In the following report the manufacturing costs and profitability
data shown in Table 2 for the "Initial Study Products" were taken
from the initial study project. Comparable data for the six "Major
Study Products" were developed by the Contractor.
3. Conclusions
In Figure 1 we have compared the incremental (over B.L.P.) water
treatment costs estimated in the Development Document to achieve B.A.T.
effluent standards as a function of product selling price versus treat-
ment costs as a function of unit profit margin for the inorganic
chemicals discussed in this study. Three initial study products do
not appear on the figure because data for industry profitability were
not developed. For the three products (hydrochloric acid, nitric acid,
and hydrogen peroxide), however, unit treatment costs are small so that
these products would appear in the lower left-hand corner of the figure.
One of the major study products, viz. calcium carbide, has also been
left off the figure. With a treatment cost of $1.94 per ton versus a
selling price of $90 per ton, the cost/price ratio is a nominal 2.2%.
However, since industry profit margins are minimal, the treatment cost
as a function of unit margins is very high and falls off the scale of
the figure.
Titanium dioxide stand out in this figure as the product where
the estimated treatment costs represent the highest proportion of both
selling price and profit margin. (For both the chloride and sulfate
' 5434
TABLE 1
WATER TREATMENT COSTS BY LEVELS OF CONTROL
(Dollars Per Ton of Product)
Base- Exemplary Best Best
Level Plant Practicable Available
Practice Practice Technology Technology
Initial Study Products
Aluminum Chloride 0.00 3.77 3.77 3.77
Aluminum Sulfate 0.79 1.72 1.72 1.72
Chlorine
(Mercury) 2.14 2.14 - 2.74 3.00
(Diaphragm) 0.04 0.29 0.29 0.56
Hydrochloric Acid 0.25 0.25 0.30 0.30
Hydrofluoric Acid 3.57 4.04 4.89 12.95
Hydrogen Peroxide
(Organic) 0.20 0.33 1.06 1.06
(Electrolytic) 0.00 0.75 1.14 1.14
Lime
(Bag) 0.00 0.00 0.00 0.00
(H20 Scrubber) 0.00 1.28 1.28 1.28
Nitric Acid 0.00 0.22 0.22 0.22
Sulfuric Acid
(Burning) 0.05 0.10 0.17 0.17
(Regen) 0.25 0.75 0.75 0.75
Major Study Products
Calcium Carbide 0.00 1.94 1.94 1.94
Sodium Sulfate 0.00 0.00 0.00 0.00
Titanium Dioxide
(Sulfate)
[Neutralization] 1.90 10.05 83.57 98.09
[Acid Recovery] 1.69 10.05 35.71 50.48
(Chloride) 2.12 38.61 38.61 66.79
Sodium Chromate and 0.26 11.66 16.45 16.45
Bichromate
Potassium Bichromate 0.57 3.52 5.24 5.24
Additional Products
Sodium Bicarbonate 0.03 0.04 0.04 0.04
Solar Salt 2.34 2.34 2.34 2.34
Evaporated Salt 0.00 0.23 0.44 0.44
Sodium Silicate 0.19 0.60 1.14 1.14
Sodium Metal 0.19 3.07 5.53 5.53
Sodium Sulfite 0.00 3.09 2.98 (1.56)*
Calcium Chloride 0.00 0.19 0.19 0.19
Soda Ash--Synthetic 0.44 (1.17)* 0.44 1.10
Potassium Sulfate 0.10 2.47 2.47 2.47]
*Before-tax profit.
Source: Development Document on inorganic chemicals, alkali and chlorine
industries prepared for United States Environmental Protection
1132 Agency under Contract Number 68-01-1513, June 1973.
. - : 6
TABLE 2
MANUFACTURING COSTS AND PLANT ECONOMICS
Sample
Selling Manufacturing After Tax Depreciable Plant
Price Costl Net Income Investment Capacity
. = ($/Ton) > SMM M Tons/Year
Initial Study Products
Aluminum Chloride 292 226 21 1.2 10
Aluminum Sulfate 42 32 3 1.0 33
Chlorine and Caustic
Soda
Mercury 1017 NLA. 4.12 13 66
Diaphragm 101 81 4.33 20 115
Hydrofluoric Acid 370 N.A. 18 5 21
Lime 16 12 1.00 4 165
H.SO
2nutning 20 14 1.20 6 330
Regeneration 22 16 1.20 9 330
Major Study Products
Calcium Carbide 90 86 0 4 45
Titanium Dioxide-- .
Sulfate 540 416 26 15 25
Chloride 570 471 21 21 25
Sodium Bichromate 245 212 18 5 49
Potassium Bichromate 475 403 24 2 5
bexcluding GS&A and federal income taxes.
2sales revenue per ECU.
Source: Initial Study Products: “Initial Analysis of the Economic Impact
of Water Pollution Control Costs Upon Ten Inorganic Chemicals,"
final report to Environmental Protection Agency for Booz, Allen
Public Administration Services, Inc., January 5, 1973.
Major Study Products: The Contractor.
7
1B
Treatment Cost as Percent Profit Margin
@ Titanium Dioxide - Chioride
@ Titanium
Dioxide -
Sulfate
(Neutralization)
200 }
150 }
@ Titanium Dioxide - Sulfate (Recovery)
100 } 20
© Lime
10 LL @ Chlorine/Caustic - Mercury
Aluminum Chioride @
50 } @ Potassium Bichromate
Sulfuric @@ydrofluoric Acid Sodium Sulfate
ation 0 — L
Aluminum Sulfate 0 1 2
o* +——— For Key to Product Identity See Expanded Scale — , , .
j i 1 i
0
0 2 4 6 8 10 12 14 16 18
Treatment Cost as Percent Selling Price
FIGURE 1 INCREMENTAL WATER TREATMENT COSTS FOR BEST AVAILABLE TECHNOLOGY VERSUS
SELLING PRICE AND PROFIT MARGIN
175.1
process, the estimated treatment costs on a unit basis are very nearly
2.5 times current estimated industry profit levels.) Lime and sodium
bichromate are at an intermediate level where treatment costs represent
7-8% of selling price and 50-80% of estimated profit margins. A third
group of products--hydrofluoric acid, sludge sulfuric acid, and aluminum
sulfate--are faced with treatment costs representing 2-3% of selling
price and 15-25% of estimated profit margins. A final group of products
including aluminum chloride, potassium bichromate, chlorine and caustic
soda, and direct burning sulfuric acid, have estimated treatment costs
at about 1% of selling price and 5-10% of profits. No water treatment
costs were ascribed to sodium sulfate (as chromate by-product).
The same comparison is made in Figure 2 using incremental water
treatment costs for B.P.T. In general, the spatial relationships between
the identified products is much the same as in Figure 1, with the ex-
ception that sulfate process titanium dioxide is at a greater disadvantage
with respect to chloride process titanium dioxide.
Although Figures 1 and 2 provide a first approximation of the
impact severity on each of the products from additional water treatment
costs, we have used the methodology described above to assess the
economic impact. The results of this assessment are summarized in
Table 3. From this table and based on the treatment costs given in the
Development Document we conclude that plant shutdowns as a direct
result of increased water treatment costs using B.A.T. are likely for
chlorine/caustic soda, lime, sludge sulfuric acid, sulfate process
titanium dioxide and sodium bichromate. Although the B.A.T. costs for
potassium bichromate could be passed on through a price increase the
one significant manufacturing facility could not continue operating
if the sodium bichromate plant upon which it depends were shut down.
For the other products included in the study the increased water
treatment costs will either be passed on as price increases or absorbed
by the producers.
The final effluent guidelines, published in the March .2, 1974,
Federal Register contain some changes from the originally proposed
guidelines. Among others, the B.A.T. standards for mercury cell chlorine/
caustic and sulfate process titanium dioxide have been modified to
allow higher suspended solids. The aforementioned plant shutdown con-
clusions are based on the guidelines and estimated treatment costs
contained in the original Development Document dated June 1973.
The same shutdown conclusions pertain as well for B.P.T. For
three of the five shutdown candidates--viz. lime, sludge sulfuric acid,
and sodium bichromate--B.P.T. costs are identical to B.A.T. costs. It
should be noted that the regulation as promulgated for B.P.T. standards
for sodium bichromate has been relaxed somewhat from the originally
proposed regulation. For the remaining two--viz. mercury cell chlorine/
caustic and sulfate process titanium dioxide--the costs resulting from
B.P.T. were not judged to be significantly different (i.e., lower) than
B.A.T. costs to impact the industries less severely.
Treatment Cost as Percent of Profit Margin
180
160
140
120
100
Titanium Dioxide - Sulfate (Neutralization) ]
@ Titanium Dioxide - Chioride
@ Titanium Dioxide - Sulfate (Recovery)
@ Potassium
Lime @ Bichromete
Aluminum Chioride @
8}
®@ Chiorine/Caustic -
Mercury
6 @Suituric Acid - Burning
Sodium Bichromate @e
4
@ Sulfuric Acid - Regeneration
0 1 2
@ Aluminum Sulfate /
®
@
3
@—For Key to Product identity See Expanded Scale Diagram
D. ADDITIONAL STUDY PRODUCTS
L L l l l
2 4 6 8 10 12 14
Treatment Cost as Percent Selling Price
FIGURE 2. INCREMENTAL WATER TREATMENT COSTS FOR BEST PRACTICABLE TECHNOLOGY VERSUS
SELLING PRICE AND PROFIT MARGIN
10
1. Water Treatment Costs
All of the water treatment costs for the various levels of
effluent control shown in this report were taken from the Development
Document prepared for the EPA under contract number 68-01-1513 ded
June 1973.
The water treatment costs provided by the Development Document
and summarized in Table 1 were specific to a particular manufacturing
process for each of the products under consideration. In general,
this manufacturing process is not the only method for producing
the products being considered, or in some cases not even the major
method of production. Our judgment of economic imapct, however, is
necessarily predicated on these costs and we have, therefore, confined
our judgment to the economic impact on the producers utilizing the
particular process defined by the Development Document. The
processes are specified in the individual product studies.
2. Conclusions
The impact analysis matrix (Table 3) also summarizes the
relevant price increase and plant shutdown impact considerations for
the additions’ products. For none of the nine additional products do
we see plant shutdowns as a direct result of increased water treatment
costs. For one of the nine--sodium metal--there may be plant shutdowns
as a result of possible reduced demand for alkyl leads in gasoline.
The Development Document indicates that for solar salt there
would be no incremental cost for B.P.T. or B.A.T. over E.P.P. and con-
sequently no economic impact. For sodium bicarbonate, evaporated salt,
sodium silicate, and calcium shloride, the conclusion is that water
treatment costs can be passed on as price increases. For sodium metal,
sodium sulfite, and potassium sulfate, the water treatment costs will
either be absorbed by the producer or passed on as price increases.
Finally, for sodium carbonate the nominal incremental cost for B.A.T.
over E.P.P. will be absorbed by the producer. (The original Development
Document indicates that there is no incremental cost over E.P.P. for
B.P.T. for synthetic soda ash.)
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TABLE 4
Il. INDUSTRY CHARACTERIZATION--MAJOR STUDY PRODUCTS
CALCIUM CARBIDE PRODUCTION, IMPORT/EXPORT, AND APPARENT CONSUMPTION
a. cect IDE (Thousands of Tons)
1 Apparent
l. Summary Year Production Imports Exports Consumption
Calcium carbide is produced in the United States almost exclusively 1950 671 6 6 671
for conversion to acetylene gas. Acetylene is used primarily in the
synthesis of various organic chemicals and plastics, although a sig- _ 41955 875 2 4 873
nificant amount is used as a fuel for welding and other metalwork.
1960 1,093 5 5 1,093
Production of calcium carbide declined more than 502% by 1972
from a peak reached in the mid-1960's. The main reason for this decline 1961 1,042 5 6 1,041
has been the substitution of acetylene derived from hydrocarbons for that
produced from calcium carbide for the manufacture of organic chemicals. 1962 1,083 6 6 1,083
Acetylene for chemical uses has also been largely replaced by other,
less expensive, raw materials. 1963 1,109 7 6 1,110
While the lower cost of shipping calcium carbide to industrial 1964 1,132 12 6 1,138
centers for conversion to fuel acetylene has favored this source over ;
tanked, hydrocarbon-derived acetylene, more convenient and economical 1965 1,098 ll « 1,109
fuels (e.g., propane) have made significant inroads into the amount
of acetylene used for metalworking. 1966 1,063 20 o 1,083
The general trend of a declining market for calcium carbide is 1967 912 8 o 920
likely to continue as hydrocarbon-derived acetylene replaces carbide-
derived acetylene for chemical use, and as other raw materials replace 1968 942 7 s 949
acetylene in both chemical and metalworking applications.
1969 856 18 - 874
2. Market Characterization 1970 791 19 - 810
a. Size 1971 625 20 - 645
U.S. production of calcium carbide reached a maximum of approxi- 1972 493 ll - 504
mately 1.1 million tons per year in the period 1960 to 1965. Since U.S.
foreign trade in this commodity has always been small in comparison
to production, apparent annual consumption of calcium carbide was also
at a level of about 1.1 million tons during this period, as is shown in l exports not reported separately after 1964.
Table 4. By 1972, production had fallen to less than half a million °
tons per year. Table 4 also indicates the low level of imports, Apparent consumption: production and imports minus exports.
which have ranged between 1% and 3% of consumption in recent years,
and have come exclusively from Canada.
Source: U.S. Department of Commerce.
b. Growth
Calcium carbide producers have experienced a steady drop in
demand for almost a decade. Annual market value data for calcium carbide
production since 1950 are given in Table 5. While 1972 production, at
26 27 9
Year
1950
1955
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969 |
1970
1971
1972
Sources:
945!
1
TABLE 5
Production
(Thousands of
671
875
1,093
1,042
1,083
1,109
1,132
1,098
1,063
912
942
856
791
625
493
Tons)
28
TOTAL MARKET VALUE OF CALCIUM CARBIDE PRODUCTION
Market
Value
($/Ton)
78
94
100
99
93
95
91
89
87
94
94
78
81
90
90 (est.)
44.4
U.S. Department of Commerce, and Contractor's estimates.
4°3,000 tons represented a 55% drop from 1960 production levels, price
erosion has caused the total market value of calcium carbide production
to drop 60% over the same period (from $109 million to $44 million).
c. Uses
Although a small quantity of calcium carbide is consumed in such
direct applications as the carburization of steel, desulfurization, and
other foundry work, by far the largest use is in the production of
acetylene. In the preferred "dry" process, water is added to calcium
carbide to form acetylene and calcium hydroxide at the-rate of 640 pounds
of acetylene per ton of carbide. The "wet" process uses excess water,
and produces by-product calcium hydroxide in a slurry which is 90% water.
