Trends in World PVC Industry Expansion

A Greenpeace White Paper

June 19, 1998

Joel A. Tickner

The polyvinyl chloride plastic (PVC) industry is growing worldwide despite growing concerns about the environmental impacts of its production, use, and disposal. This white paper provides an analysis of trends in PVC industry expansions over the past couple of years and into the next century.[1] It focuses primarily on production of the PVC feedstock vinyl chloride monomer (VCM) and PVC itself. Trends in ethylene dichloride (another PVC feedstock) production will be only briefly discussed. This paper will examine the current geographic distribution and capacity of PVC production, forecasts for the years 2001-2002, actual and planned expansions, and factors influencing the industry’s growth. It is important to note that there is a distinction between projected industry growth and projected expansions, those these two are linked. Projected expansions will depend on industry growth, not vice versa. If industry growth does not occur or if it is fulfilled by other plastics, then expansions will be less likely to occur.

This paper was developed to address the magnitude of projected expansions in the PVC industry and place them in the context of growing concern about the hazards of PVC production, use and disposal. The fight over Shintech’s proposed 1.1 billion lb. integrated PVC production facility in Convent, Louisiana and its worldwide implications in terms of disproportionate impacts on minority and low income communities and its links to initiatives to phase out PVC in the U.S. and Europe provides a backdrop for this discussion. If the Shintech project does not go ahead, this could have large implications for other PVC expansions throughout the world. Other Greenpeace research has addressed the looming waste crisis posed by PVC and its lack of recyclability as well as the links between PVC lifecycle and the creation of dioxin.[2] Industry expansion could thus exacerbate the scale of these PVC lifecycle impacts in the future.

I. Why focus on PVC production expansions?

The consumer market for PVC products is growing considerably in the third world while growth in Europe and North America is levelling or decreasing. As a result of its growth, the industry will need to expand its production capacity to meet growing demand, although currently there is more capacity than demand in some markets. To do this the industry will either increase capacity at current facilities (likely a cheaper option for most firms if they have expansion space) or construct new capacity. New capacity may be a useful option for firms trying to enter growing markets for PVC, such as Asia and Latin America. Since a normal chemical producing facility has a useful life of somewhere between 30 and 50 years, the introduction of new VCM or PVC capacity will ensure its continued production, at least until the facility investment is sufficiently amortized.

II. Overview of past, current, and future capacity in the PVC industry

This section examines current and future capacity in the PVC, ethylene dichloride (EDC), and vinyl chloride monomer (VCM) industries by region. The largest producers of VCM and PVC worldwide are also noted as well as current producers in both Europe and the United States.

Polyvinyl Chloride (PVC)

Polyvinyl chloride plastics are the second largest class of theromoplastics in the world, after the polyethylenes. Global PVC production capacity amounted to approximately 26 million metric tons (57 billion lbs.) in 1997 and is expected to increase by approximately 5.5% per year through the year 2002. Thus, world PVC production capacity is expected to reach 34 million metric tons (75 billion lbs.) by the year 2002. [3] From 1992 to 1997, PVC production capacity rose an average of 2% per year, actually going down in Europe. Regions of greatest PVC capacity growth into the next millennium include Asia, Eastern Europe, the Middle East, and South/Central America. Per capita PVC consumption in these areas is in the range of 2 kg compared to 6-8 kg in North America, Western Europe and Japan. These three countries/regions account for approximately 60% of PVC production. To satisfy quickly growing demand in Asia, Latin America and Eastern Europe, mainly due to large investments in construction and infrastructure, 3.4 million metric tons of capacity are expected to be added in developing countries by 2001. Capacity in Asia (except for Japan) is expected to almost double by the year 2002.

Table 1: Regional PVC Capacity[4] and Expected Expansions (in thousands of metric tons per year)

Region	1992	1997	2002	Avg. Annual growth %
North America	5210 (only U.S.)	7730	9350	4
Western Europe	6335	6185	6320	0.5
Japan	2375	2772	2772	0
Other Asia		5755	10150	12
Other regions	9620 (all other regions)
Africa		370	370	0
Middle East		940	1095	3
South America		1240	1550	4.5
Eastern Europe		840	2380	23
Oceania		200	200	0
Total	23540	26032	34187	5.5

(Source: SRI International)

PVC is currently produced by approximately 150 companies in 50 countries (see Appendix 1, Table 2 for a breakdown by country). Table 3 shows that PVC production is highly concentrated in a few large companies, with the top 10 PVC producing companies amounting for more than 40% of global capacity. Formosa Plastics (Taiwan) accounts for approximately 8% of global PVC production capacity. Operating rates (actual production/capacity) range from 90% in North America to 70% in other regions. With the exception of Shin-Etsu (Shintech), all of the largest PVC producers have captive sources of VCM (Shin-Etsu purchases theirs from Dow, though the proposed Shintech plant in Louisiana would have a captive source of chlorine and VCM).

