Acetylene  

*Millions of pounds per year for chemical use. This capacity does not include industrial gas producers manufacturing acetylene from calcium carbide. The majority of the capacity (approximately 96%) is targeted for chemical use, including acetylene black, with the balance currently being used to supply the industrial gas market. Most of U.S. capacity (68%) is based on natural gas, with 18% based on ethylene coproduct and 14% on calcium carbide.

Equistar Chemicals is a polymers and olefins joint venture that Lyondell Petrochemicals and Millennium Chemicals formed in 1997. To this, Millennium contributed its acetylene facility in LaPorte, Tex.

In December, 1999, Borden Chemicals & Plastics (BCP) acquired BASF's half of their acetylene plant joint venture, in Geismar, La. About the same time, BASF commissioned a new 100 million-pound-per-year acetylene plant, also in Geismar, and based on natural gas partial oxidation. In January 2001, BCP idled its acetylene capacity and its acetylene-based vinyl chloride monomer plant at Geismar, due to high natural gas prices and sluggish demand for polyvinyl chloride. It was more economical for BCP to buy vinyl chloride monomer from other producers than to make it for itself.

Chevron Corporation and Phillips Petroleum Company merged their chemical operations into a 50-50 joint venture in 2000. The new entity is called Chevron Phillips Chemical Co. The company recovers its acetylene from their olefin unit and uses this in the production of acetylene black.

Dow Chemical Company acquired Union Carbide Corporation in February, 2001, and along with it, the acetylene plants in Seadrift, Tex., Texas City, Tex., and Taft, La.

Profile last published 12/14/98; this revision 11/19/01.

DEMAND
1999: 338 million pounds; 2000: 303 million pounds; 2004: 217 million pounds, projected. There is no apparent foreign trade in acetylene.

GROWTH
Historical (1995 - 2000): (minus) - 2 percent per year; future: (minus) - 8 percent per year through 2004.

PRICE
Historical (1995 - 2000): High, $0.80, average transfer price; low, $0.63, same basis. Current: $0.63, same basis.

USES
1,4-Butanediol and other acetylenic chemicals, 89 percent; acetylene black, 9 percent; miscellaneous, including vinyl fluoride, 2 percent.

When this profile was last published in 1998, vinyl chloride monomer accounted for 35 percent of acetylene consumption; approximately 120 million pounds. With Borden idling its Geismar, La., vinyl chloride monomer plant last January, US consumption of acetylene for this application dropped to zero.

STRENGTH
1,4-Butanediol, which accounts for nearly 90 percent of the acetylenic chemicals demand for acetylene, is growing at more than 5 percent annually, fueled by strong demand for downstream intermediates (tetrahydrofuran for spandex and gamma-butyrolactone for pyrrolidones). Polybutylene terephthalate-based engineering resins for automotive applications remains a major butanediol driver.

WEAKNESS
Borden’s decision to buy, rather than manufacture vinyl chloride monomer eliminated roughly 120 million pounds of acetylene demand this year. The market for vinyl chloride monomer is weak because of soft demand for polyvinyl chloride, which accounts for 99 percent of the demand for vinyl chloride monomer. Polyvinyl chloride is highly sensitive to the GDP growth and new housing starts in particular. This situation is not expected to turn around in the next couple of years. Borden, however, is the only acetylene based vinyl chloride monomer manufacturer in the US.

OUTLOOK
Chemical use of acetylene is currently growing at the modest rate of 1.5 percent annually, largely due to 1,4-butanediol. This growth rate, however, is masked by the big hit acetylene received when Borden idled its acetylene based vinyl chloride monomer production in Geismar, La., earlier this year. Based on last year’s acetylene consumption, 303 million pounds, consumption will decline by 8 percent per year until 2004 when demand will amount to only 217 million pounds.