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The Economic Benefits of Formaldehyde

to the United States and Canadian Economies

PREPARED FOR:

Formaldehyde Council Inc.

PREPARED BY:

24 Hartwell Avenue
Lexington, MA 02421-3158

August 2005

Copyright 2005 by Global Insight (USA), Inc. ALL RIGHTS RESERVED.


Reproduction or distribution of this report in whole or in part prohibited, except by permission of
Global Insight, Inc. or the Formaldehyde Council Inc.

ii

1.

EXECUTIVE SUMMARY................................................................................................................. 6
CONSUMER BENEFITS ................................................................................................................................. 7
ECONOMIC CONTRIBUTIONS OF FORMALDEHYDE PRODUCERS .................................................................. 9

2.

THE NATURE OF THE RESEARCH ........................................................................................... 15


ECONOMIC CONTRIBUTIONS METHODOLOGY........................................................................................... 15
CONSUMER BENEFITS METHODOLOGY..................................................................................................... 15
ORGANIZATION OF THIS REPORT .............................................................................................................. 18

3.

UREA FORMALDEHYDE RESINS .............................................................................................. 19


INTRODUCTION ......................................................................................................................................... 19
ECONOMIC CONTRIBUTIONS OF UREA FORMALDEHYDE RESIN PRODUCERS ............................................ 19
PROPERTIES AND ADVANTAGES OF UREA FORMALDEHYDE RESINS......................................................... 20
UREA FORMALDEHYDE CONSUMPTION .................................................................................................... 20
SUBSTITUTES FOR UREA FORMALDEHYDE ............................................................................................... 22
Particleboard and medium density fiberboard (MDF) ....................................................................... 22
Asphalt roofing shingles ..................................................................................................................... 25
Hardwood plywood............................................................................................................................. 26
Molding Compounds........................................................................................................................... 26
Other ................................................................................................................................................... 26
ECONOMIC BENEFITS OF UREA FORMALDEHYDE ..................................................................................... 27

4.

PHENOL FORMALDEHYDE RESINS......................................................................................... 30


INTRODUCTION ......................................................................................................................................... 30
ECONOMIC CONTRIBUTIONS OF PHENOL FORMALDEHYDE RESIN PRODUCERS ........................................ 31
PROPERTIES AND ADVANTAGES OF PHENOL FORMALDEHYDE RESINS ..................................................... 31
PHENOL FORMALDEHYDE CONSUMPTION ................................................................................................ 32
SUBSTITUTES FOR PHENOL FORMALDEHYDE............................................................................................ 34
Plywood and oriented strand board.................................................................................................... 34
Insulation binder................................................................................................................................. 37
Paper Lamination ............................................................................................................................... 37
Molding Compounds........................................................................................................................... 38
Abrasives binders................................................................................................................................ 38
Other ................................................................................................................................................... 39
ECONOMIC BENEFITS OF PHENOL FORMALDEHYDE ................................................................................. 40

5.

MELAMINE FORMALDEHYDE RESINS................................................................................... 43


INTRODUCTION ......................................................................................................................................... 43
ECONOMIC CONTRIBUTIONS OF MELAMINE FORMALDEHYDE RESIN PRODUCERS ................................... 43
PROPERTIES AND ADVANTAGES OF MELAMINE FORMALDEHYDE RESINS ................................................ 44
MELAMINE FORMALDEHYDE CONSUMPTION ........................................................................................... 44
SUBSTITUTES FOR MELAMINE FORMALDEHYDE ....................................................................................... 46
Laminates............................................................................................................................................ 46
Surface Coatings................................................................................................................................. 47
Molding compounds............................................................................................................................ 47
Paper treatment .................................................................................................................................. 47
Specialty wood applications................................................................................................................ 48
ECONOMIC BENEFITS OF MELAMINE FORMALDEHYDE............................................................................. 48

6.

POLYACETAL RESINS ................................................................................................................. 50


INTRODUCTION ......................................................................................................................................... 50
ECONOMIC CONTRIBUTIONS OF POLYACETAL RESINS.............................................................................. 50
PROPERTIES AND ADVANTAGES OF POLYACETAL RESINS ........................................................................ 51
POLYACETAL RESIN CONSUMPTION ......................................................................................................... 52
SUBSTITUTES FOR POLYACETAL RESINS................................................................................................... 54

ECONOMIC BENEFITS OF POLYACETAL RESINS ........................................................................................ 56


7.

1,4-BUTANEDIOL ........................................................................................................................... 57
INTRODUCTION ......................................................................................................................................... 57
ECONOMIC CONTRIBUTIONS OF 1,4-BUTANEDIOL .................................................................................... 57
PROPERTIES AND ADVANTAGES OF 1,4-BUTANEDIOL .............................................................................. 58
1,4-BUTANEDIOL CONSUMPTION.............................................................................................................. 58
SUBSTITUTES FOR 1,4-BUTANEDIOL ......................................................................................................... 60
ECONOMIC BENEFITS OF 1,4-BUTANEDIOL............................................................................................... 61

8.