Tables 4 and 5 present PVC manufacturers in the U.S. and Western Europe, respectively. Four companies (Formosa, Shintech, Occidental, and Geon) make up 62% of total PVC capacity. Six PVC producers in the U.S. (CertainTeed, Colorite, Kaneka, Keysor-Century, Shintech, and Union Carbide) do not have captive sources of VCM. They represent 26% of total PVC capacity. More than 50% of PVC capacity in the U.S. is under foreign ownership. This is likely an indication that production in the U.S. is less expensive than in other regions, due to low energy costs and available transport routes, and raw materials are more readily available.[5] Domestic sales make up approximately 88% of total U.S. PVC sales.

Approximately 10.9 billion lbs of PVC resin were sold and used in the U.S., 1.5 billion lbs exported and 506 million lbs imported during 1996. U.S sales and use of PVC grew at an average annual rate of 5.4% during the 1986-1996 period, driven mainly by exports. This same trend in growth can be expected over the coming five year period, where exports to developing nations will drive industry growth.

In Europe, Germany was the largest PVC producing country with a total annual capacity of 117 thousand metric tons, followed by France, Belgium, and Italy. EVC was the largest European manufacturer accounting for 19% of total Western European capacity. EVC, along with Solvay, Elf Atochem, Vinnolit, and Norsk Hydro accounted for 62% of European Capacity in 1997. Projected expansions in Germany, the Netherlands, Norway, Portugal, Sweden, the UK will increase annual Western European PVC capacity to about 6.3 million metric tons by 2002. Western Europe consumed approximately 5.5 million metric tons of PVC in 1996. Germany was by far the largest user, followed by Italy, France and the UK. Sweden uses the least PVC in the region.

Japan has 26 PVC producing companies, which produced 2.8 million metric tons of PVC in 1997. Japan consumed some 1.9 million metric tons in 1996. Approximately 35% of PVC made by Japanese producers in 1996 originated overseas and this percentage is expected to increase. Asia, including Japan has the largest regional consumption of PVC. Approximately 8 million metric tons were consumed in 1996 and it is expected that more than 10 million metric tons will be consumed by the year 2000.[6]

Table 3: Largest PVC producing companies (combined plant and subsidiary totals)

Company (country) Annual Capacity

as of January 1997

(thousands of metric tons)

Formosa Plastics (Taiwan) 2044

Shin-Etsu Chemical Company (Japan) 1924

The Geon Company (U.S.) 1292

Solvay SA (Belgium) 1166

EVC International (Belgium) 1145

Elf Atochem SA (France) 740

Occidental Chemical (U.S.) 726

Borden Inc. (U.S.) 646

LG Chemical Ltd (Korea) 606

Vinnolit Kunststoff (Germany) 580

Total 10869

Percent of World Capacity 41%

(Source: Chemical Economics Handbook, SRI International)

Ethylene Dichloride (EDC)

Ethylene dichloride, a suspect carcinogen and nervous system toxicant, is a major PVC feedstock The production of EDC through the oxychlorination process is known to result in the formation of dioxins and other persistent organochlorine materials that end up in production waste and require final disposal. The EDC industry is directly linked to the PVC industry, which accounts for approximately 98% of total demand.[7] The ethylene-based process accounts for approximately 94% of PVC production.[8] Other EDC uses include the production of perchlorethylene. Total world demand for EDC is forecast to reach 46.8 million tons by 2001.

Table 6: Ethylene Dichloride Capacity and expected expansions (as of 1997)

Region	Capacity (in thousands of metric tons/year^*)	Expansion through 2001
North America	15765	32%
South America	955	3%
Western Europe	11710	5%
Asia/Pacific^a	5041	46%
Other	n/a	7%

(Source: Chemical Week, March 12, 1997)

^aJapan, 3133 mt/yr; data only includes Indonesia, Japan, South Korea, Taiwan, and Thailand

^*Note: Multiply thousands of metric tons by 2.2 to obtain millions of pounds

[Japan breakdown?]

Vinyl Chloride Monomer (VCM)

Vinyl chloride monomer is the direct precursor to PVC. As the production processes are linked, it is generally produced in integrated facilities along with the EDC. It is a colorless gas and a known human carcinogen. About 99% of VCM is polymerized (individual monomer units linked) through various processes into PVC. Other uses for VCM include the production of polyvinylidene chloride (PVDC), a plastic used in packaging, and as an intermediate in the production of 1,1,1-trichloroethane. In 1996 an estimated 22 million metric tons (48.5 billion lbs.) of PVC were produced worldwide requiring 22.5 million metric tons (49.6 billion lbs.) of VCM.[9] VCM capacity is expected to expand approximately 5% annually until the year 2001, depending on the health of the industry, the economy, and variations in regions. The areas of greatest growth in the industry include Asia (excluding Japan), Latin America, and the Middle East. It is estimated that Asia will account for more than one-third of VCM demand by 2001. According to SRI International, the only region expected to see a decrease in capacity by 2001 is Japan. The growth in capacity worldwide between 1992 and 1996 was approximately 3% per year. Thus, growth in the VCM industry is projected to increase considerably in the next four years. However, growth rates for other plastics, particularly the polyolefins are expected to be even greater than those for PVC.[10]

Operating rates varied from region to region with North America having the highest utilization rate at 92% and Eastern Europe, Latin America, and the Middle East only utiing about 70% of capacity.

