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HOUSTON (December 17, 2004) --The American plasticizer and flexible vinyl (or PVC-polyvinyl chloride) business continues to face ongoing economic and market challenges. However, the outlook for these products is sustainable in the long-term. That’s the key message participants heard at the inaugural ExxonMobil Chemical Plasticizer Symposium in November.
A primary focus of the symposium, which took place in Houston, Texas, was the impact of current economic and market pressures on the viability and sustainability of the American flexible PVC business. Key topics covered feedstock volatility, the increase in finished product imports and pressure on profitability. Participants were reassured that despite slow growth and continued economic and regulatory challenges the business would have a viable future by adapting to market changes and by supporting product innovation.
“The American plasticizer and flexible PVC business continue to face numerous challenges. However, despite these pressures, we are convinced that it is sustainable in the long term,” said Robert C. Davis, Global Oxo Business Unit vice president, ExxonMobil Chemical Company. "We are here to reinforce ExxonMobil Chemical's commitment to the plasticizer business. Our objective is to provide customers with product options that meet their needs through our demonstrated capability in terms of product slate and supply, as well as technical and customer service."
Telling insights into the prospects for the flexible PVC business were provided by representatives from organizations such as Chemical Market Associates, Chemical Market Resources, Probe Economics, Teknor Apex, The Vinyl Institute and event organizer ExxonMobil Chemical (see appendix below for summary of presentations).
Appendix: Summary of Presentations
Summary of presentations:
ExxonMobil Chemical: Commitment to the Chemical Business – Paul Hanson, vice president and treasurer, ExxonMobil Chemical Company
Hanson explained that the key to creating ongoing value in an ever-changing business landscape is to match the company's strengths with customers' needs. ExxonMobil Chemical has built a sound foundation in terms of assets and capacity to serve an increasingly global business. The company will continue to seek ways to enhance its performance through competitive advantage in research and technology, business investments and, most importantly, interaction with and understanding of customers and markets.
North America Economy and its Impact on Vinyl – Fred Peterson, Ph.D., president, Probe Economics, Inc.
In his presentation, Peterson highlighted the key macro-economic factors that are significantly impacting the trade balance -- such as the high price of crude oil, increase in exports, particularly from China, and other North American economic conditions. However, the expectation is for trade and manufacturing, driven by the cheaper dollar, to stabilize and consumption to grow in real terms.
Update on the Plastics Industry -- Rick Smith, executive vice president, Chemical Market Associates, Inc. (CMAI)
In tackling the future, Smith pointed out that the flexible PVC market had changed forever, with import of finished goods here to stay. North American producers will see slower growth with the construction industry driving demand and global trade in finished goods dominating the market. On a positive note, despite higher PVC prices in the future, the expectation is for a reduced price volatility that should allow customers to catch up and rebuild margin bases with their downstream customers.
The Global Plasticizer Business: An ExxonMobil Chemical Perspective --
Robert Davis, Ph.D., Global Oxo Business Unit vice president, ExxonMobil Chemical Company
The global plasticizer business is sustainable in the long-term, as long as ExxonMobil Chemical and its customers adapt to the changing market dynamics and challenges impacting the North American marketplace. ExxonMobil Chemical remains committed to phthalate plasticizers and will invest in the right products at the right locations in order to provide customers with global supply and service excellence from an unparalleled capability base.
Vinyl Institute Activities -- Tim Burns, president, The Vinyl Institute
Burns highlighted the key role of the trade association to educate and promote the benefits of vinyl and mitigate any concerns about its application. Some of the latest programs in which it is actively engaged include the U.S. Green Building Council, the Leadership in Energy and Environmental Design, and the Green Guidelines for Healthcare. Studies indicate that consumers continue to rate vinyl/PVC positively.
Global Phthalate Regulatory Landscape -- Laura Keller, Ph.D., ExxonMobil Chemical product stewardship and regulatory affairs coordinator, and chairperson, American Chemistry Council Phthalate Esters Panel
Keller shared the latest information on key issues such as Section 313 of the U.S. Superfund Amendments and Reauthorization (SARA 313) which requires covered facilities to report on the use, release, and off-site transfer of listed chemicals; the State of California's Proposition 65, a law requiring the State Governor to publish, at least annually, a list of chemicals known to the state to cause cancer or reproductive toxicity; and the European Union Risk Assessments for phthalates commonly used as plasticizers in PVC. The fundamentals of risk-based, sound science are working. In particular, she noted that the recent conclusions by the U.S. Consumer Product Safety Commission (CPSC) found that diisononyl phthalate (DINP) is safe to use in all current applications. With this and the positive status of the European Risk Assessment process to evaluate diisodecyl phthalate (DIDP) and DINP, she stated that plasticizer and flexible PVC products are well positioned for long term sustained use.
Meeting Market Needs: An Innovative Approach to Vinyl Compounding -- Robert S. Brookman, Ph.D., vice president of business development, Teknor Apex Company
Brookman reviewed the evolution of polyvinyl chloride (PVC) from its commercialization in the early 1940s through its position today as a mature commodity material. It has achieved its current market presence despite formidable obstacles, including attempts to displace it in the 1980s and 1990s. While the PVC business is well positioned today, Brookman emphasized the need to support and encourage innovation in vinyl products and applications, especially in the United States, in order to prosper in the future.
PVC Influenced Polyolefins and Elastomers Activities – Balaji Singh, Ph.D., president, Chemical Market Resources, Inc.
Singh focussed on the ongoing question of inter-plastic substitution and the potential for manufacturers to reformulate from flexible PVC to polyolefin technologies. Because of the unique ease of compounding to meet various specifications, PVC covers the performance range of a variety of other polymers. This performance flexibility, together with cost-effectiveness, suggests that PVC will not be replaced by polyolefins to a significant degree over the next decade. However, he cautioned producers and their customers not to become complacent because polyolefins producers would continue their efforts to displace PVC.
About ExxonMobil Chemical
ExxonMobil Chemical is a global leader in technology, product quality and customer service with petrochemical manufacturing and/or marketing operations in more than 150 countries around the world. Its products include olefins, aromatics, fluids, synthetic rubber, polyethylene, polypropylene, oriented polypropylene packaging films, plasticizers, synthetic lubricant basestocks and additives for fuels and lubricants. Its range of products includes JayflexTM plasticizers. To find out more about ExxonMobil Chemical's plasticizer business, visit www.jayflex.com.
Editor's notes:
1) ExxonMobil, the ExxonMobil logo, Jayflex, the "Interlocking X," are trademarks or registered trademarks of Exxon Mobil Corporation.
2) The term "ExxonMobil Chemical" refers collectively to some or all of the companies affiliated with Exxon Mobil Corporation which have chemical manufacturing and/or marketing operations around the world.
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ExxonMobil News Media Desk: (281) 870-6607
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