METHYLENEBIS(4-PHENYL ISOCYANATE) .......................................................................... 62


INTRODUCTION ......................................................................................................................................... 62
ECONOMIC CONTRIBUTIONS OF MDI ....................................................................................................... 62
PROPERTIES AND ADVANTAGES OF MDI.................................................................................................. 63
MDI CONSUMPTION ................................................................................................................................. 63
SUBSTITUTES FOR MDI ............................................................................................................................ 66
FORMALDEHYDE FREE ROUTE TO MDI.................................................................................................... 68
ECONOMIC BENEFITS OF MDI .................................................................................................................. 69

9.

PENTAERYTHRITOL.................................................................................................................... 71
INTRODUCTION ......................................................................................................................................... 71
ECONOMIC CONTRIBUTIONS OF PENTAERYTHRITOL................................................................................. 71
PROPERTIES AND ADVANTAGES OF PENTAERYTHRITOL ........................................................................... 72
PENTAERYTHRITOL CONSUMPTION .......................................................................................................... 72
SUBSTITUTES FOR PENTAERYTHRITOL ..................................................................................................... 74
ECONOMIC BENEFITS OF PENTAERYTHRITOL ........................................................................................... 76

10.

CONTROLLED RELEASE FERTILIZER .............................................................................. 78

INTRODUCTION ......................................................................................................................................... 78
ECONOMIC CONTRIBUTIONS OF CONTROLLED RELEASE FERTILIZERS ..................................................... 78
PROPERTIES AND ADVANTAGES OF CONTROLLED RELEASE FERTILIZERS ................................................ 79
CONTROLLED RELEASE FERTILIZER CONSUMPTION ................................................................................. 80
SUBSTITUTES FOR UREA-FORMALDEHYDE CRF ...................................................................................... 82
ECONOMIC BENEFITS OF UREA-FORMALDEHYDE CRF PRODUCTS .......................................................... 84
11.

ALL OTHER USES OF FORMALDEHYDE AND DERIVATIVE BENEFITS .................. 85

HEXAMETHYLENETETRAMINE (HMTA)................................................................................................... 85
Introduction ........................................................................................................................................ 85
Properties and Advantages of Hexamethylenetetramine .................................................................... 85
Hexamethylenetetramine Consumption .............................................................................................. 85
Substitutes for Hexamethylenetetramine............................................................................................. 87
CHELATING AGENTS ................................................................................................................................. 88
Introduction ........................................................................................................................................ 88
Properties and Advantages of Chelating Agents................................................................................. 88
Chelating Agents Consumption........................................................................................................... 88
Substitutes for Chelating Agents ......................................................................................................... 90
TRIMETHYLOLPROPANE (TMP)................................................................................................................. 91
Introduction ........................................................................................................................................ 91
Properties and Advantages of Trimethylolpropane ............................................................................ 91
Trimethylolpropane Consumption ...................................................................................................... 91
Substitutes for Trimethylolpropane..................................................................................................... 93
PYRIDINES ................................................................................................................................................ 93
Introduction ........................................................................................................................................ 93
Properties and Advantages of Pyridines............................................................................................. 93
Consumption of Pyridines................................................................................................................... 94
Substitutes for Pyridines ..................................................................................................................... 95

ECONOMIC CONTRIBUTION AND BENEFITS OF OTHER END USES ............................................................... 96


HEALTH CARE APPLICATIONS ................................................................................................................... 97
Manufacture of Vaccines .................................................................................................................... 97
Manufacture of Gelatin Capsules ....................................................................................................... 99
Laboratory Usage ............................................................................................................................... 99
OTHER USES ........................................................................................................................................... 100
Embalming ........................................................................................................................................ 100
DERIVATIVE BENEFITS ........................................................................................................................... 100
12.

MACROECONOMIC AND STATE/PROVINCIAL LEVEL IMPACTS ........................... 101

13.

ECONOMIC CONTRIBUTIONS AND BENEFITS METHODOLOGIES......................... 107

ECONOMIC CONTRIBUTIONS ................................................................................................................... 107


Establish an Operational Definition of the Formaldehyde Industry................................................. 107
Estimate Direct Impacts.................................................................................................................... 108
Estimate Indirect Impacts ................................................................................................................. 109
Estimate Expenditure-Induced Impacts ............................................................................................ 111
CONSUMER BENEFITS ............................................................................................................................. 111
ASSUMPTIONS USED FOR THIS ANALYSIS ............................................................................................... 114
APPENDIX I............................................................................................................................................. 115
AUTHORS OF THE REPORT .............................................................................................................. 115
APPENDIX II ........................................................................................................................................... 117
PRODUCT TREE FOR THE FORMALDEHYDE INDUSTRY .......................................................... 117

1.

