Phosgene

*Millions of pounds per year. Industrial production is by catalytic reaction of anhydrous chlorine gas with high-purity carbon monoxide. The vast majority of phosgene production is consumed captively and on-site in the manufacture of di- and polyisocyanates and polycarbonate resins. VanDeMark produces for the merchant market, as well as its own on-site requirements for pharmaceutical intermediates.

In 2002, SNPE (France) closed its La Porte, Texas phosgene derivatives unit and terminated its phosgenation contract with Dow Chemical. Dow continues to operate the La Porte plant and produce phosgene for MDI production.

In November 1999, SNPE acquired VanDeMark Chemical Co. and renamed it VanDeMark, Inc. It is now part of SNPE’s fine chemicals subsidiary, Isochem.

J.H. Products is a subsidiary of Twin Lake Chemical Inc.

Profile last published 6/21/99; this revision, 2/16/04.

DEMAND

2001: 3,870 million pounds; 2002: 4,410 million pounds; 2006: 5,060 million pounds, projected. Imports and exports are negligible, if any.

GROWTH

Historical (1997 - 2002): 6.4 percent per year; future: 3.5 percent per year through 2006.

PRICE

Historical (1997 - 2002): High, $0.78 per pound, list, t.l., cylinders (9 to 13 cylinders), f.o.b. works; low, $0.74 per pound, same basis. Current: $0.78 per pound, same basis.

USES

Toluene diisocyanate, 36 percent; p,p′-methylene diphenyl diisocyanate (MDI) and “polymeric” MDI (PMPPI), 44 percent; polycarbonate resins, 11 percent; miscellaneous, including specialty isocyanates, chloroformates and agricultural chemicals, 9 percent.

STRENGTH

Toluene diisocyanate (TDI), Methylene diphenyl diisocyanate (MDI) and “polymeric” MDI (PMPPI) account for 80 percent of phosgene’s demand. These derivatives are sensitive to economic conditions and are expected to do well in the recovering economy.

TDI is used primarily to make polyurethane foams, elastomers and some urethane coatings. Phosgene demand for TDI is expected to grow 1.5 percent annually over the next few years.

MDI is used in reaction injection-molding (RIM) systems, coatings, adhesives and sealants, thermoplastic resins (TPUs), elastomers and spandex fibers. PMPPI is used primarily in the production of polyurethane resins for rigid polyurethane foams. Phosgene consumption for combined MDI and PMPPI production growth is forecast to increase by about 5 percent per year during 2003-2006.

Less economically sensitive is polycarbonate. Polycarbonate resin applications include break-resistant glazing and signs, optical media, and housings for business machines, appliances and electrical tools. Forecast growth for phosgene consumption to produce polycarbonate resins during 2003-2007 is 6 percent annually.

Phosgene continues to find increasing use as the demand for fine chemicals increases from pharmaceuticals and agrochemicals manufacturers. Several companies have specialized in the manufacture of phosgene derivatives for pharmaceutical and agricultural end uses. These producers include PPG Industries, VanDeMark, Great Lakes Chemical and Hatco.

WEAKNESS

Because of safety issues concerning phosgene production, some producers have introduced alternative manufacturing methods for isocyanates and polycarbonates.

Regarding polycarbonates, GE (Cartagena, Spain), Bayer (Antwerp, Belgium) and Asahi Kasei (Taiwan), have introduced new non–phosgene-based manufacturing units. These companies use a phosgene-free route which uses diphenyl carbonate as the carbonylation agent. Aside from health and safety advantages, these nonphosgene processes may also lead to reduced costs for polycarbonate production. Reduced costs result from the elimination of solvents and lower fixed capital investment. Presently, about 12 percent of polycarbonate is produced from the phosgene-free technology. By 2006 this portion could be as high as 20 percent.

The alternative isocyanate production technology is not as far advanced at this time.

OUTLOOK

In the short term, phosgene’s fortunes are tied to the demand for isocyanates, which is strong and improving with the recovering economy. Longer term, uses for fine chemical syntheses will become more important as new uses are commercialized as a result of current efforts in this area. Offsetting these growth prospects, however, will be the continuing trend to replace phosgene with less toxic reactants. Aggregate growth for the demand period is forecast at 3.5 percent annually.

FIVE YEAR DATA