Table 7: VCM capacity and production trends (in thousand metric tonnes)

Region	North Am.^a	W. Europe	Japan	Other Asia^b	Other^c	Total
Annual Capacity, 1992	6540	6315	2485		7860 (rest of world)	23200
Annual Capacity, 1996	8027	6420	3189	4236	4461	26333
Operating rate 1996	92%	89%	88%	91%	70%	87%
Actual Consumption 1996^d	6723	5266	2486	4877	3462	22814
Regional Avg. Growth 1996-2001 (%)	4.0	2.0	-0.5	9.5	6.5	5.0

(Source: Chemical Economics Handbook, SRI International)

^a Includes the U.S, Canada and Mexico

^b Includes the People’s Republic of China, Hong Kong, India, Indonesia, Reputlibc of Korea, Malaysia, Philippines, Singapore, Taiwan, and Thailand

^c Includes South and Central America, Eastern Europe, Africa, Middle East, and Oceania

^d Utilization less exports.

The following tables provide a better understanding of the concentration of the industry, which companies dominate the market for VCM production, and the relative sizes facilities in the U.S. and Europe. Table 8 shows that a relatively small number of companies dominate VCM production in the world. For example, Dow represents about 10% of global VCM capacity. This concentration of production is likely to increase with the large percentage of mergers and joint ventures planned during the coming years, as will be discussed following sections of this report. Tables 9 and 10 (see Appendix. C) demonstrate that there are far fewer VCM production facilities in the U.S. than in Europe, and that those in Europe are on average much smaller than similar than facilities in the U.S. Similarly, in Japan there are twelve VCM production facilities, though capacity is less than one-half that of the United States.

In the United States, three VCM producers (Dow, Oxymar, and PHH monomers) represent approximately one-third of total VCM capacity. The US imports only negligible amounts of VCM, and it exports more than 1.5 billion pounds per year. While exports have risen since 1990, they will likely come down by the end of the century as capacity grows in other regions. Approximately 90% of U.S. VCM exports go to Canada and Mexico, South and Central America, and Asia. U.S VCM capacity is expected to reach 17.6 billion lbs. by the year 2001; however, this figure will depend on the outcome of the fight to stop Shintech’s proposed Convent, Louisiana facility.

In Europe, three companies (EVC, Solvay, and Elf-Atochem) account for almost 50% of VCM capacity. VCM capacity in Europe is expected to grow slower than in other regions (about 2%) reaching a total capacity of 7 million metric tons by the year 2001. Belgium, France, Germany, the Netherlands, and Italy are to be the largest VCM producing countries in the region.

Table 8: Largest VCM producing companies (combined plant and subsidiary totals)

Name (Parent company country) Annual capacity as of Jan. 1997

(in thousands of metric tons)

Dow Chemical Company (U.S.) 1906

Formosa Plastics (Taiwan) 1643

EVC (Netherlands)* 1370

Solvay, SA (Belgium) 1193

The Geon Company (U.S.) 1088

Occidental Chemical Corp. (U.S.) 1020

Elf-Atochem SA (France) 803

Georgia Gulf Corp (U.S.) 726

Norsk Hydro a.s. (Norway) 595

Tosoli Corporation (Japan) 570

Total 10914

Percent of World Capacity 42%

*Note: EVC has its administrative headquarters in the Netherlands but is not a Dutch company

(Source: Chemical Economics Handbook, SRI International)

III. Update on PVC industry expansions

This section presents a listing of actual and proposed PVC industry expansions throughout the world (see appendix 4 for a listing of specific expansions). These expansions have been identified through a review of the trade press from 1996 to the present.[11] Nonetheless, the list supports the overview on expansions provided in the previous section, as well as the general trends in the industry, discussed in the next section.

In general, the largest concentration of expansions observed through a review of the trade press are in Asia (Pakistan, Malaysia, Thailand, and China), Latin America (Brasil and Argentina), the Middle East, and the United States. Expansions in both VCM and PVC production are occurring widely; however, few EDC or chlorine expansions were identified, a possible indication that the chlorine industry is shifting greater amounts of production to PVC production. An analysis of the various expansions indicates that many multi-company joint ventures with new names are being initiated.

In terms of size, the vast majority of new expansions, both VCM and PVC are less than 200,000 metric tons per year. Only four of the expansions identified are larger than 300,000 metric tons per year. The proposed Shintech facility in Convent, Louisiana is the largest of the planned expansions at 500,000 metric tons of VCM and 400,000 metric tons of PVC projected per year.

IV. Trends in PVC industry expansions

Based on the information provided in the previous sections and other trade publications, this section provides an analysis of trends in PVC industry expansion and those factors influencing expansion. Many of these issues were discussed in previous sections and will be summarized here. In general, trends and issues concerning PVC industry expansion can be divided into the following categories:

· Product distribution, product market growth, and impacts of deselection

· Factors influencing industry growth

· Factors influencing location of expansions

· Impacts of the Asian economic crisis

· Production/product integration

Product distribution, product market growth and impacts of deselection

Fluctuations in the market for virgin PVC are heavily influenced by fluctuations in the market for its various end-products. PVC use in various markets is distributed as follows:

Table 12: Distribution of PVC Uses in the United States

Market Percentage

Construction 64

Pipe and Tubing 38

Siding 12

Windows/Doors 3

Other Construction 11

Packaging 6

Consumer Goods** 6

Electrical (inc. cables) 4

Transportation*** 2

Home Furnishings 2

Other**** 4

Exports 12

*Other Construction: flooring, wall coverings, roofing membranes, gutters, fencing.

