Cash cost

Simply looking at the feedstock prices or price ratios is iasufficient to accurately identify the most attractive feedstock because the values of all of the co-products and by-products must also be taken iato account. This is usually accompHshed by calculating the cost to produce ethylene with all other coproduct and by-product yields credited against the cost of ethylene. An example of the cost of ethylene is presented ia Table 4. The cash costs of ethylene from various feedstocks are compared for the months of July and November of 1991. Cash costs reflect all plant manufactufing costs except depreciation and are a measure of the out-of-pocket cash costs generated by the operation. 

Table 4. Cash Costs of Ethylene From Various Feeds, f5/kg...

Cash cost excludes 10% depreciation allowance and 20% pretax ROI. 

The point to remember from this analyis is that the actual cash cost of a LIMS system is usually between one-half and three-quarters of its price tag. 

The concept of the producer cash cost curve, that aligns and ranks producers in ascending order based on their cash costs of production and the intersection of which with market demand identifies the marginal - and therefore price-setting -producer, is universally known in commodity industries and requires no further explanation here. 

We noted earlier that commodity chemicals have earned superior returns to other commodity industries. Closer analysis that we have undertaken of the key differentiating factor behind chemicals higher profitability compared to other commodities shows it to be the recurrence of fly-ups, resulting from robust demand growth, limits on low-cost new capacity, and relatively flat cash cost curves. 

Determine the relative economics (cash cost and full cost) and available future supply of product from various regions and technologies. Consider potential technology developments and potential changes in relative prices of feedstocks. 

Cash cost of production plus margin required to meet investor s cost of capital Source McKinsey... 

Taxes insurance Total cash costs Depreciation Transportation Profit... 

Cost of LLDPE production and delivery to China, USD/ton Cash cost... 

The impact of natural gas prices on ammonia prices on the US Gulf Coast is shown in Figure 3.17. This figure also illustrates the high percentage of ammonia cash costs that are due to the natural gas feedstock price. 

At a plant size of 4,000 tonnes per day, the MEGAMMONIA process offers a reduction in specific investment that is between 15% and 20% less than a scaled-up version of conventional technology. It also offers the potential for a reduction in cash costs that are 10% to 15% below the most advanced conventional ammonia technology291. 

M Gas Cost Othef Cash Cost Freight to Port S Freight to US Gulf... 

Income-tax laws permit recovery of funds by two accelerated depreciation schedules as well as by straight-line methods. Since cash-flow timing is affected, choice of depreciation method affects profitability significantly. Depending on the ratio of depreciable to nondepreciable assets involved, two projects which look equivalent before taxes, or rank in one order, may rank entirely differently when considered after taxes. Though cash costs and sales values may be equal on two projects, their reported net incomes for tax purposes may be different, and one will show a greater net profit than the other. 

Operating cash flows are revenues (Rev) minus direct costs that include variable costs (VC) and fixed cash costs (FCC) ... 

Participating in the development of a condo cracker . Building a world-scale cracker can cost about USD 1 biUion. No more than two new world-scale crackers wiU probably be needed to satisfy the increase in European demand for raw materials over the next eight to ten years. European petrochemical players could therefore join forces to build condo crackers owned by a number of them, each with the right to use or sell a fixed amount of a product at a predetermined cash cost. 

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