Approximately 80% of the acetylene produced from calcium carbide
is used as a raw material in the synthesis of organic chemicals and
plastics by the chemical industry. The balance is used as a fuel in
metalworking for welding, cutting, and scarfing. A summary of calcium
carbide use, showing representative products produced by the chemical
industry, is given in Table 6.
d. Substitute Products
Until 1951, all of the acetylene produced in the United States
was derived from calcium carbide. Since that time, acetylene has also
been manufactured through the pyrolysis, or cracking, of hydrocarbons.
This process produces several other important industrial chemicals as
by-products, and has become increasingly competitive with the calcium
carbide route to acetylene.
The advantage of calcium carbide as a source of acetylene is that
the carbide can be shipped more economically than the heavy cylinders of
compressed acetylene gas. Thus, for uses which are geographically
removed from the production of hydrocarbon-derived acetylene, calcium
carbide as a source of acetylene is less-susceptible to substitution.
Even here, however, carbide acetylene faces competition from other fuels,
such as propane or natural gas, and also from electric-arc welding.
In such direct applications as the carburization of steel, de-
sulfurization, and use as a drying agent, calcium carbide also faces
competition from a variety of products. In foundry work, various com-
binations of lime, coke, and magnesium can replace calcium carbide.
Calcium sulfate is only one example among a variety of alternative drying
agents which are available as substitutes for calcium carbide. These
direct applications currently account for only apout 3% of U.S. con-
sumption.
e. Geographic Consumption
Except for the relatively small amount of calcium carbide used
to generate acetylene for metalworking, virtually all calcium carbide
29
5455
TABLE 6
USE PATTERN OF CALCIUM CARBIDE BY APPLICATION!
Calcium Carbide Converted to Acetylene
97%
Chemical Acetylene 80%
Used in synthesis of organic chemicals
(e.g., butadiene, allyl alcohol, vinyl
ethers) and derived products such
as neoprene, other plastics, and resins.
Fuel Acetylene
17%
Used for welding, cutting and scarfing
in metalwork, and for production of
acetylene black.
Calcium Carbide for Direct Use
3%
Includes use as a dehydrating agent and a
reducing and desulfurizing agent in certain
metallurgical processes.
100%
This use pattern is typical of consumption in 1972. Chemical use
of calcium carbide acetylene is rapidl
significant. pidly becoming much less
Sources: Kirk-Othmer, Encyclopedia of Chemical Technology;
Shreve, Chemical Process Industries; and
Contractor's estimates.
5456
30
is consumed in the region in which it is produced. In fact, most
carbide acetylene is generated either in the same plant as the carbide,
or in an adjacent one. In 1972, nearly 85% of U.S. calcium carbide
production capacity was located in Kentucky and Ohio, and with it, the
bulk of calcium carbide consumption. Most of the remaining 15% of
consumption occurs in major industrial metalworking cities such as
Cleveland, Detroit, and Pittsburgh.
f. Captive Requirements
As indicated above, calcium carbide is most often used as a ready
source of acetylene. Furthermore, the greatest portion of calcium car-
bide is consumed either in the same plant as it is produced, or at
another plant owned by the same company. Although the most recent
information on merchant shipments was given in 1965, it is apparent from
these data that captive consumption was typically at a level of 75%.
Data illustrating th‘s relationship for the years 1962 through 1965 are
given in Table 7. Although the trend in recent years has been away
from captive use, as acetylene for chemical synthesis has been replaced
by ethylene, propylene, and other less expensive raw materials, the
bulk of calcium carbide production will be consumed captively through-
out the 1970's.
3. Supply Characterization
a. Manufacturing Route
Calcium carbide is prepared from quicklime (calcium oxide) and
coke (carbon) which are mixed together at approximately 2000° C. This
temperature is achieved in an electric furnace using large amounts of
electric power. In a typical run, 1900 pounds of quicklime, 1300
pounds of coke, and 3,000 kilowatt hours of electricity are required
to produce one ton of calcium carbide. The product, tapped from the
furnace as a liquid, is allowed to solidify and is then crushed to a
convenient size for packing and handling. Calcium carbide for chemical
acetylene often goes directly to an acetylene generator in the same
plant.
An example of the overall process is shown in Figure 3 as a
simplified schematic diagram. The source of quicklime is a high-grade
limestone containing nearly 100% calcium carbonate. The limestone is
heated in a kiln to produce quicklime, which is combined with coke,
or another source of carbon such as anthracite, in the electric furnace.
The large power requirements and high raw material shipping costs are
important factors in determining plant location.
b. Producers
In 1972, calcium carbide was produced in seven plants by four
different companies. As indicated in Table 8, three of these plants
31
AS?
FIGURE 3
SCHEMATIC FLOW DIAGRAM--PRODUCTION OF CALCIUM CARBIDE
TABLE 7 a es
+ oe —w}| Crusher > Kiln — oa
CAPTIVE VS. COMMERCIAL CONSUMPTION OF CALCIUM CARBIDE 3 ‘
(Thousands of Tons) i i
)
Consumption
Year Production Captive Merchant! Percent Captive
Coal ——| Pulverizer
1962 1,083 815 268 75
1963 1,109 824 285 74
1964 1,132 891 241 79 Coke —~ Crusher ! Drier
1965 1,098 819 279 75
Carbon Mono e
co
Electric-arc |
, Calcium Carbide ~<«— Vurasce
Last reported separately in 1965. Cac,
Source: U.S. Department of ( merce.
Cooling Commer cial-Grade
mn Crusher
Calcium Carbide
33
5158 32
/
TABLE 8
CALCIUM CARBIDE PRODUCERS--LOCATION AND CAPACITY
(Thousands of Tons)
Annual
Producer Location Capacity
Airco, Inc. , Calvert City, Ky. 325
Airco Carbide Div. Louisville, Ky. 150
Midwest Carbide Corp. Keokuk, Lowa 30
Pryor, Okla. 50
Pacific Carbide & Alloys Co. Portland, Ore. 20
Union Carbide Corp.”
Chemicals & Plastics Div. Ashtabula, Ohio 228
Portland, Ore. 35
Total 838
1
Manufacturing operations in Calvert City were discontinued early in
1973; the Louisville plant is to be phased out over the next
several years.
~operations at Portland were discontinued in mid-1973.
Sources: Trade journals, industry contacts.
51460 34
were responsible for most (84%) of the 1972 annual production capacity
of 838,000 tons. These were the Airco plants at Calvert City and
Louisville, Kentucky, and the Union Carbide plant at Ashtabula, Ohio.
A decade ago, in 1960, there were twelve plants, with a combined
capacity of 1,225,000 tons. The move to reduce capacity, which began
in the early 1960's, has continued into 1973 with the announcement by
Airco that operations would be discontinued at the Calvert City plant,
and that the Louisville plant would be phased out by about 1980. The
closing of Calvert City has reduced 1973 U.S. capacity by 39% to
approximately 513,000 tons per year.
, Existing calcium carbide plants may be classified as either large
(annual capacity 150,000 tons or more), or small (annual capacity 50,000
tons or less), with four of the six plants operating in early 1973 classi-
fied as small. All of these plants are at least ten years old and some
are much older. Airco's Calvert City plant had been operating about 20
years when it closed this year.
As stated earlier, approximately 75% of all calcium carbide
produced is captively consumed. This gives some indication of the large
degree of intra- and inter-company integration in the sale and use of
this chemical commodity. As an example, the Airco plant at Calvert City,
which was the largest calcium carbide plant in the world, shipped a
small part of its output to the Airco plant in Louisville, and con-
verted the rest to acetylene for local use. This local use included
chemical synthesis at an adjacent Airco plant, and shipment of acetylene
and derived products by pipeline to the plants of several other firms in
the large Calvert City chemical complex.
c. Manufacturing Economics
A summary of estimated manufacturing costs for calcium carbide
is given in Table 9. The data in this table are for a plant of
45,000 ton-per-year annual capacity, operating at 100% capacity. A
plant of double this capacity would benefit from relatively small economics
of scale, reducing manufacturing costs by about 5%, to $81 per ton.
On the other hand, a plant producing calcium carbide for fuel acetylene,
as opposed to chemical acetylene, experiences manufacturing costs which
may be from 5% to 6% higher than that shown in Table 9 due to quality
requirements relating both to raw materials and to the manufacturing
process itself. General, celling, and administrative expenses are
estimated to be 5% of manufacturing costs. This brings total costs to
about $90 per ton for a 45,000 ton-per-year plant producing calcium
carbide for conversion to chemical acetylene. Depending on plant size
and intended end use of the product, total manufacturers’ costs may
vary from approximately $85 to $95 per ton.
35
S161
TABLE 9 4. Supply/Demand Balance
Industry capacity for calcium carbide has gradually been reduced
since the early 1960's. As of 1972, capacity had been reduced by 302,
ESTIMATED COST OF MANUFACTURING CALCIUM ,
SEATED COST OF MANUFACTURING CALCIUM CARBIDE
while production had fallen by more than 50%. In the early 1960's,
Plant Capacity: 45,000 Tons/Yr (1-15,000 KVA furnace) operating rates were typically close to 90% of capacity; in the early
Fixed Investment: $3,740,000 1970's operating rates have generally been below 80%, and it is only
the shut down of the largest plant in the industry (Calvert City) which
has brought current capacity down to a level consistent with current
Quantity/Ton $/Unit Ton demand.
Variable Costs In view of the continued replacement of carbide acetylene by
: hydrocarbon-derived acetylene, and replacement of acetylene for chemical
Quicklime 0.95 ton 18.75 17.81 use by less expensive raw materials, this trend towards reduction of
Coke 0.65 . excess capacity is likely to continue as demand is further reduced.
. ton 24.00 15.60 Total production in the first two months of 1973, for example, was 20%
Carbon Electrodes 30 1b. 0.15 4.50 below that of the same period in 1972.
Operating Supplies 0.30
reas 2780 kwh 0.007 19.46 5. Prices
Water ,
32 M gal 0.02 0.64 Published prices for packaged and delivered calcium carbide have
58.31 increased steadily from $121 per ton in the early 1950's, to a level of
. $171 per ton since 1963. A more realistic price for 1972 is the $100
Semi-Variable & Fixed Costs per ton, f.o.b. plant, quoted by industry sources. Some discounting
occurs, and the average actual price received for calcium carbide shipments
Operating Labor 9 men/shift 4.25/hr 7.45 has been somewhat lower than this in recent years, as is shown in Table 10.
Supervision 4€ ‘ In addition to discounting, and as indicated in the footnote for Table 10,
: ocenes 12,000/yr 1.07 the difference between actual and published prices also reflects packaging
superintendent 17,000/yr 0.38 and freight charges. Packaging charges range from $35 to $45 per ton,
Maintenance “5% of investment/yr 3.73 and freight charges add approximately $10 per ton locally and up to $20 .
' wi °
Labor Overhead 30% of operating labor oa per ton for more distant shipments within a given region
Information on 1972 actual prices is not yet available, but it
and supervision
appears that the declining trend was at least temporarily halted in
Plant Overhead 70% of o
perating labor .
1 and supervision —e 1971 when actual price increased approximately 10%, from $81.00 to
Depreciation $90.00 per ton. In any case, a comparison of manufacturer's total costs
6-2/3% of investment/yr 5.53 with actual prices received per ton of calcium carbide, indicates that
Local Taxes & Insurance si of investment/yr 1.25 ee cot ey ia
a’: the break-even level.
die 28.31
ost o nufacture (Bulk)
Off Gas Credit” rages
edit 3.14 MM Btu 0.35 1.10
Net Cost of 3
st of Manufacture” (Bulk) 85.52
l
For older plants depreciation may onl
20% of this amount. y y cover items replaced and be about
2
Credit valid only if carbon monoxide can be utilized as fuel at plant.
3
Quality requirements make manufacturin
g costs about $5/ton higher f
manufacturers of calcium carbide for use in generation of rom —
acetylene.
37 "163
91462 36
TABLE 10
CALCIUM CARBIDE PRICES--PUBLISHED VS. ACTUAL
(Dollars per Ton)
B. SODIUM SULFATE
Published Price! Actual Price’
121 78
134 94
149 100
171 89
171 81
171 90
171 N.A,
Published prices include packaging and freight charges of
ca. $50/ton. Quoted 1972 price for bulk
was $100 per ton, f.o.b. plant. CoD GENER
2
Actual Price: Total Value of Shipments/Tons Shipped.
Sources: Chemical Marketing Reporter, U.S. Department of
Commerce, and Contractor's estimates.
38
1. Summary
Sodium sulfate is produced in the United States largely as a
joint product with some other material, rather than for its own value.
This joint-product characteristic, combined with a low price, has oft m
led to a situation where the potential supply of sodium sulfate has ex-
ceeded demand. Uses have been developed to take advantage of the large,
inexpensive supplies. As a result sodium sulfate has become an important
material to several industries, and its low cost ultimately translates
to lower product costs in those industries where it is used.
Sodium sulfate is used in the paper industry, by detergent
manufacturers, and in the manufacture of glass and textiles. U.S.
consumption has averaged 1.6 million tons over the last decade, and this
level of use is likely to be characteristic of the foreseeable future.
2. Market Characterization
a. Size
U.S. production of sodium sulfate was approximately 1.36 million
tons in 1972, down 8% from a record level of nearly 1.5 million tons
in 1968. Total value of 1971 shipments was $28 million.
Net imports of about 0.27 million tons in 1972 (equa). to 20%
of U.S. production) brought total 1972 U.S. apparent consumption to
approximately 1.63 million tons. Belgium accounted for 48% of import
dollar value, Canada 38%, and in descending order of importance, The
Netherlands, East Germany, Sweden, West Germany, and Japan accounted
for the remaining 142%.
Historical data for production, foreign trade, and apparent
consumption are given in Table 11. In this table, and in Table 17.
(giving price information) the data are presented for both high purity
(anhydrous sodium sulfate), and lower purity (saltcake) grades of
sodium sulfate. Most of this analysis will be in terms of aggregate
data for both grades.
b. Growth
As Table 1l illustrates, both U.S. production and apparent
consumption of sodium sulfate reached record levels in 1968. Between
1968 and 1972, production decreased 8% and apparent consumption
39 5465
TABLE 11 ‘decreased 6%. Data for 1972 indicate that the downward trend has at
— least temporarily stopped. Production volume was up slightly (less
— - — coms _ than 1%) from 1971, and apparent consumption increased 5%.
SODIUM S , IMPORT/EXPORT, AND APPARENT CONSUMPTION
While net imports were at a record level in 1972, and accounted
(Thousands of Tons-- 100% Na,SO,) for most of the 5% increase in apparent consumption between 1971 and
1972, it is difficult to discern a trend in imports over the past
1 2 decade. From a low of 9% to a high of 20%, net imports have
Production, by Type Foreign Trade . vo averaged 16% of U.S. production since 1962.