**Consumer Goods: blinds, toys, clothing, appliances, credit cards, tapes.

***Transportation: auto undercoating, dashboards, floor mats

****Other: Medical devices, poor liners

(Source: Chemical Economics Handbook, SRI International)

By far, fluctuations in the construction market, making up some 70% of overall PVC use, will have the greatest impact on overall PVC demand. The most important factor influencing this demand are housing starts - including new construction and renovations.[12] In the developing world, the industry is hedging its growth on its ability to market products to fill the need for low-cost housing and development of infrastructure. Building codes, requiring specific fire retardancy or properties, may also heavily influence the use of PVC in the construction sector. However, increasing concern over the fire hazards of PVC will possibly lead to changes in building codes and support the introduction of alternative materials. The declining number of skilled carpenters coupled with increases in labor costs and increased costs for lumber are likely to also drive increases in the demand for PVC and other plastic materials. PVC is considered by contractors and architects to be inexpensive, durable, and easy to install and care for. Its environmental and health impacts are relatively unknown to these groups.[13] PVC pipe use is expected to continue growing as older infrastructure is replaced, though this may be influenced by several notable failures [need cite from KS]. Sales of PVC siding and windows are expected to increase by upwards of 8-10% per year through the year 2001 in the U.S. [do we cut/edit some of this to make it seem less like PVC is doing so well.]

In coming years, metallocene catalyzed polyolefins will enter the market for flexible PVC products. This new generation of polyolefins can be tailored to specific flexible applications, often using the same processing machinery as PVC. Some of the possible areas for metallocene replacement include: medical devices, packaging, wire and cable insulation, flooring, membranes, and auto components. However, these together only account for 16% of total PVC.[14] Analysts feel that any market lost by to metallocene polyolefins may be made up by new rigid PVC applications. Other polymers, such as polyethylene, polypropylene and thermoplastic elastomers, will likely also impact PVC markets, for packaging, medical devices, and other flexible applications. Even some rigid PVC markets are suffering from competition (and will possibly lose more market share in coming years) due to the infusion competitively priced polyolefins (such as polyethylene in pipes) and other non-plastic materials, such as wood and clay.

The impact on PVC markets due to growing recognition of PVC’s environmentally-unfriendly lifecycle is unclear but potentially very important Environmental concerns over the PVC lifecycle are a constant issue discussed in trade journals and in market reports such as the Chemical Economics Handbook. There is growing concern over PVC in toys, medical devices, and packaging because of the environmental and health impacts of the polymer and its additives; however the majority of PVC use is in the construction sector. Nonetheless, deselection in the construction sector is happening in a growing number of towns and regions in Europe.

Factors influencing industry growth

There are several critical factors that are currently influencing industry growth: First, as previously noted, economic growth leading to construction and infrastructure development likely drive the largest percentage of PVC demand.[15] Growth in PVC (and other plastics) consumption has been correlated to economic growth in the developing world. Given the energy intensive nature of chlorine production, energy and petroleum prices will also have a substantial impact on PVC industry growth. An overcapacity of PVC during recent and coming years, due to large expansions throughout the world (not compensated for by increases in demand), will possibly result in a decrease in operating rates and industry growth and a decrease in virgin material prices.[16] This is important because there are likely to be few markets for recycled material given the low price of virgin material, as is currently the case (so production waste and end of life products will need to be landfilled or incinerated. Finally, production of PVC feedstocks in Europe may decrease in coming years due to declining profit margins and as mercury cell chlorine production is slowly phased out. This may result in European manufacturers attempting to establish new facilities in Asia, the Middle East, and Latin America.

Factors influencing location of expansions

The four most important factors influencing the location of PVC expansions are: energy prices, availability of raw materials, market for caustic (a co-product of chlorine production), and increasing demand (or market potential) for PVC products. These factors indicate that the areas of greatest expansion of PVC feedstock production will likely be the Middle East, Latin America (Brasil and possibly Argentina), and the United States - all of which have both readily available raw materials and relatively inexpensive energy sources (the U.S. has the lowest energy prices). Given high energy prices and undependable energy sources in Asia, coupled with a lack of markets for caustic, PVC polymerization, rather than feedstock production facilities (though less energy intensive VCM production could occur) are more likely to be located in that region in the near future.[17] This factor (essentially a chlorine deficit) makes Asian expansion highly dependent on both EDC and VCM prices and availability. VCM and PVC expansions in the region will be based primarily on imported raw materials. High EDC prices will result in a reduction in PVC production. Thus, EDC production could be considered a weak link in the PVC expansion chain. A limited market for caustic will also limit chlor-alkalai production in Asia; though as PVC is by far the largest factor driving chlorine industry growth, the PVC industry may place less concern on availability of caustic markets.

