Chemicals, commodity

Fuels. Two-thirds of the fuel used by the United States chemical industry in 1988 was natural gas [8006-14-2] which is clean and easy to combust (see Gas, natural). Although relatively inexpensive at the wellhead, natural gas is cosdy to transport. Hence the chemical industry is concentrated in regions where natural gas is produced, keeping the average price paid by the U.S. chemical industry for natural gas in 1988 to only 80% of the average U.S. industrial price (1). Similarly the movement of chemical commodity production to the Middle East is driven by the desire to obtain low cost natural gas. 

The former may be considered the true fine chemical while the latter may conveniently be termed intermediate-scale chemicals commodity chemicals produced at a relatively small scale. This crude division starts to indicate the complexity of the economic drivers for B2C that is discussed later. First, however, progress in making the switch is reviewed and the essential elements of plant design structures and costs are briefly introduced. 

The bulk chemical commodity producing companies (e.g., refineries, petrochemicals) have been practicing this philosophy for some time, using dynamic models to contain operational variability through feedback controllers, and employing static models to determine the optimal levels of operating conditions (Lasdon and Baker, 1986 Garcia and Prett, 1986). 

Chemical products can be divided into three broad classes commodity, fine and specialty chemicals. Commodity chemicals are manufactured in large volumes with low added value. Fine and specialty chemicals tend to be manufactured in low volumes with high added value. The priorities in the design of processes for the manufacture of the three classes of chemical products will differ. 

Notes Upper curve depicts en aver eye rate applying to many chemicals shipped in 40.000 lb. lots. The "low-bulk" curve represents approximately the cheapest rates available for chemical commodities shipped in bulk, except for the few cases where unit train rates have been established. Actual freight rates are not predicted by the curves because rates for specific chemicals and movements are normally negotiated between the carrier and the shipper. 

The manufacture of fertilizers was discussed in Chapter 14. Phosphate rock is digested with sulfuric acid to convert CaC03 into a more soluble form that contains a higher percentage of phosphorus. Sulfuric acid is used as a catalyst in alkylation reactions, petroleum refining, manufacture of detergents, paints, dyes, and fibers, and other processes. It is also used as the electrolyte in the lead-acid battery that is used in automobiles. Sulfuric acid is an enormously important chemical commodity that it would be hard to do without. 

Additional challenges exist specifically for chemical commodities. Commodities are standard products with a defined quality, where price is the key buying criterion. Commodities are often volatile in sales and purchasing prices as well as volumes increasing crude oil prices lead to higher raw material prices in procurement while dynamic customer markets specifically in Asia lead to a sales price and volume volatility. These dynamics in volumes and values through the value chain directly impact company s profitability as shown in fig. 1. 

The research field related to the problem to plan values and volumes of a global chemical commodity value chain network is structured into ... 

Developed frameworks are applied to the specific industry problem to monthly plan a global chemical commodity value chain by volumes and values. Sub-objectives are to elaborate characteristics and planning requirements for a global commodity value chain in the chemical industry and to develop, implement and evaluate the respective model. Research question 2 is directed to a real industry case study demonstrating the real existence of formulated requirements, showing the applicability of the developed model in reality and evaluating the model using industry data. 

Deterministic vs. stochastic an optimization problem can be based on deterministic parameters assuming certain input data or reflect uncertainty including random variables in the model in value chain management deterministic parameters are the basic assumptions extended models also model specifically uncertain market parameters such as demand and prices as stochastic parameters based on historic distributions in chemical commodities, this approach has some limitations since prices and demand are not normally distributed but depend on many factors such as crude oil prices (also later fig. 37). 

By combining simulation and optimization, benefits of both methods can be combined e.g. to simulated different input data scenarios - such as price scenarios - and analyze the resulting optimal plans in comparison. This approach is specifically relevant for planning volatile and uncertain prices of chemical commodities. 

The chemical industry is the application field for the study and the development of a global value chain planning model. General characteristics of the chemical industry as application field are described in this chapter. Particularities of chemical commodities are described in more detail being relevant for the considered case. 