Year Saltcake Anhydrous Na,SOQ, Imports Exports Apparent Consumption - ;
c. Uses
1960 810 303 167 31 1249 Se
1335 ; An estimated use pattern for sodium sulfate is given in
1961 . 844 327 196 32 Table 12. By far the largest use (ca. 70%) is in the kraft, or sulfate,
1331 pulping process of the paper industry. Sodium sulfate is converted to
1962 826 368 188 51 sodium sulfide, and with sodium hydroxide and water, forms a digesting
1348 solution for wood chips. Techniques for recovering impure sodium sulfate
1963 837 396 160 45 (saltcake) from the digesting liquor are constantly being improved, but
62 present losses average about 100 pounds of saltcake per ton of pulp.
1964 926 390 290 44 15 Purchased saltcake is used to replace that which is not currently re-
1665 covered. Use in kraft pulping has remained relatively constant at
1965 976 428 274 13 about 1.1 million tons for the last ten years. Increasing requirements
1654 due to growing pulp demand have been offset by improved sodium sulfate
1966 1,009 436 237 28 recovery techniques.
1967 696 668 290 28 1626 The second largest use of sodium sulfate (ca. 18%) is in deter-
1732 gent formulations. A small amount is added to all detergents as part
1968 758 125 305 56 of the manufacturing process, but increasingly, manufacturers have
1669 been adding additional purchased sodium sulfate to their formulations.
1969 730 744 286 91 This additional sodium sulfate partly compensates for the loss of bulk
1587 and detergency brought about by decreased phosphate content. Sodium
1970 561 812 269 55 sulfate use in detergent formulation has doubled from about 150,000 tons
_ 67 1559 in the early 1960's to about 300,000 tons in 1972.
1971 514 843
1634 Use in the manufacture of glass, in textile finishing, and other
1972 681 683 299 29 uses constitute the remainder (ca. 12%) of U.S. consumption of sodium
sulfate. In glass manufacture, sodium sulfate speeds the melting of the
raw material charge, improves the working properties of high-silica glass,
and, when carbon is added, forms sulfur dioxide gas. The sulfur dioxide
bubbles have a “fining” effect, removing other gas bubbles as they move
toward the surface of the molten glass.
Use of sodium sulfate in glass manufacture has decreased slightly
over the past decade due to restrictions on the sulfur dioxide content
1 The large difference between pre-1967 and post-1965 production figures is of stack gases. Manufacturers are being forced to cut down on the amount
h . of sodium sulfate in each batch of glass and to install scrubbing units
due to a product classification change
which will allow recycling of sodium sulfate. Current consumption is
about 140,000 t ar.
2 Total for crude and refined sodium sulfate. - , — oe ewe
In textile manufacture, sodium sulfate finds use in the finish-
3 Apparent Consumption: production plus imports minus exports. ing operation. The primary use is dye standardization; that is,
Source: U.S. Department of Commerce. Data for 1972 are preliminary.
41
9-166 40
SAG7
TABLE 12 dilution of the dye to a standard potency. Sodium sulfate is also
USE PATTERN OF SODIUM SULFATE BY APPLICATION added to the dye bath to level, or control, the color. Consumption of
————eeerereerereeerrrerrerreeeeeee sodium sulfate for textile applications has remained fairly constant at
an estimated 50,000 tons annually over the past several years.
Finally, several thousand tons per year of sodium sulfate find
application in such uses as cellulose sponge manufacture, mineral feed
Kraft (Sulfate) Paper Process 70% supplements, cleansing agents, photography, and as a chemical catalyst.
Used with sodium sulfide and sodium
hydroxide in the pulping-bleaching operation. d. Substitute Products
In applications which account for the bulk of U.S. sodium sulfate
consumption, other products could be substituted with relative ease.
The major consequence of such substitution would probably be increased
Detergents manufacturing and product costs.
Sodium sulfate is used in detergents to 18%
improve detergency and contribute bulk In kraft pulping operations, sodium sulfate is employed as the
density to the formulation. most economical source of make-up sodium and sulfur values. Other, more-
expensive sources (e.g., sodium carbonate or caustic soda) could be sub-
stituted for the purchased saltcake, or "synthetic saltcake”" may be
manufactured by oxidizing a mixture of soda ash (sodium carbonate) and
sulfur. Furthermore, the newer pulp mills will generate most, or all,
Glass, Textile, and Other of their saltcake requirements internally as a by-product of on-site
In approximate order of importance, sodium 12% chlorine dioxide bleach production. The only problem here is that
sulfate is used in "fining" glass, standard- sodium values must still be purchased outside, and high prices for
izing textile dyes, manufacturing cellulose sodium hydroxide or sodium carbonate can make this source of saltcake
sponges, as a cleaning and metal pickling agent, less attractive than purchased saltcake.
and in photography.
os SESS SEES . — Increasing use of sodium sulfate in detergent formulation is,
itself, the result of a substitution. Sodium sulfate, as an inexpensive
electrolite, serves to replace some of the lost detergency and bulk to
100% detergents with reduced phosphate content.
e. Geographic Consumption
An estimated geographic use pattern for sodium sulfate is given
in Table 13. More than 60% of sodium sulfate demand is in the U.S.
south, and approximately 90% of this demand is attributable to the kraft
pulping industry.
Approximately 16% of U.S. sodium sulfate demand is in the north-
Sources: Kirk-Othmer, Encyclopecia of Chemical Technology; Shreve, central--Great Lakes region. The primary use in this region (ca. 60%)
alec Chemical Process Industries; and Contractor's estimates. is in detergent formulation, with kraft pulping operations accounting
for most of the remaining consumption.
The U.S. west and northwest require an estimated 14% of annual
U.S. sodium sulfate supply. Kraft mills account for most (cay 75%) of
this regional demand; detergent formulation and other uses make up the
rest.
In the U.S. northeast, it is estimated that half of the 72%
regional consumption is for detergent formulations; most of the remaining
half is split between kraft pulping and glass manufacture.
SAG 43
»168 as 5469
TABLE 13
GEOGRAPHIC USE PATTERN OF SODIUM SULFATE
South
Approximately 90% - kraft pulping,
10% other.
North Central - Great Lakes
Approximately 60% - detergent formula-
tion, 25% kraft pulping, 15% other.
West and Northwest
Approximately 75% - kraft pulping,
15% detergent formulation, 10% other.
Northeast
Approximately 50% - detergent formula-
tion, 20% - kraft pulping, 20% glass
fining, 10% other.
Source: Contractor's estimates.
5170 44
63%
16%
14%
7%
100%
f. Captive Requirements
Production of sodium sulfate for captive use by producing
companies is insignificant in the U.S. Nearly 90% of U.S. production is
as by-product or co-product sodium sulfate. The small amount produced
as primary product is produced for sale to end users. Table 14 shows
a comparison of sodium sulfate production and shipments for the years
1962-1972. Shipments have averaged 99% of production over the last
decade.
Production of by-product sodium sulfate during chlorine dioxide
bleach manufacture at pulp mills, is the only significant case where
by-product sodium sulfate is used in another operation by the same
company.
g. Other Market Characteristics
Most of the sodium sulfate produced in the U.S. sells for about
$20 per ton, with price as the main basis for competition. In this price
range, freight costs become a significant consideration in marketing
and distribution of the product. Local shipment may cost up to $15
per ton, and long distance shipping rates may be $24 per ton and more.
These rates are relatively high compared to transatlantic bulk shipping
rates of about $7 rer ton, and allow foreign producers to compete
effectively with U.S. companies located on the Atlantic coast.
Within the U.S., the relatively high freight costs cause
local demand to be highly dependent on the proximity of sodium sulfate
supply. Substitution may occur when freight-equ2lized costs of another
product make its use more economical. An example is caustic soda as
a source of sodium values for kraft pulping operations.
3. Supply Characterization
, a. Manufacturing Routes
Sodium sulfate has rarely been produced in quantity for its
own sake. A summary of sodium sulfate production by process, from
1964 to 1971, is given in Table 15, Only about one-third of the pro-
duction classified as "natural" is recovered solely for sodium sulfate
value, and in 1972, approximately 90% of U.S. production could be
classified as by-product or co-product sodium sulfate.
By-product sodium sulfate is defined as sodium sulfate formed in
a process which produces one or more other products of significantly
higher value. These processes include manufacture of rayon and
cellophane, lithium and strontium processing, and the chemical
synthesis of sodium bichromate and resorcinol.
Co-product sodium sulfate is formed in a process which con-
currently produces products having a value comparable to that of sodium
45
S471
TABLE 14
CAPTIVE VS. COMMERCIAL CONSUMPTION OF SODIUM SULFATE
(Thousands of Tons)
Year Production Shipments!
1962 1,194 1,170
1963 1,233 1,226
1964 1,316 1,303
1965 1,404 1,364
1966 1,445 1,398
1967 1,364 1,384
1968 1,483 1,469
1969 1,475 1,439
1970 1,373 1,386
1971 1,356 1,377
1972 1,364 --
: Including interplant transfers.
Source: Current Industrial Reports, U.S. Department of Commerce.
JI
-_—
~}
a)
46
Year
1964
1965
1966
1967
1968
1969
1970
1971
Sovrce:
Table 15
PRODUCTION OF SODIUM SULFATE BY PROCESS
(Thousands of Tons)
Mannheim Polymer
Furnace By~Product
214 356
224 382
228 387
196 346
165 404
181 388
177 354
162 362
Sodium
Dichromate
and Other
201
190
217
228
254
282
278
210
U.S. Department of Commerce.
47
Natural
544
608
613
594
660
624
564
622
Total
1,315
1,404
1,445
1,364
1,483
1,475
1,373
1,356
sulfate. Examples of such processes are the Mannheim and Hargreaves
processes for producing hydrochloric acid, and the recovery of sodium
sulfate from natural brines and salts which contain a variety of in-
organics of similar value.
One producer, with about 10% of U.S. capacity, has plants which
sell sodium sulfate recovered from natural brines as their sole source
of revenue. This is the only significant case in which sodium sulfate
is produced as a primary product.
Methods for sodium sulfate production may be divided into three
categories: recovery from natural sources, production as a by-product
of rayon and cellophane manufacture, and production accompanying the
synthesis of various chemicals.
Recovery from natural brines accounts for about half of U.S.
sodium sulfate production. Figure 4 illustrates, in flow chart forn,
a typical process for recovery of both anhydrous sodium sulfate and
Glauber's salt, a hydrated form of sodium sulfate. The natural brine,
containing dissolved sodium sulfate and other inorganics, is pumped into
a natural salt deposit to reduce the solubility of sodium sulfate. When
the saturated solution is cooled, Glauber's salt precipitates. The
mixture is filtered, and the hydrated sodium sulfate is collected for
direct sale or for further processing to anhydrous sodium sulfate.
Production of sodium sulfate as a by-product of viscose rayon
or cellophane production is responsible for about 30% of U.S. sodium
sulfate capacity. Figure 5 is a schematic diagram for production of
sodium sulfate as a rayon by-product. The sodium sulfate is formed in a
spinning bath when the basic viscose rayon dope is forced through the
fine holes of a spinneret into a solution containing sulfuric acid. Sodium
sulfate is produced at a rate of about 1.2 pounds per pound of rayon or
cellophane. The spinning bath must be refreshed periodically by removing
the sodium sulfate which has formed and replenishing the sulfuric acid.
The production of certain industrial chemicals results in the
formation of sodium sulfate as a natural result of the process used.
Approximately 20% of U.S. sodium sulfate capacity is of this type.
Figure 6 is a simple flow diagram for the Mannheim hydrochloric acid
process. Salt (sodium chloride) and sulfuric acid are heated together
to form hydrogen chloride and crude sodium sulfate. The crude sodium
sulfate may be further refined or converted to Glauber's salt depending
on relative demand for the two products.
Other examples in this third category of sodium sulfate production
include the Hargreaves process for hydrochloric acid, formation with
sodium bichromate when sodium chromate is treated with sulfuric acid,
and production accompanying the synthesis of phenol and resorcinol.
b. Producers
In 1972 there were 22 companies producing sodium sulfate in
32 locations. These companies, plant locations and capacities, and
oe in| 48
FIGURE 4
RECOVERY OF SODIUM SULFATE FROM NATURAL BRINES
Natural Brine Chill
(-112 er
7-11 Na,S0,) | — —#1 Crystallizer
" 4
Vz
Salt
Deposit Filter
Dryer —~<_ Evaporator ~~
Anhydrous Sodium Sulfete
(Na,SO, )
Glauber's Salt
(Na,SO,-10 H,0)
49
5475
FIGURE 6
FIGURE 5
PRODUCTION OF SODIUM SULFATE IN THE MANNHEIM PROCESS
PRODUCTION OF SODIUM SULFATE IN VISCOSE RAYON PROCESS a
Sulfuric Acid Hydrochloric Acid—®To Recovery
Viscose Solution _ H,80,) (HC1)
.Viscsss tem (Cellulose Xanthate + NaOH solution) | 4
Salt H
(NaCl) a
Furnace
Rayon Fibers
To bobbin ~iSolution Tank
Sodium Sulfate
H,SO, + 2 NaOH —e Na,SO0, (Na,SO,)
Spinning Bath
—<g-
To Solution Tank~—*— Filter —t———+ Chiller —
-w- Dryer —s Anhydrous Sodium Sulfate
(Na,SO,) Glauber's Salt
(Na,SO,° 10 H,0)
51
asf? 7 ~
176 50 a
TABLE 16
processes involved are given in Table 16. The five major producers
accounted for 70% of 1972 U.S. capacity. Seven companies (10 plants) SODIUM SULFATE PRODUCERS -- LOCATION AND CAPACITY
produce sodium sulfate from natural sources. Only one of these (Th ate of %
companies has facilities (2 plants) which produce sodium sulfate as their ousands of Tons)
sole source of operating revenue. The others produce it as either a by-
product or co-product along with other inorganics.
Five companies (1l plants) produce sodium sulfate as a by- Producer Location Annual Capacity Process
product of rayon or cellaphane manufacture, and ten companies (11 plants)
produce sodium sulfate as a by-product or co-product of chemical synthesis Akzona Inc.
operations. American Enka Co., div. Enka, N.C. 20 Polymer by-product
Lowland, Tenn. 36 Polymer by-product
Seven plants having approximately 100,000 tons-per-year capacity
each, were responsible for 60% of 1972 U.S. capacity, and would be
classified as large producers of sodium sulfate. Fifteen plants, of Allied Chem. Corp
25,000 tons-per-year capacity or less, accounted for 12% of 1972 U.S. Industrial Ch Di
capacity, and would be classified as small. The remaining ten plants, we —_— _ ealesasee, WS. 0
with capacities between 25,000 and 100,000 tons per year each, accounted
Bichromate by-product
for 28% of 1972 U.S. capacity. American Cyanamide Co
I . .