Growth in infrastructure, construction, and industries such as the electronic industry are important factors driving the PVC industry’s expansion into Asia. The PVC industry is attempting to create a large market niche in this region, especially China and India, due to the large increase in demand for housing and consumer goods. A similar situation exists in Latin America (the 18% growth in PVC consumption in Brasil in 1996 was driven primarily by infrastructure investments). Also, Asian and Latin American countries represent inexpensive manufacturing centers for PVC and other products, given low labor costs and free trade benefits. However, labor costs should not be much of a factor with regards to feedstock expansions, as they represent only about 4-5% of overall production costs.[18] Internal PVC consumption, along with increased export market growth will fuel industry growth in the United States in coming years.

Impacts of the Asian economic crisis

One of the most important factors potentially impacting PVC industry expansion in the coming years is the recent Asian economic crisis. As a result of the crisis (resulting a giant decline in construction), demand for PVC will come down, and due to unstable currencies it will be difficult for Asian countries to import needed EDC. This resulted in a 10% decrease in operating rates for PVC manufacturers in the region last January and this decrease is expected to continue.[19] Anticipated PVC growth rates of 10+% per year have been downgraded by some analysts to 4-5%. The need for hard currency will also drive countries in the region to reorient production towards export markets (increased PVC consumption in China may help reverse declining trends). Though exact information for the PVC industry is not available, the Asian economic crisis has resulted in multiple project cancellations and plant closures (or substantial reductions in capacity) in the region and delays in foreign investment until 2001-2003. The Asian economic crisis will likely have some indirect impacts on PVC expansions (and closures in regions such as Japan) in other regions as demand for EDC and VCM feedstocks to this largest future PVC consuming region in the world will be reduced considerably.

Production/product integration

To avoid fluctuations in feedstock prices and supply, many manufacturers in the U.S. and Europe are undertaking joint ventures or other types of marketing linkages to ensure captive feedstock supplies. There is also an increasing trend towards integrated facilities (such as Shintech) in areas where chlor-alkalai production is profitable. This will result in larger, multi-owner facilities, especially in feedstock production, consolidating the number of these facilities in the world. This consolidation will result in a competitive advantage for companies. As a result, smaller, less cost-effective companies and facilities will likely be phased-out. Another trend is that PVC manufacturers are becoming more apt to produce and market final products (the most value added part of the production process). Integrating raw material and product production offers greater market control (upstream and downstream) and protection in the face of fluctuations in demand. It also may provide opportunities for creating demand for new PVC products, to replace those being lost to competition. For example, Royal Building Products recently purchased PVC production capacity in Canada and other parts of the world, likely as a cost efficiency measure, as its sales of pre-fabricated PVC housing units grows. European Vinyls Corporation has announced its desire to increase expansion in final products markets, possibly to offset decreasing profit margins. The strategy of Formosa, the largest PVC manufacturer in the world, is to own the entire production process, including shipping. As a result, Formosa is the largest PVC pipe manufacturer in the world.

V. Conclusions

The PVC industry is expected to continue growing at an increasing rate into the next millennium. Nonetheless this expected rate of growth may be modified depending on the impacts of the Asian Economic crisis and other market impacts. In general, the industry is likely to expand the most in Asia and Latin America in coming years, as production levels off or decreases in other regions. Thus while the industry may be facing growth problems in some regions, such as Europe, it will likely create markets for its products in emerging consumer economies. While new expansions in Asia and Latin America are likely to be based on modern technologies, these regions could face increasing waste disposal problems and increased generation of dioxin and other persistent organic pollutants (POPS), especially as a result of dioxin contaminated EDC tars and product disposal (especially short lived products, such as packaging).

Industry expansions will likely be most vulnerable as a result of economic downturns (reducing construction), energy and EDC price increases, competition by other comparably priced polymers and other materials, and deselection due to environmental concerns. Recycling and disposal of products will also possibly affect industry expansion, as a large quantity of construction materials reach the end of their useful life. Analyzing trends in PVC industry expansions provides an opportunity to better understand where growth in the industry products is targetted, how the industry creates and markets new products, and weak points in its production cycle.
Appendix 1: World PVC Capacity

Table 2: World PVC Capacity, 1997 (in thousands of metric tons./year)

NORTH AMERICA

U.S.: 6794

Canada: 329

Mexico: 429

SOUTH AMERICA

Argentina: 111

Brazil: 659

Colombia: 256

Venezuela: 60

EUROPE/MIDDLE EAST

Austria: 60

Belgium: 330

Finland: 85

France: 1080

Germany: 1710

Italy: 712

Netherlands: 520

Norway: 105

Portugal: 145

Spain: 425

Sweden: 170

U.K.: 445

EASTERN EUROPE: 2,161

MIDDLE EAST: 1,224

ASIA/PACIFIC

Australia: 250

China: 2,100

India: 893

Indonesia: 550

Japan: 2581

Korea: 870

Malaysia: 75

Philippines: 48

Singapore: 28

Taiwan: 1260

Thailand: 492

(Source: CMAI Consultants, as reported in Chemical Week, December 17, 1997)

Appendix 2: PVC Production Facilities in the US and Western Europe

Table 4: Production capacity for U.S. PVC manufacturers as of June, 1997 (in millions of pounds)