Hence, value chain management and specifically global value chain planning of commodities plays an important role for chemical companies due to the direct relation to globalization, consolidation as well as commoditization. Specifics of chemical commodities are presented in the following. 

Production processes for chemical commodities exist often already for decades and are continuously enhanced as shown in the following example from the 1970s. Commodity production processes this time already have been rather complex composed by multiple reactions and interim steps as shown in the following example of Caprolactam production, an intermediate product for Polyamide (Sittig 1972, p. 139) in fig. 35. 

Prices for chemical commodities are volatile and can change regularly as shown in a further example for two polymers in fig. 36. 

Main price driver for chemical commodities is the development of oil prices influenced by many parameters as shown in the fig. 37 (s. Al-Sharrah et al. 2003, p. 4680). Not only direct demand and supply for crude-oil but also the development of substitutes such as natural gas or other energy forms such as nuclear power can have an influence on oil prices according to Al-Sharrah et al. as shown in fig. 37. 

Chemical Commodity Characteristics Relevant for Value Chain Management... 

Initial characteristics relevant for chemical commodity value chain management are ... 

A production location comprises one or multiple production plants where production resources are located. Production resources are single units or groups of production units aggregated to production lines or assets. Having the structure of chemical commodity value chain network as a network of chemical production processes in mind presented in fig. 34 (Al-Sharrah et al. 2001), production locations include respective resources and transportation lanes between production locations to model relations in chemical Verbund structures. 

The product type can be commodity or specialty. Commodity products are considered with a defined standard quality, where price is the key buying criterion. The product life cycle for chemical commodities can be relatively long meaning that the products are in the market partly for decades. Examples for short life cycle commodities on the other hand are semiconductors that are also mainly sold over price, but are shortly out-dated due to technology advances. The number of products is medium and does not reach the complexity of specialty product portfolios, where often more than 1,000 products need to be handled by a company. The product customization is standardized with some variants with respect to product properties but not related to a specific customer. Product perishability is... 

Production Planning detailing the planning requirements for a chemical commodity production with continuous and multi-purpose resources... 

Now, future inventory value planning as a specific chemical commodity value planning requirement reflecting the volatility of working capital and capital costs influenced by volatile raw material prices is described. 

In the following an integrated global value chain planning model for chemical commodities supporting end-to-end value planning of volumes and values is developed to close the research gap. 

When classifying chemical products, Seider et al. [3] identify three categories (1) basic chemicals (commodity and specialty chemicals, bio-materials, and polymeric materials) (2) industrial chemicals (films, fibers, paper,. ..) and (3) configured consumer products (dialysis devices, post-it notes, transparencies, drug delivery patches,. ..). In the manufacture of epitaxial silicon wafers, a thin film of crystalline silicon is often deposited on a polished crystalline silicon... 

Ethanol in the past has been used commercially to synthesize dozens of other high-volume chemical commodities. However, at present, it has been substituted in many applications by less costly petrochemical feedstocks, e.g., ethylene. The availability of low-cost ethanol and the rising cost of ethylene, however, may change this scenario. For example, there is interest in producing ethylene from ethanol [71-73], while the opposite reaction is commercially current. Already, in markets with abundant agricultural products, but a less developed petrochemical infrastructure, such as the People s Republic of China, Pakistan, India, and Brazil, ethanol can be used to produce chemicals, including ethylene and butadiene, that would be produced from petroleum in the West. For example, ethanol may substitute alkenes for the alkylation of aromatics [82]. 

In view of the use of glycerol as a chemical commodity for the production of chemical intermediates, an overview will be made of existing catalytic knowledge. More specifically, glycerol oxidation, dehydration, hydrogenolysis, oligomerization/polymerization, polyol formation, and formation of a few miscellaneous products will be dealt with. 

To summarize, an increasingly constricted industry is an engine for the expansion of chemical commodity markets and the invention of new arenas for the consumption of chemicals. It is in part the supply of pesticides, herbicides, and fertilizers that sets the conditions for chemical demand. Internalizing the costs associated with chemical risks, especially under these constrictive economic conditions, is essentially unthinkable. As such, the risks and hazards associated with the industry are largely shunted downwards along the commodity chain to other players, including applicator service providers. 

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