The base materials from which sodium sulfate is produced as a — are See Ft. Worth. Tex 13 Catalyst by-prod
by-product are long-established chemical commodities. It is there- IRC Fibers Co., subsid. Painesville, Ohio 33 ee Ped ate sony
fore not surprising that many of the plants producing sodium sulfate
are fairly old. Most plants have been operating at least ten years;
some nearly twenty years. Chem. Met Corp. Chicago, Ill. oo
c. Manufacturing Economics
Climax Chem. Co. Monument, N.M. 36 Mannheim furnace
Raw materials for sodium sulfate production are either natural
(HCl by-product)
brines and salt deposits or sodium alkalis and sulfuric acid. In
either case, nearly all of the manufacturing cost is represented by
separation, drying, and packaging costs. In the case of natural sources, GHUSSSUTeD CROTD CHUESED, Ms. ie Tapes, Als. a Polyner by-product
depletion costs must be covered; where sodium sulfate is formed as a
joint product of some manufacturing process, raw material costs are El Paso Natural Gas Co.
often allocated to each product according to its relative value. Beaunit Corp, subsid.
' Beaunit Fibers Div. Elizabethton, Tenn. 25 Polymer by-product
We understand that water pollution abatement costs have been
developed only for chrome saltcake, i.e., that sodium sulfate produced
as by-product from sodium bichromate manufacture. For that reason, our FMC Corp.
sodium sulfate manufacturing cost estimates are included with the sodium American Viscose Div. Fredricksburg, Va.
bichromate costs. Fort Royal, Va.
Lewistown, Pa. -
| inens tek. Be. 275 Polymer by-product
4. Supply/Demand Balance Nitro, W. Va.
Parkersburg, W.Va.
Sodium sulfate has had an inverse relationship from that most
often associated with the law of supply and demand. With nearly 90%
of sodium sulfate production resulting from processes in which it is a Great Salt Lake Minerals &
by-product or co-product of some other material, and with both a low Chems. Corp. Ogden. Utah 150 Natural: co-
price and low profit margin, demand for this product has traditionally ° . ’ wenSy Go-yesmuet
followed supply.
Green Bay Packaging, Inc. Green Bay, Wisc. -- By-product
5479
Producer
Cult Resources & Chem. Corp.
Lithium Corp. of America -
Inc. ,subsid.
Yercules, Inc.
Coatings & Specialty
Products Dept.
Kerr-McGee Corp.
Kerr-McGee Chem. Corp.
subsid.
Koppers Co., Inc.
Organic Materials Div.
Morton-Norwich Products, Inc.
Morton Chem. Co. div.
Nalco Chem. Co.
Industrial Div.
Ozark-Mahoning Co.
Pratt Sodium Co.
Reichhold Chems., Inc.
Stauffer Chem. Co.
Indust. Chem. Div.
U.S. Borax & Chem. Corp.
>ources
int
TABLE 16 (Continued)
Location
Bessemer City, N.C.
Glens Falls, N.Y. f
Hopewell, Va.
Trona, Calif.
Petrolia, Pa
weeks Island, La.
Chicago, Ill.
Brownfield, Tex.
Seagraves, Tex.
Casper, Wyo.
Tuscaloosa, Ala.
San Francisco, Calif.
West End, Calif.
Boron, Calif.
Wilmington, Calif.
Annual Capacity
18
20
250
15
120
10
185
44
Total: 1,555
Trade journals, industry reports.
54
Process
By-product
Bichromate by-product
Polymer by-product
Natural, co-product
Resorcinol by-prcJuct
Hargreaves furnace
(HCl by-product)
By-product
Natural, sole product
Natural, sole product
Natural, by-product
Phenol by-product
Boric acid co-product
Natural
Boric acid co-product
Boric acid co-product
With this type of relationship, there is often a time lag be-
tween increased supply and the development of new applications for the
product. While supply often exceeds demand, the reverse is rarely true.
Evidence of this relationship of demand following supply is
seen in the use pattern of sodium sulfate. From a technological point
of view, very few uses of sodium sulfate result from unique chemical
or physical properties of the compound. Rather, because of its rela-
tively low price, sodium sulfate is often used wherever its chemical or
physical properties allow its substitution in place of a more expensive
material.
Substitution of sodium sulfate for higher cost materials wherever
possible is a healthy economic practice, and does not detract from the
importance of this chemical to both manufacturers and consumers. Even
so, an excess of supply over demand is likely in the future, as water
pollution abatement guidelines become more stringent. More rigorous
water quality standards will have a dual effect: increasing recovery of
by-product sodium sulfate, and decreasing consumption of sodium sulfate
by kraft pulping mills and detergent manufacturers. Rayon and cellophane
manufacturers, for example, currently recover only about one-third of
the sodium sulfate produced by the industry. Kraft pulping mills,
on the other hand, experienced sodium sulfate "losses" (in plant
effluent) of about 250 pounds per ton of pulp in 1950, had reduced
these losses to approximately 100 pounds per ton by 1972, and may be
forced to reduce these losses by an gdditional 50% in the next decade.
This lower demand as a result of kraft pulping effluent guidelines is
in addition to reduced demand due to technical changes in bleaching and
pulping operations.
In view of the joint-product nature of most U.S. sodium sulfate
production, capacity figures are less meaningful for this chemical than
for most others. Reported capacity is often much lower than theoretical
capacity, and depends on the degree of commitment to recovering the sodium
sulfate produced. Nevertheless, in terms of reported capacity, pro-
duction of sodium sulfate has varied from 75% of capacity in 1964,
to 100% in 1968. Production in 1972 represented approximately 90% of
reported capacity.
On a regional basis, the U.S. south, northcentral. and northeast
are net consumers of sodium sulfate, while the west and northwest are
net producers. European sources supplement supplies to the U.S. south,
and Canadian sources provide additional sodium sulfate to northern U.S.
markets.
5. Prices
Published and actual prices of sodium sulfate for representative
years since 1950 are given in Table 17, The published price for lower
purity sodium sulfate (saltcake) has been $28 per ton since 1955. Actual
prices for this grade have varied erratically in a narrow range from
$20 to $22 per ton, indicating an average discount of 25%.
55 «5481
TABLE 17
SODIUM SULFATE PRICES -- PUBLISHED VS. ACTUAL
(Dollars per Short Ton)
Publisined Price! Actual Price?
Year Lower Purity High Purity Lower Purity Hi Purit
1950 : 22 40 12 27
1955 28 52 22 27
1960 28 54 22 29
1965 28 56 21 27
1970 28 48 20 21
1971 28 43 21 20
1972 28 -- -- oo
Published prices bulk, works, 100% =. SO, basis for lower purity; bags,
carlots, delivered East for high purity Na,SO,.
,
Actual price: Value of Shipments/tons shipped.
Sources: Chemical Marketing Reporter, U.S. Department of Commerce,
and Contractor's estimates.
mAs?
56
Prices for higher grades of sodium sulfate are more difficult
to characterize due to the number of different grades in this category,
but it appears that considerable discounting occurs, and that the
average price commanded by higher grades has declined in recent years.
In 1971, the average price of high-purity sodium sulfate was below
that of the lower quality grade. This unusual situation is most likely
the result of increased recovery of this high-purity grade from rayon
manufacture.
C. TITANIUM DIOXIDE
l. Summary
In 1972, U.S. titanium dioxide (TiO,) consumption, including
imports, was approximately 787,000 tons, with paint, paper and
plastics applications accounting for nearly 80% of the total. Market
demand growth in recent years has been at a 3% to 4% rate and is
expected to continue at least at that rate through 1975. Imports remain
a relatively small proportion (10%) of sales and are generally used only
in non-critical, lower-cost applications.
While Ti0, is sold in volumes comparable to those of some
commodities, it is marketed more as a specialty chemical rather than
a commodity. Producers’ marketing efforts in recent years have been
centered around grade improvement, quality control, and customer-
oriented technical service. Depending on particular product expertise,
individual producers frequently are strong in one market segment,
such as paper, but do not fare as well in another--paint, for instance.
Current list prices are 28.5¢ per pound for rutile grades,
24¢ per pound for paper grade, and, at these prices, TiO, frequently
is one of the more expcusive raw materials in its end-use application.
List prices have historically been stable or slowly rising, with the
industry generally attempting to move as a whole to a given new price
level. <A long-established l¢ per pound price differential between
anatase and rutile grades disappeared in 1971 and both grades are currently
offered at the same list price. Due mostly to overcapacity problems,
the industry has been plagued with substantial price discounts which
forced several major producers to operate at a loss in the 1970-71 period.
Prices have firmed in recent months.
TiO. is manufactured by either of two processes--sulfate and
chloride. urrent domestic manufacturing capacity is about 817,000 tons,
approximately 54% of which is sulfate. The sulfate process is older and
employs sulfuric acid to separate and recover TiO. from ilmenite, the
principal raw material used in this manufacturing route. The sulfate
process has the disadvantage of producing a large amount of potential
pollutants in the form of spent sulfuric acid and ferrous sulfates
(copperas). Depending on processing steps employed, both anatase and
rutile, the two chemical forms of Ti0., can be produced. Estimated
current manufacturing cost for pigment via the sulfate process is
approximately 2l¢ per pound, including pigment finishing steps.
The alternate method of production, and the one employed in every
TiO, plant built since 1956, is the chloride process. In this process,
57
ASS
chlorine is reacted at high temperature with the raw ore, generally rutile,
a high TiO,-content material. TiO, is recovered later in the process
through further chemical treatment, and approximately 90% of the chlorine
is recovered for reuse. Due to higher quality ore and reactant recycling,
the chloride process produces far less pollutant by-product than the
sulfate process. Although rutile pigment has been the sole product from
the chloride process in the past, Du Pont will begin production of both
anatase and rutile grades upon conversion of its Edgemoor, Delaware,
plant to 100% chloride production in 1974. Chloride pigment has more
uniformly consistent particle size, hence it offers greater hiding power
and is used preferentially in certain critical applications such as
automotive paint. Current chloride process manufacturing cost is
estimated at nearly 23¢ per pound.
TiO, for commercial production is obtained from four principal
sources--ilmenite, rutile, leucoxene, and slag. Ilmenite contains
approximately 50% TiO,, is mined virtually worldwide, and is the
basic raw material for the sulfate process and for Du Pont's chloride
process plants. World supply is plentiful with present production of
nearly three million short tons per year. U.S. production is
approximately 700,000 short tons. Rutile, containing 95+% Ti0,,
is the raw ore for most chloride production and is found almost exclusively
in Australia. World supplies are believed to be limited to 20-25 years
at present production rates of over 400,000 long tons per year. No
rutile is mined in the U.S.
Leucoxene and titanium slag, used in sulfate production, are
relatively minor sources of TiO, worldwide, although over 100,000 tons
of Canadian slag are imported into the U.S. every year.
2. Market Characterization
a. Market Size and Growth
U.S. market demand for TiO, pigments in 1972 was approximately
787,000 short tons, valued at neasty $433 million on a delivered basis.
Table 18 shows the recent history of TiO, production, trade and ship-
ments data. Since 1965, overall market growth has been at an annual
rate of 3% to 4%, although certain individual end-use segments, such as
plastics, have grown considerably faster.
Exports of TiO, have remained quite small, less than 2% to 3%
of domestic production, and have actually declined somewhat in recent
years. Imports, on the other hand, have ranged in recent years from 5%
to 10% of total apparent consumption, although 1972 saw a large jump to
86,400 tons, or 11% of apparent consumption. Imports will probably
continue at present percentage levels for the foreseeable future.
b. Product Uses
Table 19 identifies the major end uses and recent consumption
history tor TiO> pigments. Paint and coatings applications, currently
“1 58
TABLE 18
oc
TiO. APPARENT CONSUMPTION AND INDUSTRY SHIPMENTS
(Thousands of Tons)
Commercial
Shipments
Total
Shipments
Apparent
Consumption
Stocks
Imports Exports
Production
Year
524.5
573.0
606.3
576.7 49.6 17.0 101.7
1965
545.4
593.3
48.0 15.0 98.5 630.7
594.5
1966
542.5
582.3
617.4
103.3
46.8
589.4
1967
564.4
632.1
53.3 15.0 94.2 671.1
623.7
1968
590.1
654.5
53.2 14.0 100.8 684.3
664.3
1969
59
560.9
643.7
60.2 15.0 106.9 691.4
655.3
1970
581.2
684.7
723.6
14.0 89.7
42.8
677.8
1971
86.4 10.0 66.3 787.1
687.3
1972
U.S. Department of Commerce "Current Industrial Reports" and Tariff Commission trade data.
Sources:
“91S
TABLE 19
TiO, MARKET CONSUMPTION
(Thousands of Tons)
1965 1970
Paint and Coatings 345 375
Paper 110 147
Plastics 27 59
Rubber 31 35
Floor Covering 29 30
Printing Ink 12 18
Ceramics 10 i7
Synthetic Fibers 6 10
Roofing Granules 4 5
Other _26 _34
Total 600 730
Source: Contractor's estimates.
1h} 60
accounting for 50% of total consumption, constitute the major use for
Ti09. Two other end uses, paper and plastics, have grown rapidly in recent
years, and in 1972, accounted for an additional 30% of Ti0, consumption.
(1) Paint and Coatings
The paint and coatings industry is comprised of two basic segments--
trade and industrial--with trade sales accounting for about 60% or
235,000 tens of TiO, consumption in the paint industry. Due to its
interior hiding power and dispersibility (relative to rutile), anatase
grade TiO, is rarely used, exceptions being low-cost applications such
as highway paint. Within rutile grades, chloride process pigments account
for about 60%, or 240,000 tons of paint pigment.
Sulfate producers have worked hard in recent years to eliminate
previous performance deficiencies of sulfate rutile grades, and for
many trade sales applications, such as interior wall paint and exterior
house paint, sulfate and chloride grades are interchangeable. In in-
dustrial applications, the chloride process pigments, with Du Pont's
R-900 series grades as the industry standards, enjoy clear superiority.
A critical factor in selling Ti07 to the paint industry is a
customer-oriented marketing effort. With TiO, pigment cost typically
comprising 10% to 25% of paint selling price, paint manufacturers demand
quality technical service and grade development to meet ongoing paint
application needs. Imported Ti0, has fared poorly in the paint industry
due to lack of good customer service.
2) P r
1972 TiO, sales to the paper industry were about 158,000
tons and sales to the industry have been growing at 6% per year. Anatase
grade pigments, because of their lower cost, account for about 70%,
or 110,000 tons, of pigment sales. (TiO. frequently competes with
10 to 12¢ per pound clays for whitening and opacity filler applications;
hence cost is a critica) /actor, and imported anatase grades have made
their most successful penetration in this market.)
There are two main application areas within the paper industry--
beater and coatings. Beater applications call for pigment addition
directly to the paper pulp, and there is much grade and supplier
interchangeability. A recent trend in beater use has been an increased
TiO, requirement as paper sheet has become thinner while retaining
opacity. In the coating area, use of rutile giade Ti0, has been increas-
ing, and there is less grade interchangeability than in beater use.