Company	Location	Annual Capacity (Jan. 1, 1997)	Expected Capacity 2001
Borden Chemicals	Addis, Louisiana	450	600 (by 1997)
	Geismar, Louisiana	550	550
	Illiopolis, Illinois	425	425
CertainTeed Corp.	Lake Charles, Louisiana	445	445
Colorite Polymers	Burlington, New Jersey	120	120
Condea Vista	Aberdeen Mississippi	465	750
	Oklahoma City, Oklahoma	450	450
Formosa Plastics	Baton Rouge, Louisiana	935	935
	Delaware City, Delaware	135	135
	Port Comfort, Texas	1275	1275
The Geon Company	Deer Park, Texas	680	900
	Henry, Illinois	90	120
	Louisville, Kentucky	585	780
	Pedricktown, New Jersey	414	700
Georgia Gulf Corp	Plaquemine, Louisiana	1130	1510
Kaneka Copr/Mitsui	Delaware City, Delaware	50	75
Keysor-Century Corp.	Santa Clarita, California	60	60
Occidental Chemical Corp.	Pasadena, Texas	1380	1830
	Pottstown, Pennsylvania	220	220
Shintech Inc.	Freeport, Texas	2800	3880 (inc. capacity in 1997)
Union Carbide Corp	Texas City, Texas	140	140
Westlake PVC Corp	Calvert City, Kentucky	620	800
	Pace Florida	280	350
Total		13810

(Source: Chemical Economics Handbook, SRI International)

Table 5: Production capacity for Western European. PVC manufacturers as of June, 1997 (in thousands of metric tons)

Country	Company	Location	Capacity (Jan. 1997)
Belgium	BASF	Antwerpen	100
	Solvic snc	Jemeppe-sur-Sambre	230
Finland	Nessy Oy	Porvoo	90
France	Elf Atochem	Balan	185
		Brignoud	125
		Saint Auban	125
		Saint Fons	185
	Shell Chemie	Berre-l’Etang	215
	Societe Artesienne de Vinyle SA	Mazingarbe	220
	Solvay SA	Tavaux	250
Germany	BASF	Ludwigshafen	150
	BSL	Schkopau	165
	EVC	Wilhelmshaven	280
	Solvay	Rheinberg	190
	Vestolit	Marl	350
	Vinnolit	Burghausen	190
		Gendorf	120
		Knapsack	110
		Koeln	160
Greece	EKO	Diavata	100
Italy	EVC	Brindisi	145
		Porto Marghera	180
		Porto Torres	90
		Ravenna	200
	Industrie Generali	Samarate	30
	Solvay SA	Ferrara	90
Netherlands	LVM	Beek Geleen	220
	Rovin	Rotterdam-Pernis	295
Norway	Nork Hydro	Heroya	90
Portugal	Companhia Industrial de Resinas Sinteticas	Estarreja	150
Spain	Aiscondel	Monzon del Rio Cinca	60
		Vilaseca	105
	Elf Atochem	Hernani	45
		Miranda de Ebro	75
	Hispavic Industrial	Martorell	145
Sweden	Hydro Plast AB	Stenungsund	150
United Kingdom	EVC	Barry	125
		Fleetwood	40
		Runcorn	85
	Hydro Polymers Ltd	Newton Aycliffe	130
Total			5990

(Source: Chemical Economics Handbook, SRI International)
Appendix 3: VCM Production Facilities in the US and Western Europe

Table 9: Production capacity for U.S. VCM manufacturers as of June, 1997 (in millions of pounds)

Company	Plant Location	Annual Capacity	Comments
Bordon Chemicals and Plastics	Geismar, Louisiana	950	320m lbs. based on acetylene
Condea Vista	Lake Charles, Louisiana	950	Capacity to expand to 1,050M lbs by 2001
Dow Chemical	Oyster Creek, Texas	1600	Primary supplier of VCM to Shintech
	Plaquemine, Louisiana	1300
Formosa Plastics Corp	Baton Rouge, Louisiana	1235
	Point Comfort, Texas	800
The Geon Company	La Porte, Texas	2400
Georgia Gulf Corp.	Plaquemine, Louisiana	1600
Occidental Chemical	Deer Park, Texas	1200
Oxymar	Ingleside, Texas	2100	Joint venture between Occidental Chemical and Marubeni Co.
PHH Monomers	Lake Charles, Louisiana	1150	Formerly PPG now Condea Vista/PPG joint venture.
Westlake Monomers	Calvert City, Kentucky	1000
Total		16,285

(Source: Chemical Economics Handbook, SRI International)

Table 10: Production capacity for Western European VCM manufacturers as of June, 1997 (in thousands of metric tons)

Country	Company	Location	Annual Capacity
Belgium	BASF	Antwerpen	160
	LVM NV	Tessenderlo	550
	Solvic snc	Jemeppe-sur-Sambre	280
France	Elf Atochem SA	Lavera	430
		Saint Auban	120
	Societe du Chlorure de Vinyle de Fos	Fos sur Mer	350
	Solvay SA	Tavaux	270
Germany	BASF	Ludwigshafen	100
	BSL Olefinverbund^a	Schkopau	150
	EVC	Wilhemshaven	340
	Hoechst	Gendorf^b	180
		Huerth	110
	Solvay Kunststoffe	Rheinberg	245
	Vestolit	Marl	350
	Wacker-Chemie^b	Burghausen	225
Italy	EVC	Brindisi	200
		Porto Marghera	250
		Porto Torres	110
		Ravenna	100
Netherlands	Rovin vof	Botlek-Rotterdam	520
Norway	Norsk Hydro as	Heroya	470
Spain	Aiscondel SA	Vilaseca	165
	Viniclor	Martorell	250
Sweden	Hydro Plast AB	Stenungsund	125
United Kingdom	EVC	Fleetwood^c	190
		Runcorn	180
Total			6420

