ETHYLENE

Ethylene is the largest-volume petrochemical building block, with more than 22 billion pounds produced last year in the U.S. It is made from natural gas liquids (80 percent) or petroleum fractions such as naphtha and gas oil (20 percent). This process is known as pyrolysis, or cracking.

Currently, economics favors making ethylene from natural gas liquids-not only because of the latter's stable, attractively-low prices, but also because ethylene yields from them are greater than 70 percent.

There are not enough natural gas liquids, however, to supply current national demand for ethylene. Naphtha, from which ethylene can be made in about 35 percent yield, is second choice. But it, too, is in short supply, so new ethylene capacity will probably be able to use either naphtha or gas oil (ethylene yields of 20 percent or less). Several new processes are under development to use heavier and heavier crude fractions, at correspondingly lower yields and higher ethylene prices.

Ethylene prices declined steadily over the 1960's, reaching a low of about 3 cents per pound, where it remained until early 1973. Since then, ethylene prices have escalated sharply. In late summer 1974, merchant ethylene was being contracted for at 9 cents per pound, and industry sources expected that 12 cents per pound would be reasonable to expect in 1975-at least five years earlier than predicted only one year before. By 1980, new ethylene capacity will probably require a 20 cents per pound ethylene price tag, to cover higher raw materials costs, higher plant investment costs (probably three times as costly as in 1970), and higher borrowing costs, as well as other inflationary effects.

Ethylene consumption

The biggest market for ethylene is polyethylene. About 40 percent goes this consumption route, ending up in packaging (film, sheet, and bottles), electrical insulation, and molded products. Next most important ethylene derivative is ethylene oxide (about 20 percent), from which ethylene glycol (antifreeze), polyester fibers, surface active agents, solvents, plasticizers, and a range of specialty chemicals are made.

Other major ethylene derivatives are ethyl benzene (from which styrene and a number of plasticizers and solvents are made), tetraethyl lead (antiknock), chlorinated hydrocarbon solvents, and vinyl chloride (from which PVC is made).

Ethylene end uses and production are summarized in table 1 and table 2.

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PROPYLENE

The main U.S. source of propylene is from catalytic cracking of refinery gas streams (methane, ethane, propane, butane) or liquid petroleum fractions such as naphtha, with small additional amounts made as by-products in ethylene production. Historically, most propylene has gone into propylene alkylate for gasoline; but the proportion going into chemical production has been increasing rapidly. Up to the present, the value of propylene for use in gasoline has been the factor that governed the price of propylene going to chemicals.

Future propylene prices may, however, be less dependent on gasoline values. As demand for ethylene increases, it will be met by cracking of oil fractions, a process that also produces propylene in large quantities. Some experts are predicting, therefore, that propylene will be in oversupply for most of the latter half of the 1970's and possibly beyond, and that its price will settle down at some 5 cents per pound lower than that of ethylene-unless a new propylene-derived product takes off and increases propylene demand beyond the levels now forecast. Propylene demands

The largest single chemical use for propylene is in polypropylene, of which more than 2 billion pounds were produced in the United States in 1973. The polypropylene market has been expanding at a breakneck pace, 30 percent in 1972 and an additional 25 percent in 1973. Current expectations are for at least a 15 percent per year sustained growth for the next 5-10 years.

Polypropylene is used in packaging, fibers (including rope and yarn for such things as fishnets and patio carpeting), and in molded shapes in appliances, housewares, luggage, toys, and a wide range of other consumer products.

Other major uses of propylene are for acrylonitrile (which goes into acrylic fibers, ABS plastics, nitrile rubber, and a variety of other chemical products), isopropyl alcohol (which goes into solvents and other chemical uses), glycerine, cumene (used to make phenol), high molecular weight alcohols (for solvents, detergents, plasticizers, etc.), propylene oxide (for polyurethanes and polyester resins), and ethylenepropylene rubbers.

Most of these uses are growing rapidly. Acrylic fiber demand has been less buoyant recently than expected, but ethylene-propylene rubber is expected to take off soon, acrylate bottles are nearing commercial introduction; and strong price increases in ethylene-derived competitive products will improve the position of propylene-derived products with similar properties.

Propylene production history and end use patterns are tabulated in tables 3 and 4.