(3) Plastics
The fastest growing market segment for TiO, is plastics, with
1972 consumption of about 78,000 tons and a recent growth rate of nearly
61
S187
17% a year. Major application areas inciuded polyethylene injection
molding and film production, polystyrene extrusions, and vinyl extrusions,
such as outdoor siding and moldings. Product performance is the critical
factor in plastics use, and rutile accounts for over 95% of TiO» sales.
Rutile pigment, both chloride and sulfate, is superivr to anatase in
dispersion and resistance to discoloration and weatmering. Technical
service is very important, and it is common for producer and user to
work together in developing new applications. Impurted Ti05, again due
to lack of customer service, has made little hea¢way in this market.
(4) Other Applications
The remaining applications shown in Table 19 make up the re-
maining 161,000 tons of TiO, consumed in 1972. Individual applications
and their consumption relative to the total are as follows: rubber,
4%; floor covering, 4%; printing ink, 2.6%; ceramics, 2.6%; synthetic
fibers, 1%; roofing granules, 0.5%.
c. Substitute Products
TiO, use presently is threatened by substitute products in only
one market Segment, paper. There TiO, enjors the advantage of being an
effective opacifier, but it is at a cost disadvantage to alumina and
silica clays, some of which offer nearly equivalent brightness as Ti0,.
In the paint industry, TiO, is by far the most effective white pigment
in terms of hiding power, a key to the trend toward one-coat paint
applications. While pigment research is extensive, no equally effective
substitute has been found. In plastics and rubber, Ti0, offers the
best combination of white pigment cost, dispersion, and resistance to
discoloration. In other product application areas, no substitute products
represent serious threats to Ti0,'s present position.
d. Captive Consumption
The major captive use of Ti0, pigment is in the paint industry,
where three of the top six TiO, consumers have their own pigment plants.
Table 20 details captive TiO, consumption and shows the rise in
captive use as a percentage of apparent consumption from 8% in 1965
to 14% in 1971. Sherwin-Williams, Du Pont, Glidden-Durkee, and NL
Industries are the major captive users, and it is believed that these
companies account for virtually all of the captively-consumed TiO,
pigment.
3. Supply
a. Manufacturing Processes
Two commercial processes are presently employed to produce TiO
pigments--the sulfate process and the chloride process. The sulfate process
is older and is the process employed by most of the existing worldwide
62
=
Pi
D
TABLE 20
140, CAPTIVE CONSUMPTION
(Thousands of Tons)
Total Commercial Captive l Pon
Year Sh nts Shipments Consumption Consumption
1965 573.0 524.5 48.5 8.0
1966 593.3 545.5 47.8 7.6
1967 582.3 547.5 39.8 6.4
1968 632.1 564.4 67.7 10.1
1969 654.5 590.1 64.4 9.4
1970 643,7 560.9 82.8 12.0
1971 684.7 581.2 103.5 14.3
lcaptive consumption is calculated as total shipments - commercial shipments.
Source: Current Industrial Reports, U.S. Department of Commerce.
63
capacity. The chloride process was developed in the 1950's and is
used in all new TiO, plants built in the U.S. since 1956. In recent
years chloride procéss plants have become increasingly widespread in
Europe as well.
(1) Sulfate Process
Figure 7 left-hand side, is a schematic representation of
the sulfate process. In the first step ilmenite, an ore or sand con-
taining 40-60% TiO,, or titanium slag, containing 60-70% Ti0,, is
digested with sulfuric acid. The amount of acid required ranges from
2.5 to 4.5 pounds per pound of finished pigment and depends on the TiO
content of the ore. In addition to the formation of titanium sulfate
salts, substantial amounts of ferrous sulfate are also formed since the
other major component of ilmenite is iron oxide, FeO. The remainder
of the process involves separating the various sulfate salts, with iron
being removed from the process as hydrated ferrous sulfate, copperas, and
TiO, being precipitated in the hydrolysis step. This final chemical
form of the TiO, pigment, anatase or rutile, is determined by the
nucleus crystal“used to seed precipitation in this step. The TiO
precipitate is next calcined at temperatures of up to 1250° C, during
which adsorbed sulfur trioxide and water are driven off and, if rutile
seeds were used in the hydrolysis step, rutile-type pigment is formed.
The pigment finishing process will be described later.
(2) Chloride Process
The chloride process typically utilizes rutile ore containing
90% to 97% TiO. as its raw material. Du Pont has developed the capability
to use ilmenité, thereby lowering its raw material costs significantly.
Figure 7 right-hand side, outlines the process. In the first step,
rutile ore is burned with chlorine gas to produce titanium tetrachloride.
This material is separated from the reaction mixture via distillation,
then is oxidized at high temperature to produce TiO, particles, which
are quickly quenched. The quenching process allows extremely close
control of pigment particle size which is essential in developing
hiding power of the pigment. Chlorine is recovered in the oxidation
process and is recycled for use in the first step. As in the sulfate
process, the refined TiO, pigment is sent to finishing steps which
enhance the surface propérties of the pigment particles.
Although the chloride process is conceptually straightforward
and does not produce the substantial quantities of waste materials
that the sulfate process does, it hes been extremely difficult to operate
commercially. One problem has been the extreme corrosiveness of the
high temperature chlorine employed. A second, more fundamental problem,
has been the oxidation step, which is extremely sensitive to burner
configuration and to product recovery methods. Du Pont is the most
successful in this regard and holds significant patent protection in
this technology.
64
130
FIGURE 7
Ti0, PIGMENT MANUFACTURING PROCESSES
SULFATE PROCESS
CHLORIDE PROCESS
Sulfuric
Ilmenite Acid Titanium Slag Carbon Rutile Chlorine
Digestion Digestion Chleriontion |
. Scrap
Reduction [a Iron Ti Cl
4
Clarification Clarification Purificati
on
cl,
Crystallization y Recycle
Waste and/or
Nuclei By-product \
| Oxidation
Copperas
(FeSO,+ 7H,O) Titani Ti0>] Rutile
- 2 - Hydrolysis Titanium :
' Chlorine Recovery
Filtration
Calcination Neutralization
TiO?
Rutile or Anatase
Pigment
SS —_——
Finishing and Coating
Finished TiO) Pigment
65
5491
(3) Pigment Finishing
Before pigment from either process is sold, it is processed
through a series of finishing operations in which specific particle
surface properties are developed. These properties in turn determine
characteristics such as pigment dispersibility and durability. For
instance, pigment intended for plastics use is usually treated with an
organic agent, dimethyl siloxane, to enhance the pigment's compatibility
with the plastic system. Sulfate producers have made their pigments
more competitive with chloride pigments in recent years through careful
control of particle size and coating characteristics obtained in finish-
ing operations. Such finishing steps generally add 1-2¢ to the basic
manufacturing cost of the pigment.
b. Producers
At the end of 1972, there were 11 domestic TiO, producers operating
15 plants, all but one of which are in the eastern half of the U.S.
Table 21 summarizes pertinent information regarding these facilities.
Since 1956, chloride process facilities have accounted for all new TiO,
pigment plant construction. Possibly reflecting producer's uncertainty
about process technology and economics, individual capacity of most
chloride plants is in the 25,000 to 30,000 ton range. The notable
exception is Du Pont, which is increasing the capacity of their New
Johnsonville, Tennessee, plant to 195,000 tons by year-end 1973 and is
actively considering a new 100,000 ton chloride facility in Georgia.
Two producers, PPG and NL Industries, have recently closed their chloride
facilities, moves reportedly due to raw material supply and economics
problems.
Several of the large producers-~-Du Pont, NL Industries, and
Glidden-Durkee--have integrated their operations backward to provide
captive supplies of ilmenite ore. (No domestic producer has a captive
source of rutile as virtually all of this raw material is imported from
Australian producers.) These three producers have also achieved forward
integration through captive TiO, supply for their paint products. No
other domestic producers have achieved integration to a comparable
extent. Most TiO, plants are isolated manufacturing facilities, although
a few are part of larger, multi-product facilities, and most plants
produce and sell titanate and othe" salts as by-products from the
process.
c. Manufacturing Economics
Tables 22 and 23 summarize estimated manufacturing economics
and profitability for a 25,000 ton sulfate plant. The costs for raw
materials, utilities, direct labor, and overhead, are based on current
estimates for these items. For the sulfate process, two investment
bases are used--replacement and depreciable. The replacement basis is
an ADL estimate of current plant replacement cost and is used for
calculation of insurance and maintenance, since these items are best
reflected by current costs and replacement value. A depreciable basis
60
. 02922
TABLE 21
TiO. MANUFACTURING LOCATIONS AND CAPACITIES
“a
(Thousands of Tons)
Start-Up
Annual
Capacity
Process“
Year
Raw Material
Location
Company
1955
1966
Imported ilmenite, slag
Imported rutile
70
40
110
Savannah, Ga.
American Cyanamid
Cc
1964
Imported rutile
27
Ashtabula, Ohio”
Camden, N.J.
Cabot
n.a.
Combustion Engineering
n.a.
27
Wilmington, Del.
1963
Imported rutile
Antioch, Cal.
Du Pont
Bete
1935
1956
Captive mixture of ilmenite/
Captive ilmenite, slag
Edgemoor, Del. l
1959
leucoxene, imported rutile
Captive mixture of ilmenite/
New Johnsonville, Tenn. 2
leucoxene, imported rutile
1946
1965
42 Slag
Gloucester City, N.J.
Hamilton, Miss.
N.J. Zine (Div. of GéW)
Kerr-McGee
toa)
sw
Imported rutile
45
n.a.
108
115
Mapleton, Ill.
Lonza
utes
1923
1918
Captive ilmenite
Captive ilmenite
Imported rutile
St. Louis, Mo.
Industries
1966
Sayreville, N.J.?
1956
1970
Captive ilmenite, slag
Imported rutile
Baltimore, Md.
Glidden-Durkee
(Div. of SCM)
1969
Imported rutile
Ashtabula, Ohio 27
Sherwin-Williams
Penn Yan, N.Y. n.a.
Transelco
,»000 tons by year end 1973.
C = Chloride.
Converting to all-chloride process and expanding to 112
SPlant being operated by N
Expanding to 195,000 tons by year end 1973.
Announced closing January 1973.
S = Sulfate;
1
2
3
4
©4343
-J. Zinc (Div. of G&W) under lease-purchase agreement.
Sources: Chemical Economics Handbook and Contractor's estimates.
TABLE 22
MANUFACTURING ECONOMICS--SULFATE PROCESS
Basis: Sulfate Process
25,000 T/Yr, 100% of Capacity
330 Days/Yr 103 TABLE 22 (Continued)
Replacement Investment--$26,325,000°’
Depreciable Investment--$15,000,000
$/Ton LABOR SCHEDULE
Item Unit $/Unit Units/Ton Pigment T10, PRODUCTION--SULFATE PROCESS
Raw Materials
Ilmenite (56% Tio,” Ton 21.00 1.87 39.27
Sulfur Ton 30.00 0.88 26.40 Supervisors Operators Helpers
Caustic Ton 55.00 0.20 11.00
jchoe Gueptente pope Siete 30.00 Feed Preparation Section 1 1 2
106.27
Digestion and Separation Section 4 3
.
Utilities”
U es Hydrolysis--Precir‘tation Section l 3 2
Water MGal 0.10 220 22.00
Electricity kwh 0.014 525 7.35 Purification Section l 1 l
Natural Gas MMBtu 0.60 10 6.00
35.35 Calcination--Dry Milling Section 1 l l
2 ~
Direct Labor ’ After Treatment Section 1 3 3
Supervision Man Hr 7.50 1.58 11.85
Operators Man Hr 5.00 4.43 22.15 Sulfuric Acid Plant a 1
Helpers Man Hr 4.00 3.80 15.20
49.20
Total--Men/Shift 5 14 12
Overhead
3 100% Direct Labor ---- ---- 49.20
Maintenance, Labor, and Supplies
@ 7% of Replacement Investment/Yr 73.71
Depreciation
2 9.1% of Depreciable Investment/Yr 54.60
Insurance and Local Taxes
1 2.0% of Replacement Investment/Yr 21.06
Total Manufacturing Cost Per Ton $389.39
| Manufacturing Cost Per Lb. Pigment $ 0.195
“Capital investment based on Contractor's estimates.
jAssumes Wage rates and utilities rates of New Jersey area.
Assumes capital cost of H,SO/ plant included. Does not include solid waste
handling capital or operating costs.
“See labor schedule included. . 69
Source: Contractor's estimates. 68
AGA | 5495
TABLE 23
iO. PIGMENT PROFITABILITY--SULFATE PROCESS
4) eee
Investment:
Manufacturing Cost:
Pigment Selling Price
Gross Profit/Lb.
Gross Profit/Ton
Freight at 5% of List Price Sales/Ton
General, Selling, & Administrative
@ 7.5% of List Price Sales/Ton
Profit Before Taxes/Ton
Profit After Taxes/Ton
Profit After Taxes as % of Sales
Profit After Taxes/Ton
Plus Depreciation/Ton
To*al Cash Flow/Ton
Total Cash Flow @ 25,000 Tons
Investment
Working Capital (3 months'
operating costs)
Payback (Yrs)
% Return on Capital Employed
Source: Contractor's estimates.
5496
$15,000,000
$0.195
70/30 Anatase
Rutile Rutile/Anatase Paper
Grade Mix Grade
$0.275/Lb. $0.26/Lb. $0.24/Lb.
0.080 0.065 0.045
160.00 130.00 90.00
27.50 27.50 27.50
41.25 41.25 41.25
91.25 61.25 21.25
46.62 30.62 10.62
8.3 5.9 2.2
CASH FLOW
46.62 30.62 10.62
54.60 54.60 54.60
101.22 85.22 65.22
2,540,000 2,130,000 1,630,000
15,000,000 —->
2,433,000 —>
17,433,687 —»>
6.9 8.2 10.7
15.0 12.0 9.3
70
of smaller dollar size than replacement value is used for depreciation
since most sulfate plants are 20 to 30 years old, and current depreciable
assets are restricted to recently replaced process equipment and newly
installed finishing equipment. A depreciation rate of 9.1% per year is used
as this rate is the highest allowed by the Internal Revenue Service for chemical
industry facilities. Since all TiO, grades are sold on a delivered basis,
a freight charge of 5% of list price has been included in Table 23. General
selling and administrative charges of 7.52% of list price sales reflect
the relatively expensive selling effort required for TiO, pigments.
Table 23 shows that depending on grade and price, after tax
profitability tanges from 7.1% down to 2.2% of sales. In addition,
return on capital could theoretically be as high as 13.7% after tax,
although 11.5%, based on a product mix of 70:30 rutile/anatase grades,
is probably more representative of actual industry performances.