(Source: Chemical Economics Handbook, SRI International)

^aFormerly known as BUNA

^bHoechst and its 50% affiliate Wacker-Chemie are reorganizing their chlorine/VCM operations. Chlorine/EDC/VCM operations at Gendorf were transferred to the joint venture. By 2000, VCM capacity at Gendorf will be expanded to 300,000 metric tons. Wacker-Chemie’s VCM plant at Burghausen will be shut down by 2000.

^cWill be shut down in 1998.

Appendix 4: Future PVC Capacity Expansions

Table 11: Future PVC Capacity Expansions

Company/ Consortium	Location	Addition (m.t./yr)	Estimated Completion	Comments/Staus
	Qinghai, China	120,000 PVC	2000
	Tianjin, China	200,000 PVC	2000
Adnoc	Ruwais, Abu Dhabi	540,000 EDC	2001	commissioning
Argonesas	Tarragona, Spain Huelva, Spain	15,000 VCM 6,000 PVC 100,000 EDC	completed 1998 1998
Borsodchem	Hungary	40,000 VCM	1999	1997 expansion to 190,000 mt/yr
BSL	Sckopau, Germany	130,000 VCM	1999	planned
Chemplast Sanmar/Nissho Iwai	Tamil Nadu, India	PVC		under study
China General Plastics	Toufen, Taiwan	PVC	1998
Dow Chemical	Tianjin, China	VCM, PVC, chloralkalai		under study
Dow Chemical	Pibura Australia	EDC, VCM		under study
Engro, Asahi Glass, Mitsubishi	Port Qasim, Pakistan	100,000 PVC	1999
Engro/Mitsubishi/Asahi Glass	Pakistan	100,000 PVC	n/a
EVC	Runcorn	120,000 VCM	1998
EVC	Wilhelmshaven, Germany	40,000 PVC	1997	unclear if completed
Formosa	Haicang, China	PVC, VCM		under study
Formosa	Haicang, China	VCM, PVC		under study
Hindustran Heavy Chemicals	West Bengal, India	17,000 chlorine		planned
Hyundai Petrochemical	Dasean, South Korea	150,000 PVC	1998
Indian Petrochemical Corp.	India	150,000 PVC	1997	completed
Indupa	Bahia Blanca, Brasil	50,000 VCM 130,000 PVC	1999	possibly PVC to 240,000
Itochu	Wuhai China	100,000 PVC	n/a	unclear if completed
Itochu Corp	Shanghai, China	>200,000 PVC	2000	also VCM and EDC
Itochu Corp.	Maoming, Guangdong, China	140,000 PVC		under study
JC Summit/Marubeni	Batangas, Philippines	100,000-120,000 PVC	1999-2000
LG Chemicals	South Korea	300,000 VCM	1997	completed
Limburgse Vinylmaatschapp	Tessenderlo, Belgium	VCM 120,000 PVC	1999-2000

Company/ Consortium	Location	Addition (m.t./yr)	Estimated Completion	Comments/Staus
Luen Fat Hong	Guangdong, China	PVC	n/a
Marubeni/Petronas	Vietnam	85,000 VCM	1998
Mitsui Vina Chemical	Vietnam	80,000 PVC	1997	not known if completed
National Petrochemical	Bandar Imam, Iran	152,000 VCM	1999	under study
Norsk Hydro	Rafnes, Norway	200,000 VCM	2000-2001	inc. European prodn/sales
Norsk Hydro	Suzhou, China	100,000 PVC	1999	original 60,000
Norsk Hydro	Heroya, Norway	15,000 PVC	1997	unclear if completed
Norsk Hydro	Newton Aycliffe, UK	60,000 PVC	1997	unlear if completed
Oxymar	Ingleside, Texas Deer Park, Texas Pasadena, Texas	318,000 VCM 45,000 VCM 205,000 PVC	1997 1997 1997	unclear if completed
Panjin Liahoe	Liaohe, China	80,000 VCM 80,000 PVC	1998	under construction
Panjin Liaohe Group	Beijing, China	80,000 VCM	1999	planned
Pequiven	El Tablazo, Venezuela	120,000 PVC	1998
Petronas	Malaysia	EDC, VCM	2005	under study
Petronas/Land & General/Mitsui	Kerteh, Malaysia	400,000 VCM	2000	under construction
Petronas/Marubeni/Vietnam Gas	Ba-ria Vietnam	100,000 PVC	2002	VCM/EDC under study
Petro Vietnam	Vietnam	300,000 VCM	after 2005
Phillipine Resin Industries	Bataan, Pillipines	70,000 PVC	1998	inc. to 140,000 in 2000
Polifin	South Africa	PVC	2003	under study
Qatar Petrochemical/Norsk Hydro/Elf Atochem	Qatar	200,000 VCM 160,000 EDC	1999-2000	excess EDC sent to Asia for VCM production
Reliance Industries	India	90,000 PVC	1997	completed
Shintech, Inc.	Convent, Louisiana	500,000 VCM 400,000 PVC 450,000 chlorine	?	stalled due to environmental concerns.
Statumo Indovyl Monomer	Merak, Indonesia	100,000 VCM	1997	unclear if completed
Marubeni	Singapore	200,000 VCM	1998	planned
Suzhou Huasu Plastics Corp./Norsk Hydro/Westlake	Luijia Port Economic Development Zone, China	100,000 PVC	1998	financed by International Finance Corp.
Thai Petrochemical Industry	Bataan, Philippines	100,000 PVC	1999
Thai Petrochemical Industry	India	PVC	2002	studied