Tables 23 and 24 detail similar costs and profitability figures
for a 25,000-ton chlorine plant. The depreciable and replacement invest-
ment basis are considered the same in this case since most chloride plants
not only are relatively new with substantial original book value remain-
ing, but also have experienced the updating of process and finishing equip-
ment found in sulfate process plants. As seen in Table 25, while the
after-tax profit percentage is low, 3.6%, the return on capital, at
10.2%, is considerably higher. By virtue of a large depreciation tax
shield, the chloride process apparently generates substantial cash flow,
despite low-book profits. It should be noted that chloride profit margins
have shrunk recentiy, largely due to the dramatic rise in rutile ore prices,
now $175 per ton and higher. Ore cost comprises over 50% of the cost of
manufacture, and this item has been most responsible for the elimination
of the chloride process’ earlier cost advantage over the sulfate process.
Chloride pigment producers are anxious to see this cost drop through either
more widespread use of ilmenite or through successful commercialization
of synthetic rutile production. An important factor in economical chloride
production is recovery and recycle of chlorine gas after the oxidation
step. The highly corrosive nature of chlorine makes this step difficult,
but failure to do so can result in extraordinarily high use of make-
up chlorine.
d. Raw Materials
Ready availability of inexpensive raw materials is one of the
key requirements for the continued production of low-cost TiO, pigments.
Economic production via the chloride process has been sorteusty
threatened by the recent, dramatic increase in rutile ore prices. In
contrast, ilmenite prices have risen cnly siightly to $35 per ton. The
reason for these different behaviors is the supply/demand balance for
each ore.
Ilmenite is mined virtually worldwide, with 1971 world production
being almost 2.9 million short tons. U.S. ilmenite production has de-
clined from 930,000 tons in 1969 to 680,000 tons in 1971, but worldwide
71
WZ
TABLE 24
TiO, MANUFACTURING ECONOMICS--CHLORIDE PROCESS
Basis: Chloride Process
25,000 T/Yr, 100% of Capacity
330 Days/Yr
Investment (Depreciable and ,
Replacement )--$21, 330,000
Ltem Unit $/Unit Units/Ton
Raw Materials
Rutile Ton 175.00 1.17
Coke Ton 24.00 0.35
Chlorine Ton 50.00 0.21
Chemical Additives --- ----- ----
‘ 2
Utilities
Water MGal 0.10 23
Electricity kwh 0.014 750
Natural Gas MMBtu 0.60 10
Refrigeration Ton/Day 3.00 2.5
Direct Labor 3
Supervision Man Hr 7.50 0.95
Operators Man Hr 5.00 5.4
Overhead
@ 100% Direct Labor
Maintenance, Labor, and Supplies
4 6% of Investment/Yr
Jepreciation
@ 9.1% of Investment/Yr
Insurance and Local Taxes
2 2% of Replacement Investment/Yr
Total Manufacturing Cost Per Ton
Manufacturing Cost/Lb Pigment
Re .
\Capital Investment based on Contractor's estimates.
[Assumes wage and utilities rates of New Jersey.
See labor schedule included.
72
Alay
34.12
51.19
77.63
17.06
$454.01
$ 0.227
TABLE 24 (Continued)
LABOR SCHEDULE
Ti0, PRODUCTION--CHLORIDE PROCESS
Operators
Load in
Chlorination reactor
Quench, TiCl, recycle, storage
Sludge filter, waste
Ticl, purification
TiCl, vaporizer, preheat, additives -
Oxidation chamber
Ticl, quench, cyclones, bag filter
Chlorine recovery
After treatment
Bagging, warehouse
Oxygen plant
Total
Supervisors
Chlorination, purification
Oxidation
After treatment
Total
73
Men/Shift
_—
MN Jee ee
Ww |- - -
439
TABLE 25
TiO. PIGMENT PROFITABILITY--CHLORIDE PROCESS
Investment: $21,330,000
Manufacturing Cost: $0.227/Lb.
(Rutile Grade)
Pigment Selling Price $0.275/Lb.
Gross Profit/Lb. 0.048
Gross Profit/Ton 96.00
Freight at 5% of List Price Sales/Ton 27.50
General, Selling, & Administrative
@ 7.5% of List Price Sales/Ton 41.25
Profit Before Taxes/Ton 27.25
Profit After Taxes/Ton 13.625
Profit After Taxes as % of Sales 2.5
CASH FLOW
Profit After Taxes/Ton 13.62
Plus Depreciation/Ton | 77.63
Total Cash Flow/Ton 91.25
Total Cash Flow @ 25,000 Tons 2,281,375
Investment 21,330,000
Working Capital (3 months’ operating costs) 2,837,500
24,167,500
Payback (Yrs) 10.6
% Return on Capital Employed 11.7
supply has been filled by increased production in Australia and Norway.
Present reserves of ilmenite are such that, at the present annual world
consumption rate of nearly three million tons, adequate supplies of
sufficient quality ore should be available for nearly 100 years.
The rutile ore supply situation, however, is not so bright.
Rutile production in recent years has remained constant at slightly
over 400,000 tons and is confined almost erclusively to the east coast
of Australia. Significant deposits are believed available in Sierra
Leone, but technical problems have hampered attempts to exploit this
source. There is no rutile ore mined in the U.S. A large increase in
worldwide chloride pigment process capacity has greatly increased
demand, and present rutile reserves are estimated to be barely 20 years.
These conditions have fostered a rise in rutile ore price from $100 per
ton in 1965 to $180 per ton presently.
A major hope in the bleak rutile supply situation is the
commercialization of synthetic rutile production. This process involves
chemical leaching of ilmenite ore to remove iron impurities and to upgrade
the T1i0, content to approximately 90%. Since nearly two tons of ilmenite
are required to produce one ton of synthetic rutile, waste disposal
considerations will adversely affect the rapid development of domestically
available synthetic rutile, although both Sherwin-Williams and Kerr
McGee are actively pursuing this technology. Semi-commercial synthetic
plants are in operation in Australia and Japan, and the product has
been tested and found acceptable in most U.S. chloride process pigment
plants. Chloride producers anticipate that synthetic rutile will begin
to appear commercially by 1975 at $130-150 per ton and feei that this
material will be significant in keeping chloride pigment production
economically viable.
The other significant factor in chloride process raw materials
has been the development of Du Pont's ability to utilize ilmenite ore
in its chloride plants. Although this capability has always been tech-
nically feasible, it has been uneconomic due to the high chlorine loss
resulting from chlorinating the 40% of iron oxide present in ilmenite.
Du Pont, however, has developed the ability to minimize chlorine use
and is able to produce chloride pigment for an estimated 1-2¢ per
pound less than rutile-based chloride processes. Since ilmenite is
much more widely available than rutile, other chloride producers are
working on both ilmenite beneficiation technology and direct ilmenite
use capibility in chloride processing. Thus far, however, Du Pont
remains the only producer using ilmenite directly.
The last major source of TiO, is titanium slag, which is produced
in Canada from plentiful, low-quality ilmenite ores. The ilmenite used
here is closely intermixed with iron ores, and smelting is employed to
produce pig iron and titanium slag containing 70% to 72% TiO,. Slag
cannot be used in the chloride process due to the formation of in-
soluble chloride salts which plug up processing equipment. While other
raw materials such as chlorine, coke, and sulfuric acid are used in
75 | 5501
TiO. pigment production, these items are widely available and do not con-
strain the production process to the degree that TiO, ores do. TABLE 26
TiO, INDUSTRY PLANT CAPACITY UTILIZATION
4. Supply/Demand Balance; Prices
(Thousands of Tons)
Industry capacity has been sufficient to supply demand as almost
continual additions to capacity have been made. Table 26 summarizes
capacity and production figures for recent years and shows that capacity Deresne
Capacity Production Utilization
utilization has been in the 75% to 85% range. Capacity has been taken
at announced, or nameplate, levels and is higher than effective capacity
due to grade/product mix constraints. The industry is now facing a
tight-supply situation with NL Industries announcing the closing of 1965 713 576.7 81
its chloride facilities in Sayreville, New Jersey. Du Pont'’s announced
expansions won't be operational until year-end 1973. 1966 725 594.5 82
This supply situation is substantially different from that of 1967 . 766 589.4 77
1970-71 when over-supply forced a sharp depression in prices. Table 27
summarizes recent shipment valuation history and confirms industry claims 1968 746 623.7 84
that the 1970-71 period saw severe price competition, despite stable 1969
list prices. Demand and prices have improved with the economic recovery 778 664.3 85
and recent list prices stand at: standard anatase and rutile grades,
1970 817 655.3
° 81
bulk--28.5¢ per pound; paper grade anatase--24¢ per pound. Most
producers are running at full capacity presently, and shipments are 1971
805 677.8 84
being made at list prices.
1972 817 687.3 84
Sources: Chemical Economics Handbook and Current Industrial Reports.
e-¢°--19 .
27. hee 76 77 55.3
Rutile
. 26
. 26
. 26
. 26
.27
.27
. 26
3
List Prices
Anatase
. 26
.25
.25
.25
.25
- 26
. 26
TABLE 27
COMMERCIAL SHIPMENT VALUES
2
Value/Lb.
. 261
. 256
.255
. 256
.255
.248
.226
Value!
277.2
288.8
301.1
277.8
262.4
274.7
279.7
(Shipments in Thousands of Tons)
Total
TiO
Value in $ Millions.
Value in $ per Pound.
Carlot, $ per Pound.
524.5
545.4
542.6
564.4
590.1
560.9
581.2
1
2
3
Shipments
Commercial
Current Industrial Reports, U.S. Department of Commerce.
1965
1966
1967
1968
1969
1970
1971
Source:
D. SODIUM CHROMATE AND BICHROMATE
1. Summary
The U.S. sodium bichromate market has been characterized by
essentially static demand during the past five years at approximately
150,000 tons annually. The market outlook for the next five years
is for a slight overall contraction in demand with deteriorating markets
in water treating and textiles (resulting from more stringent water
quality standards) only partially offset by modest demand growth for
chromic acid, chrome colors and catalyst applications. Very nearly
half of current demand for sodium bichromate is for chrome colors
and chromic acid. Other uses include leather tanning, metal treating,
textiles, water treating and catalyst manufacture. Substitute products
(or processes) exist for most bichromate derivatives, constraining
demand growth.
There are currently three producers of sodium chromate and
bichromate--Allied Chemical, Diamond Shamrock and PPG Industries.
Aggregate captive requirements of these three companies approximate
35% of current production. U.S. producers of sodium bichromate are
dependent on foreign sources, primarily the Republic of South Africa,
for chromite ore, the basic raw material.
Manufacturing costs are estimated at $212 per ton. Assuming
GS&A at 5.5% of sales and a weighted average selling price of $262
per ton (including some chrome salt cake by-product credit), the industry
after-tax income in 1972 approximated $18.50 per ton, equivalent to a
7.1% return on sales.
During the period 1960-1971, actual prices (as calculated from
Commerce Department data for dollar values and tonnages) received by
the industry have remained in a remarkably narrow range between $240
and $255 per ton. Although confirming Commerce Department data are not
yet available, list price increases made recently probably have been
reflected in somewhat higher plant prices. These price increases are
believed to have been made possible primarily as a result of a somewhat
less aggressive posture by foreign production sources, notably Italy
and Japan. Producers in both these countries are understood to be
facing higher manufacturing costs as a result of more stringent water
pollution abatement standards. Nonetheless, imports have exceeded
exports in seven of the last ten years.
79
2. Market Characterization
In Table 28 is shown the apparent U.S. consumption of sodium
chromate and bichromate for the period 1960 through 1972. For most of TABLE 28
this period, U.S. production, as reported by the Department of Commerce,
has varied between 135 and 155 thousand tons annually. As indicated, APPARENT U.S. CONSUMPTION OF SODIUM CHROMATE AND BICHROMATE
these data include both sodium chromate and sodium bichromate. While (Thousands of §
some of the sodium chromate produced in the initial phase of the manu- aCe Ties, Na,Cr40, 2H,0)
facturing process is marketed as such (an estimated 15 thousand tons
of bichromate equivalent), most of the sodium chromate filtrate is .
further processed to produce sodium bichromate. Year Production puasens
—- ns Imports Exports Consumption
Imports, primarily from the U.S.S.R. and Japan in 1972, have 1960 121.9 1.9
varied in the last several years between 3.5 and 6.5 thousand tons. The ° 9.6 114.2
sharp drop in imports from 1966 to 1967 reflected decreased U.S. demand. 1961 120.9 1.6
As a result of the Kennedy round agreements, the import rate of duty ° 7.1 115.4
was reduced to $0.87 per pound as of January 1, 1972. 1962 127.5 2.5 5.0 -
. ° 5.0
Exports, primarily to Canada, have trailed imports in recent 1963 133.9 3.5
years. In 1972 exports totaled 4.03 thousand tons valued at $0.93 million. : 5.1 132.3
Canada received the bulk (70%) of 1972 exports, with Colombia next at 1964 137.9 3.4
very nearly 20%. For purposes of estimating apparent consumption, we have , , 6.7 134.6
ignored changes in stocks of chromium chemicals at producer plants. 1965 141.0 18.0 4.0 198.0
On a long-term basis (in the post-World War II period), apparent 1966 141.5 24.1 2
U.S. consumption of sodium chromate and sodium bichromate has increased ° -6 163.0
at an average annual compound rate of 2.4% per year. In each of the last 1967 135.3 8.2 3
three years, however, consumption has declined; the outlook is for a ’ 3 140.2
continuation of the recent trend. 1968 146.0 11.6 4.8 152.8
a. Uses 1969 152.6 6.5 5.1 134.0
In Table 29 is shown the estimated 1971 use pattern for sodium 1970 153.5 3.6 4.9
chromate and bichromate. Very nearly 50% is consumed in the manufacture : . 152.2
of chrome colors and chromic acid. In descending order of bichromate 1971 138.2 6.4 3.1
consumption, the most important chromate colors are chrome yellow and : ¥ 141.5
1972 137.1 5.7 4.0 138.8
orange, chromium oxide green, molybdate orange, and zinc yellow and
chrome green. Production of chromium pigments in 1971 and the estimated
bichromate equivalent requirements is shown in Table 30. Requirements
for U.S. sodium bichromate in pigment production would have been higher
were it not for the substantial imports of chrome colors. Imports of
chromium-containing pigments in 1971 included chromium yellow, 6.2
thousand tons; chromium oxide green, 0.9 thousand tons; chrome
green, 0.3 thousand tons; zinc yellow 1.08 thousand tons; and molybdate
orange, 0.3 thousand tons. Total value of these products and miscellaneous
other chrome colors was $4.5 million, 17% higher than in 1970.
Source: U.S. Department of Commerce.
A major use for chrome yellow is the yellow center strip line for
highways. Chromium oxide green is used where chemical and heat resistance
is required, e.g., in ceramic colors, for coloring cement and in green
asphalt roofing. Zinc yellow finds application as a corrosion inhibitor
SBOG 80
81
TABLE 29
ESTIMATED 1971 USE PATTERN FOR SODIUM CHROMATE AND BICHROMATE
(Thousands of Tons)
TABLE 30
PRODUCTION OF CHROMIUM PIGMENTS CONSUMPTION OF SODIUM BI TE EQUIVALENT, 1971
End-Use Consumption ore of Tons)
Consumption of
Pigments 36.2 Bichromate
Pigment Production Equive lent
Chromic acid 32.0
Yellow and Orange 29.0 14.8
Leather tanning 28.0 Oxide Green . 6 9.0
Molybdate Orange 11.4 5.9
Metal treating 16.2
Zinc Yellow 5.6 5.8
Textiles and dyes 10.1 Chrome Green 2.7 0.7
Miscellaneous 19.0
—— 55.3 36.2
Total 141.5
4 ontractor's estimates.
a ' Source: U.S. Department of Commerce and Contractor's estimates.
83
82 55°9
for light metals and steel. For example, in combination with red lead
it is used in priming structural steel. It also is part of the
formulation for automotive body prime coats. Sodium bichromate-based
pigments are also used in printing inks and plastics.
The second largest outlet for sodium bichromate is for the
manufacture of chromic acid, produced by reacting concentrated sulfuric
acid with sodium bichromate. Chromic acid, in turn, is used primarily
in chrome plating processes but also finds use in copper stripping,
aluminum anodizing and for general corrosion prevention. The automotive
industry represents the major user for chrome plating, although other
durable goods manufacturing such as appliances also have requirements.
Chromic acid imports have constrained domestic production.
The third most- important outlet for sodium bichromate is leather
tanning. With the exception of heavy cattle hides, where vegetable
tanning is used, chrome tanning is the most important treatment for all
hides (i.e., calfskins, goat- and kidskins, sheep- and lambskins).
Chrome tannage is used in shoe uppers, glove leathers, garment leathers,
and bag leather. In the tanning process, sodium bichromate is reduced
with glucose to make the solutions of chromium salts employed in chrome
leather tanning.
Various metal treating and finishing processes are the next most
important outlet for sodium bichromate. For example, a solution of
sodium bichromate and sulfuric acid is used in the bright dipping of
brass and copper to remove oxide scale. Another important use in metal
finishing is in the formation of chemical conversion coatings to provide
corrosion protection and decorative effects, as well as to provide a
good base for painting metal surfaces.
In the textile industry, sodium bichromate is used in a variety
of ways. For example, among its applications are mordanting of wool,
dyeing nylon and wool, dyeing with chromate colors, as an after-
treatment on cotton to retard fading of dyes during washing and for
stripdyed wool.
A miscellaneous category of uses, including chemical applications,
wood preservative applications and corrosion control, accounted for
approximatelv 13% of U.S. sodium bichromate consumption in 1971.
A small quantity of sodium bichromate is used in the oxidation of
various organic chemicals, including pharmaceuticals. The bleaching of
fats, oils, and waxes also requires use of the bichromate as an
oxidant. Perhaps the major chemical use for sodium bichromate is in
the manufacture of catalysts. Chromates and bichromates are an im-
portant ingredient in the preservatives and fire retardants used by the
wood preserving industry. Chromates are also used to inhibit corrosion
in recirculating water-based systems (e.g., in cooling towers and large
central air conditioning facilities).
b. Substitute Products
The primary substitution effect is represente
asterisle (or processes) for derivatives of cana oat therpennod
tha for the bichromate per se. As an example, aluminum or high-impact
plastics can be substituted for chrome plated trim on motor vehicles
(It should be noted that processes have been developed to chrome plate
ogee e.g-, ABS, although uncoated plastics are also used in automo-
2 e trim.) As another example, cadmium yellow can be used in place of
rome yellow pigments. Market growth for chrome leather is limited by
lower cost substitutes, specifically, the poromeric materials. Tin-
free steel cans coated with chrome compete with aluminum cans and seam-
less, deep-drawn steel cans coated with tin. The existence of these
alternate materials both limits market rowth
and r
on higher sodium bichromate sutens. & epresents a constraint
c. Captive Requirements
Table 31 presents Commerce Department data for
and bichromate production, shipments, a shipment adie ae a eee
1960 to 1971. Excluding inventory fluctuations and losses, the
difference between total production in any given year and the quantity
of shipments reflects the amount of sodium bichromate consumed at the
producing plants for derivative manufacture. In recent years, this
ela nog Ra ve rraeane Rnony med ngprsnoreeas 33% of total production.
- S, ca
approximates 35% of production. en Se ee
3. Supply Characterization
a. Manufacturing Routes and Economics
Sodium chromate and bichromate are made by cal
(chromite) with soda ash or with soda ash and iene. ior cee
sodium chromate is manufactured by calcining a mixture of chromite ore,
lime, and soda ash. The sodium chromate, if desired, can be recovered
by leaching and crystallization. Sodium bichromate is produced by
treating a sodium chromate solution with sulfuric acid. Sodium bichromate
and the sodium sulfate by-product produced are separated and recovered
by crystallization. Sodium bichromate is the principal commercial product
because it is usually priced to cost l
chromate. ess per unit of cro, than sodium
As indicated, chromium chemicals are produced from chromite ore
the term chromite being a general one used to designate chromium-bearing
spinel. The composition of chromite varies widely, usually with in-
clusions of magnesia, alumina, and silica. Although distinctions are
not clearcut, there are three broad grades of chromite--high chromium
chromite, a metallurgical grade; high-iron chromite, which is the
chemical grade; and high-aluminum chromite, the refractory grade. Chromite
85
wh]
TABLE 31
SHIPMENTS OF SODIUM CHROMATE AND BICHROMATE
Shipments*
i
1960 121.9 89.1 22.7 254.77
1961 120.9 85.2 20.5 240.61
1962 127.5 97.0 24.8 255.67
1963 133.9 88.2 21.2 240. 36
1964 137.9 99.6 22.9 239.92
1965 141.0 103.7 24.2 233.37
1966 141.5 94.2 23.9 253.72
1967 135.3 94.0 23.0 244.68
1968 146.1 100.0 23.9 239.00
1969 152.6 97.5 23.1 236.92
1970 153.5 103.2 24.8 240.31
1971 138.2 88.2 21.9 248.30
*Including interplant transfers.
Source: U.S. Department of Commerce.
86
has not been mined in the U.S. since 1961, when a small tonnage was
produced under the government's Defense Production Act. With the ex-
ception of government stockpile releases, U.S. producers of chromium
chemicals are therefore dependent on foreign sources. No commercially
feasible process for upgrading domestic chromite bearing materials to
compete with foreign ores has been developed.
Most of the known world reserves are located in the Republic
of South Africa and Southern Rhodesia. The embargo on chromite from
Southern Rhodesia, brought about by United Nations action in 1966 and
an Executive Order in 1967, resulted in the U.S. turning to the U.S.S.R.
for some of its chromite requirements. Most of the chemical grade
chromite, however, comes from the Republic of South Africa.
Estimated manufacturing costs for sodium bichromate are
shown in Table 32. The manufacturing cost estimates are based on
a plant with 150 tons per day capacity and an investment (assuming the
plant was built in 1960) of $5.7 million. The indicated manufacturing
cost is $212. Included in this total is the cost of producing by-
product sodium sulfate, amounting to approximately $20 per ton of
bichromate.
Assuming a 1972 selling price for sodium bichromate of $245
per ton, plus by-product credit for 0.8 tons of sodium sulfate valued
at $17, the total unit sales value is $262. Taking GS&A at 5.5% of
sales, tie indicated after-tax profit is $18.50 per ton for an after-
tax return on sales of 7.1%.
b. Supply/Demand Balance
The producers of scdium bichromate are shown on Table 33. The
two largest producers. Allied Chemical and Diamond Shamrock, have heavily
integrated positions, both with respect to raw materials and
derivative products. For example, Allied is a major producer of soda
ash and sulfuric acid, and, along with Diamond Shamrock, is a major
producer of chromic acid. Similarly, Diamond Shamrock produces both
soda ash and sulfuric acid and several other derivatives of sodium
bichromate in addition to chromic acid. PPG Industries produces soda
ash at Corpus Christi and has nominal captive outlets for the sodium
bichromate in pigments. Hercules, Inc., had produced bichromate in a
small (approximately 30 tous per day) plant in Glens Falls, N.Y., for
captive consumption in pigment manufacture. This facility has been
closed.
The newest facility of the three producing plants is Diamond
Shamrock's. Diamond Shamrock brought its Castle Hayne, North Carolina,
facility on-stream late in 1971. The new plant replaced two older,
less efficient plants at Painesville, Ohio, and Kearny, New Jersey.
Including Diamond's new facility, total industry capacity is estimated
at 175,000 tons per year. Compared with reported production of 137-
138,000 tons per year, the industry operating rate in both 1971 and
1972 was slightly under 80%.
87
“ish
TABLE 32
ESTIMATED MANUFACTURING COST, SODIUM BICHROMATE
Production:
Operation:
Investment:
ltem
Raw Materials
Chromite (44% Cr 703)
Soda Ash (Na 7C03)
Lime (CaO)
Sulfuric Acid (66°Be)
Utilities
Power
Fuel
Water
Direct Labor
Supervisors
Operators
Helpers
Uverhead
Maintenance
Maintenance Supplies
Depreciation
Taxes and Insurance
Cost
Units uSS/Unit Units/Ton (US$/Ton Product)
short ton 19.00 1.30 24.60
100 1b 2.40 17.00 40.80
short ton 20.50 0.80 16.40
short ton 26.00 0.50 13.00
MKwh 15.00 0.50 7.50
MMBtu 0.70 40.00 28.00
MGal 0.10 14.00 1.40
Man-hr 5.00 3.40 17.00
Man-hr 3.75 6.00 22.50
60% Direct Labor 24.48
5.50
4.00
(3.0% of investment) 3.52
(1.3% of investment) 1.50
Total Manufacturing Cost 211.50
Source: Contractor's estimates.
150 Tons/Day sodium bichromate
330 operating days
$5,700,000 (Assuming plant was built in 1960)
88
Source:
Utilities
Power
Water
Direct Labor
Supervisor
Maintenance Supplies
Maintenance Labor
Tax and Insurance
TABLE 32 (Continued)
MANUFACTURING COSTS FOR BY-PRODUCT Na.SO
2—
Units USS$/Ur it Units/Ton
MKwh 15.00 0.10
MGal 0.10 30.00
Man-hr 7.50 0.30
Man-hr 5.00 1.00
Man-hr 3.75 2.00
(0.4% of total investment)
(0.2% of total investment)
(0.1% of total investment )
Contractor's estimates.
US$/Ton
1.50
3.00
———oroee
TABLE 33
CURRENT PRODUCERS OF SODIUM BICHROMATE
(Thousands of Tons Hydrous Sodium Bichromate Equivalent)
Location
Company
Allied Chemical Corp. Baltimore, Md.
Diamond Shamrock Corp. Castle Hayne, N.C.
PPG Industries, Inc. Corpus Christi, Tex.
Total
Source: Trade sources.
9516 90
Capacity
75
70
30
175
4. Prices
A comparison of list prices versus actual prices as calculated
from the Commerce Department data on reported value and quantity of ship-
ments is shown in Table 34. Throughout the period, actual unit values
realized by producers have been less than list prices. For example, in
1971 the actual price was 12.4 cents per pound versus a list price of
16.0 cents per pound.
List prices were increased by approximately 1 cent per puund in
1973 as they were in 1970 and 1971. Although shipment values for the
industry for 1972 are not yet available from Commerce Department, actual
prices received by producers are believed to have declined slightly. We
have assumed an average industry plant price of $245 per ton in 1972 for
our profitability estimates.
For the period shown, actual prices have varied very little. The
static price pattern reflects low demand growth, competition from imports,
the availability of substitute materials for derivative products, and
an over-capacity situation in the industry. Static plant prices have
been offset somewhat during this period by declining costs for the
chromite ore. Bichromate producers are believed to have written favorable,
long-term contracts for chromite ore. These contracts, however, will be
phasing out over the next several years. Renegotiations will probably
be at higher levels, reflecting both increased ore costs anc higher ocean
freights.
91
SSL7
Year
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
lcranular, bags, carlots, truckloads, works.
ACTUAL VS. LIST PRICES FOR SODIUM BICHROMATE
TABLE 34
(Cents per Pound)
List Price!
13.
13.
13.
13.
13.
13.
14
14.
14.
14
15.
16.
16.
17.
00
00
00
00
00
00
.00
00
00
.00
00
00
00
25
Actual Price”
12.74
12.03
12.78
12.02
12.00
11.67
12.69
12.23
11.95
11.85
12.02
12.42
Not available
Not available
calculated from U.S. Department of Commerce reported value and
quantity of shipments.
92
E. POTASSIUM CHROMATE AND BICHROMATE
While sodium chromate and sodium bichromate are by far the major
chromium chemicals, a number of other chromium compounds are also pro-
duced from chromite ore. These secondary chromium chemicals include
potassium chromate and potassium bichromate, ammonium bichromate, and
chromium potassium sulfate. There are no government data for any of these
materials on an individual basis. Commerce Department does report on
an annual basis the dollar value of shipments for "other chromium
compounds." In 1971, the most recent year for which data are available,
the shipments of other chromium compounds were valued, f.o.b. plant,
at $9.5 million. This dollar total has varied between $9.5 and $10.5
million for the last five reporting years.
Although potassium chromate and bichromate are the most important
of the secondary chemicals, production of the potassium compounds in
the U.S. only totals 3,000 tons annually. There are a variety of
miscellaneous uses for potassium chromate and bichromate, the most im-
portant of which are pigments and reagent grade materials. Allied is
the only U.S. producer of importance.
Potassium chromate and bichromate can be made by a process
similar to that for producing sodium bichromate by substituting potassium
carbonate for sodium carbonate in the raw material mix. However,
potassium bichromate is normally made from sodium bichromate and potassium
chloride. Estimated manufacturing costs for potassium bichromate are
shown in Table 35. The sodium bichromate has been charged into the
potassium bichromate process essentially at manufacturing cost. As
indicated, total manufacturing costs were estimated at $402.75 per ton.
Assuming plant netback at $475 per ton (the list price for potassium
bichromate is 24¢ per pound) and GS&A at 5% of sales, the after-tax
profit per ton is $24 per ton. This would be equivalent to an after-
tax return on sales of 5.0%.
93
TABLE 35
ESTIMATED MANUFACTURING COST, POTASSIUM BICHROMATE
Production:
Operation:
Investment:
Item
Raw Materials
Sodium Bichromate
(content in solution)
Potassium Chloride
Utilities
Power
Fuel
Water
Direct Labor
Supervisors
Operators
Helpers
Overhead
Maintenance Labor
Maintenance Materials
Depreciation
Tax and Insurance
«>
<
. “he
.
.