Company/ Consortium	Location	Addition (m.t./yr)	Estimated Completion	Comments/Staus
Thai Plastic and Chemicals	Rayong, Thailand	300,000 VCM 80,000 PVC	1997-98	unclear if completed
Thai Plastics and Chemicals	Mab Ta Phut, Thailand	120,000	1999
TIDCO/Norsk Hydro	India	150,000 PVC	n/a	under study
Tirtamas Group PT TransPacific VCM	Tuban, Indonesia	300,000-500,000 VCM	2000
Titan/Norsk Hydro	Pasir Gudang, Malaysia	200,000 VCM 100,000 PVC	2000
Tosoh Corp.	Nanyo, Japan	200,000 VCM	n/a	under study
Tuntex	Taiwan	PVC	2005	planned
Union Petrochemical	Gresik, Indonesia	150,000 VCM 120,000 PVC		under study
Vinnotlit	Gendorf, Germany	100,000 VCM	2000	expand to 300,000mt
Westlake Polymers	Pace, Florida, USA	PVC
WS Group/Norsk Hydro/Tamilandu	Cuddalore, India	150,000 PVC	2000	VCM from Qatar
Wuhai	Inner Mongolia	80,000 PVC	2000	planned
Yangzi Petrochemical Corp.	Nanjing, China	150,000 PVC	1998	unclear if completed

Note: Some expansion figures may be total capacity after expansion. When possible only actual expansion figures are noted.

(Sources: European Chemical News, Asian Chemical News, Chemical Week, Chemical and Engineering News)

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[1] This analysis is based primarily on information obtained from the trade press and consultant’s reports, as well as discussions with PVC and petrochemical industry analysts.

[2] See PVC Wytze van der Naald and Beverley Thorpe, PVC Plastic: A Looming Waste Crisis, Greenpeace International, 1998 and Joe Thornton, The PVC Lifecycle: Dioxin Cradle to Grave, Greenpeace US, 1997

[3] These and other figures contained in this report were derived prior to the Asian economic crisis which began in late 1997. The impacts of this crisis on PVC and feedstock production will be discussed in the Trends in PVC industry expansions.

[4] Capacity and actual production of EDC, VCM, and PVC are discussed in this report. Capacity is the ability to produce a specific amount of the feedstock or final product. Actual production is usually somewhat less. Operating rates (the amount of capacity used) are discussed throughout this report, and usually fluctuate in the 80%-95% range. It is assumed that all EDC and VCM produced based on demand for PVC. Consumption is somewhat lower than production due to over production or a lack of market converted into PVC, either in the country of origin or in a country of export.

[5] Aida Jebens, Polyvinyl Chloride Resins, Chemical Economics Handbook, SRI International, 1997.

[6] European Chemical News, 24-30 March, 1997.

[7] Ethylene Dichloride, Chemical Week, March 12, 1997.

[8] The first commercial production of vinyl chloride was via the reaction of hydrogen chloride with acetylene, which constitutes the other 6% of vinyl chloride production. European Vinyls Corporation is now investigating and piloting a “clean” PVC process which produces VCM from ethane.

[9] Aida Jebens, Vinyl Chloride Monomer, Chemical Economics Handbook, SRI International, 1997.

[10] Marjoire Petesch, Plastics and Resins Overview, Chemical Economics Handbook, SRI International, 1995. Note: The introduction of novel polyolefins, such as the metallocenes, will likely increase the rate of polyolefin expansion compared to that of PVC. Thermoplastic elastomer production is also expected to increase considerably in the coming years.

[11] As a result this list may not be complete or it might contain information on an expansion that has either been cancelled or finished

[12] This observation is similar for other materials widely used in construction, such as wood.

[13] Discussions among some architect’s organizations, firefighters, and public building planners, especially in Europe are beginning to bring more attention to the environmental concerns of PVC building products. The recent Flexpo Conference on PVC alternatives is a case in point [need cites/explanation from Charlie].

[14] Aida Jebens, Polyvinyl Chloride Resins, Chemical Economics Handbook, SRI International, 1997

[15] Ibid.

[16] Robert Westervelt, Vinyls, Chemical Week, May 14, 1997.

[17] This would involve the high risk transportation of EDC and VCM

[18] Aida Jebens, Polyvinyl Chloride Resins, Chemical Economics Handbook, SRI International, 1997

[19] Asia/Pacific: After the Fall, Chemical Week, February 4/11, 1998.