15 Tons/Day of Potassium Dichromate
330 Working Days
$2,400,000 (Estimated)
Cost
Units uSs$/Unit Units/Ton
ton 212 1.2
ton 35 0.7
MKwh 15 0.3
MMBtu 0.7 15
MGal 0.1 10
man-hr 7.50 0.6
man-hr 5.00 3
man-hr 3.75 3
(100% Direct Labor)
(6.5% of Investment)
(1-1/2% of Investment )
Total Manufacturing Cost
94
(US$/Ton Product)
254.40
24.50
402.75
III. IMPACT ANALYSIS--INITIAL STUDY PRODUCTS
A. ALUMINUM CHLORIDE
l. Treatment Costs
As developed in the Development Document, water treatment costs
for aluminum chloride producers total $3.77 annually per ton of
product for E.P.P., B.P.T., and B.A.T. This amount would apply to
plants operating on a chlorine-rich basis to produce yellow aluminum
chloride, which is preferred for the manufacture of some dye and
pigment intermediates.
Aluminum chloride plants operating on either a stoichiometric
or aluminum-rich basis would have less waste chlorine stack gas and there-
fore lower pollution abatement costs. At least one producer is able to
manufacture and sell 28% aqueous aluminum chloride solution derived
from its scrubber effluents.
2. Price Impact
The maximum treatment cost of $3.77 per ton represents approxi-
mately 1.3% of the current selling price of aluminum chloride. Further,
it is estimated that it will cost an additional 0.4% of the current
selling price to concentrate the dilute scrubber solution for yellow
aluminum chloride. Although capacity utilization (at about 65%),
captive usage, and demand growth are relatively low, and therefore act
as price increase constraints, these facturs are outweighed by the low
level of foreign competition, the absence of substitute products, and
the existence of only a few products all with equal treatment costs.
‘All producers of yellow aluminum chloride will be faced with approximately
the same water effluent charges.) Some level of price increase is there-
fore possible, and producers of aluminum chloride should be able to
cover at least part of their added treatment costs. Any costs which
could not be passed on as a price increase would have to be absorbed
by the manufacturers.
3. Plant Shutdown Impact
No plant shutdowns are expected as a direct result of additional
water pollution abatement costs. Given the moderate degree of integration,~~
the fact that plants with a water pollution problem will have already
made a large investment in air pollution abatement equipment, and a
relatively high emotional commitment on the part of the aluminum chloride
producers, the very low level of added cost for water treatment is too
small to result in plant shutdowns.
95
B. ALUMINUM SULFATE
l. Treatment Costs
Water treatment costs for nonexemplary aluminum sulfate plants
are estimated to be $0.93 per ton of product above existing B.L.P.
treatment, or $1.72 per ton total. This added cost will raise average
treatment level to zero discharge of process or cooling water effluent,
which in this case is equivalent to E.P.P. Additional investment for
a 40 ton-per-day plant is estimated to be $60,000.
The treatment process which will effect zero discharge involves
clarification and additional pond settling of mud and digestion wastes,
followed by recycle of process water. Depreciation and operating costs
exclusive of power account for 46% and 23% respectively of total treat-
ment costs.
2. Price Impact
Since there are no suitable substitute products, foreign com-
petition is minimal, and market share is concentrated among several
producers, water treatment costs will probably be passed on as small
price increases. The amount of the increases, however, will vary with
each producer's local competitive situation. Although before-tax treat~-
ment costs are small relative to product price, the cost per ton of
product is highly dependent on plant capacity, which varies from
5,000 to 70,000 tons per year for individual facilities. Such a dis-
parity in capacity will enable the large producer to cover his unit
treatment costs with a smaller price increase than the small producer
will require.
The nature of the aluminum sulfate market, however, will probably
allow most smaller producers to continue operations at reduced profit
levels. Many small plants have been located near paper mills in order
to supply aqueous aluminum sulfate economically for paper manufacture.
Despite higher unit production costs, 4 smaller plant can supply at a
lower delivered cost than a larger, more distant plant can, due to the
cost of transporting water solution. Aluminum sulfate is sold dried
and bagged only where plants and customers are widely scattered, and the
product must be transported long distances. It is anticipated, therefore,
that larger producers will raise prices to cover their increased costs
as fully as possible. Smaller producers will probably raise prices only
to the point where they can still marginally undersell their larger, more
distant competitors--a point which most likely will not permit the small
producer to fully recover his costs, but which will allow continued
operation at lower profitability. Im any case, it is not expected
that prices need be raised more than 5% due to water treatment costs.
3. Plant Shutdown Impact
Recent years have seen the closing of some small plants and
a trend toward larger, more efficient facilities. As demand for aluminum
c_cleye?
+. We As 96
sulfate as a water treatment chemical increases
the trend toward larger
plants should continue. A large scale shutdown of small aluminum pe ll
facilities, however, is not expected to occur
as th
increases in water treatment costs. e result of anticipated
A very few marginally profitable plants may shut d
plants probably would have shut down anyway as a m= Arar cae”
from larger plants. These occurrences will most likely be limited to
situations in which a small plant cannot raise prices enough to remain
profitable, while still underselling a larger, more distant competitor,
and added water treatment costs represent th
continued operation. P e final negative factor against
Industry capacity should continue to be suffici
ent to supply demand
and no increase in imports, with accompanying detrimental effects on '
balance of payments, is anticipated.
C. CHLORINE AND CAUSTIC SODA
l. Treatment Costs
As estimated in the Development Document, the cost of water
treatment for a 175 ton-per-day mercury cell plant to achieve effluent
conditions equivalent to B.L.P. is $2.14 per ton of chlorine produced.
B.L.P. was defined in the Development Document as reduction of mercury
to less than 0.5 pounds per day. For the exemplary plant investigated
the same investment, and therefore the same cost, was sufficient to
reduce mercury to E.P.P. standards, i.e., less than 0.15 pounds per day.
An incremental cost of $0.60 per ton of chlorine above E.P.P. was estimated
for catalytic conversion of sodium hypochlorite to sodium chloride
bringing the mercury cell plant to B.P.T. control level. An increnental
cost of $0.86 per ton above E.P.P. was estimated to achieve zero dis-
charge (B.A.T.) and involved B.P.T. treatment plus evaporation and
reuse of sodium chloride.
Similarly, the Development Document has estimated that the ‘unit
cost (in terms of chlorine) to achieve B.L.P. standards for a 2300
ton-per-day diaphragm cell plant is $0.038 per ton, the treatment being
restricted to settling ponds. The incremental cost for this same plant
over and above B.L.P. to achieve E.P.P. standards is $0.254 per ton of
chlorine. This same unit cost is estimated to achieve B.P.T., but the
assumption is made that there are no incremental operating costs
associated with B.P.T. because hydrochloric acid recovered is assumed
equal to cost. There is an incremental investment of $430,000 estimated
above E.P.P. to cover the installation of the hydrochloric acid plant
for the chlorine tail gas. Finally, the incremental unit cost above
E.P.P. to utilize B.A.T. standards for this plant is estimated at
$0.52 per ton of chlorine.
97
i -
» Yeoe
As a percent of the estimated $100.90 industry average revenue
in 1972 per ECU (1.0 tons of chlorine plus 1.1 tons of caustic soda),
the before-tax unit cost above B.L.P. and E.P.P. (which are equal) for
the mercury cell plant is 0.59% for B.P.T. and 0.85% for B.A.T. The
comparable ratio for the diaphragm cell plant is 0.25% for E.P.P. and B.P.T.
and 0.52% for B.A.T. Compared to the average industry profit margin of
$4.12 per ton for mercury cell plants (estimated in the initial study
project) the incremental after-tax cost for B.P.T. in the mercury cell
plant represents 7.3% of unit profits while B.A.T. represents 10.4% of
industry profits. The comparable figures for the diaphragm cell plant
(using $4.33 per ton as average unit profit) are 2.93% for both E.P.P.
and B.P.T. and 6.03% for B.A.T.
2. Price Impact
Chlorine/caustic producers have the theoretical option of
attempting to recover water treatment costs through price increases
for chlorine and/or caustic soda. In our judgment, the opportunity for
defraying some or all the water treatment costs through higher chlorine
prices is better than via raising caustic soda prices. Both capacity
utilization and captive usage are atypically high on average for chlorine.
Demand growth is good (at 6% per year) and foreign competition is non-
existent. Although there are a relatively large number of producing
companies (approximately 30), the water pollution abatement costs faced
by mercury plants are not significantly different than those for diaphragm
plants. The difference is insufficient to put the mercury plants at a
significant disadvantage if prices were to be raised only to cover the
water treatment costs experienced by diaphragm cell plants.
More severe constraints exist for price increases in caustic
soda. Except for periods of abnormally low chlorine demand (e.g.-,
that experienced in the 1970-71 recession), caustic soda has usually
presented a disposal problem to most chlor-alkali producers. Because
normal caustic soda demand growth has been insufficient to match caustic
soda supply (which, in turn, is a function of chlorine demand), the
excess caustic has been sold in competition with other sodium alkalis,
notably soda ash, at distressed price levels. We expect a long-term
continuation of the caustic soda excess and therefore continued down-
side pressure on caustic soda prices.
3. Plant Shutdown Impact
On the basis of the treatment costs estimated in the effluent
guideline Development Document (and mentioned above), and based on the
conclusion that most if not all of the nominal incremental costs for
water treatment will be passed on through chlorine price increases,
we foresee no plant shutdowns for producers who have already achieved
B.L.P. However, an estimated 13% of the mercury cell plants have not
yet made this investment. Instead of the $0.86 per ton incremental costs
mentioned above to reach B.A.T., these producers would be faced with a
$3.00 per ton cost. Some of these producers, assuming that they tend to
be marginal plants, but probably no more than 5% of the industry (one or
two plants), would he subject to shutdown.
98
D. HYDROCHLORIC ACID
ein
l. Treatment Costs
Treatment costs have been supplied for the chlo
— ae a method which accounts for at most 12% ae Gee hydro-
de ap greece For a 40 ton-per-day chlorine-burning facility
poe He oy st to apply B.A.T. is $0.30 per ton of product (100% HCl)
e incremental cost above B.L.P. is $0.05 per ton. The treatment
Gly Sek ae oe of weak acid effluent which is generated
rtup. ccordi to the
ment Document there is no stent-seate wane poor
Additional investment required for B
-A.T. for the 40 to -
plant is only $5,000. Depreciation and operating costs enahentee of ”
power account for 35
cost of $4,250. % and 47% respectively of the total annual treatment
By-product proauction of hydrochloric acid from hydroc
arbon
page typ (which accounts for 88% of total ouaieashath em not covered
n the effluent guideline Development Document. The effluent guideline
Development Document indicated, however, that there are no water treat-
ment costs directly attributable to by-product production. =
2. Price Impact
Due to its overwhelming preponderance of.
by-product route controls iediotiinete acid ae at ee ee van
Sone neta Dee Be se to bear the direct water treatment costs which
» hence, it is not anticipated that the treatme t
costs incurred by a small industry segment wil 1
price increases. The likelihood of r= greens _ crap dinadd mn ygae
by the presence of many producers holding fragmented market shares and
the fact that, despite a recent trend toward a more balanced supply/
sg situation, production has exceeded consumption by as much as 32%
since 1961. This situation has been brought about by by-product acid
supply being a function not of hydrochloric acid demand, but of the non-
related demand for chlorinated hydrocarbons and has had a strongl Posey
pressing effect on hydrochloric acid prices. The decreasingly iouas
portion of the industry which is faced with water treatment costs
therefore, will be hard pressed to seek relief in the form of rice
increases and will be forced to absorb these costs. ‘
3. Plant Shutdown Impact
Only those direct producers not in a chlor-a
possibility of plant shutdown as the result of aay saa ee ho
weak acid waste stream from direct production in a complex can be used
to neutralize caustic waste from other parts of the complex, and the
producer essentially incurs no waste treatment cost on hydrochloric acid.
99
There is only one known isolated, direct burning plant in the
country, and it is located near a larger chior-alkali complex which pro-
vides a readily available site for waste acid disposal at nominal cost.
The fact that there are no direct burning hydrochloric acid plants
unable to dispose of water wastes at nominal cost leads us to conclude,
therefore, that water treatment costs will not directly result in shut-
downs of direct-burning hydrochloric acid plants.
E. HYDROFLUORIC ACID
l. Treatment Costs
As estimated in the effluent guideline Development Document, total
treatment costs for a 40 ton-per-day hydrofluoric acid plant to achieve
E.P.P., B.P.T. and B.A.T. are $4.04, $4.89 and $12.95 per ton, respectively.
Costs for B.L.P. were estimated at $3.57 per ton. Annualized costs to
to bring the industry to E.P.P., B.P.T. and B.A.T., respectively, from
B.L.P. therefore would amount to $0.47, $1.32, and $9.38 per ton. As a
percent of the estimated average industry's 1972 selling price of $370
per ton, the annualized treatment costs for E.P.P., B.P.T. and B.A.T.
would be 0.13%, 0.36% and 2.54%, respectively.
The initial study project suggested a range for after-tax pro-
fitability on sales of 4% to 10%. Taking 5% as average, the after-tax
profit margin on a $370 netback price would be $18.50 per ton. The
after-tax treatment cost as a percent of this profit margin for E.P.P.,
B.P.T. and B.A.T. is 1.30%, 3.57% and 25.4%, respectively. New investment
in treatment facilities for E.P.P., B.P.T. and B.A.T. as a percent of
net fixed plant investment is 0.60%, 1.00% and 1.50%, respectively.
2. Price Impact
Conditions in the hydrofluoric acid industry are such that price
increase constraints are low. Specifically, there are no economically
viable substitute products for hydrofluoric acid in its major end-use
applications. Captive usage is exceptionally high at about 75% of current
consumption. Similarly, plant utilization is high at nearly 85% of the
392,000 tons of in-place capacity at the end of 1972. Demand growth is
strong at 5% to 7% per year. Imports have been negligible so that there
has been no threat of foreign competition. (Imports of hydrofluoric acid
from Mexico will very probably increase in the future, however. Four
U.S. companies have announced plans to build acid plants in that country
with the apparent intent--initially at least--of using the acid captively
for U.S. derivatives manufacture. There is the long-term possibility
that increased pressure will be brought to bear by Mexico for manufacture
of the derivatives of hydrofluoric acid in Mexico as well.) The price
elasticity of demand for hydrofluoric acid is low. Market shares are
relatively concentrated with two producers, Allied and Du Pont, accounting
for more than 50% of capacity.
SH26 100
All of the foregoing considerations suggesti i
constraint on price increases by far cueetah tin a rsa Rag
conditions tending to constrain price increases, viz. the relatively large
number of producers (nine) and the fact that price is the primary
basis for competition. Moreover, the magnitude of the price increase
necessary to defray treatment costs even for B.A.T. (2.54% of the estimated
industry selling price) is less than one-half cent per pound.
3. Plant Shutdown Impact
Since we have concluded that the industry woul
on the treatment costs through price increases md enc lle dl dye
there will be no plant shutdowns on the basis of the treatment costs
provided us. The magnitude of these treatment costs on an after-tax basis
as compared with industry profitability and cash flows
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