EXECUTIVE SUMMARY

People use products that contain formaldehyde every day. For example, this chemical is
a key building block in four major sectors of the economy:

In the residential construction industry, it is used for making plywood, asphalt


shingles, insulation materials, cabinets and cabinet doors, and laminated
countertops (see Figure 3);
In the automobile industry, it can be found in molded under-the-hood
components, exterior primer and clear coat paints, tire cord adhesive, brake pads,
and critical fuel system components (see Figure 4);
In the aircraft industry, its applications include essential landing gear
components, lubricants, brake pads, and door and window insulation (see Figure
5), and
In health care applications, it is used for vaccine manufacturing, as a denaturant
for RNA analysis, as an active ingredient in anti-infective drugs, for hard gel
capsule manufacturing, and in pharmaceutical research, especially proteomics and
genomics research.

We make formaldehyde in our bodies and it occurs naturally in the air we breathe. Use
of formaldehyde for embalming purposes, one of the earliest and most widely known
applications for formaldehyde, represents less than 1% of consumption.
Products that contain formaldehyde or materials made from formaldehyde have a broad
role in the U.S. economy, but their dependence on formaldehyde is largely invisible to
the public. In addition, government statistics are not well designed to identify or quantify
the value of formaldehyde to consumers or the contribution of the formaldehyde industry
to the economy in terms of jobs, wages, and investment.
The Formaldehyde Council, Inc., acting on behalf of the entire formaldehyde industry,
commissioned Global Insight, Inc. to conduct the necessary independent research to
quantify the value of formaldehyde to consumers and the contribution of the industry to
the United States and Canadian economies. This report is the result of this
groundbreaking research.
Global Insight approached this task from two different points of view in order to obtain a
comprehensive view of formaldehyde and its economic role, looking at both the
consumer benefits and the economic contributions of formaldehyde. First, for its
benefits research, Global Insight identified the unique and specific physical and chemical
properties of formaldehyde and the qualities that it imparts to major categories of
products that contain it. While there are some applications where other materials can
replace formaldehyde with only a small incremental cost or performance penalty, in most
instances the use of substitutes entails significant cost increases or performance losses.
This portion of Global Insights research was focused on quantifying the benefits of
formaldehyde by asking, "What would be the costs to the consumers if they were forced
to switch to substitute products that do not contain formaldehyde?"

Executive Summary

Secondly, Global Insight researched the contributions of the formaldehyde industry to


the U.S. and Canadian economies in terms of direct and indirect effects on employment,
wages, and investment. This research employed more familiar economic data and
modeling tools using a very conservative and narrow definition of the formaldehyde
industry in order to avoid over-estimating its economic contribution. While the benefit
values and the contribution values for the formaldehyde industry are not directly additive,
this quantification of both is necessary in order obtain a comprehensive understanding of
the importance of the formaldehyde industry to the United States and Canadian
economies and its citizens.
Figure 1
Economic Contributions and Consumer Benefits

Focus on producers

Focus on consumers

Production economics:
jobs, sales, business
fixed investment, trade

Substitution economics

Q: what are the costs to


the consumer if forced
to switch to substitute
products?

Nationwide consumer
impacts

Q: how does this


industry contribute to
economic welfare?

Local geographic
impacts

Consumer Benefits
Here are highlights of the major findings for benefits for consumers:

Consumers would have to spend an additional $17 billion per year (the equivalent
of nearly $3,500 per metric ton of formaldehyde currently consumed) if
formaldehyde-based products were replaced by substitute materials. Nearly 60%
of the estimated benefits are attributed to three major applications: urea
formaldehyde resins, phenol formaldehyde resins, and methylenebis(4-phenyl
isocyanate) or MDI. In most cases, substitution in these end uses is very
imperfect; consumers would suffer large losses in utility using alternative
materials, and large new capital investments would be required to produce or
utilize the substitutes.

Urea formaldehyde (UF) resin is one of the mainstays in the building and
construction industry. Nearly 95% of UF resins are used as a binder or adhesive

Executive Summary

in particleboard and medium density fiberboard for composite panels, roofing


tiles, hardwood plywood, and coatings. In its main applications, it has a
predominant market share. There are substitutes for each application but no
substitute material has the broad range of properties of UF resins including low
cost, dimensional stability, hardness, clear glue line, and fast curing time.
Without UF resins, consumers would be forced to use more expensive, less
versatile, and less durable materials or else switch to entirely different
construction methods. In most cases, switching to different construction methods
is a significantly more costly alternative.

Phenol formaldehyde (PF) resin is another mainstay in the building and


construction industry. Nearly 75% of PF resins are used in this end use for
applications like structural panels, insulation binder, and laminates. Other
significant end uses include automobile applications (e.g. friction materials) and
foundry binders. Like UF resins, it has a predominant market share in its major
applications. There are substitutes for each application but no substitute material
has the broad range of properties of PF resins where high strength, dimensional
stability, the ability to resist water, and thermal stability are required. In addition,
current production methods in manufacturing plywood or in laminating wood
products are designed around the continued use of PF resins, and possible
substitutes may have quite different processing properties. Without PF resins,
consumers would be forced to use more expensive, less desirable, and less
versatile materials, or switch to alternate construction methods.

The majority of MDI is used in the manufacture of rigid polyurethane foams.


These products are commonly used in construction applications for their superior
insulating and mechanical properties. In addition, MDI rigid foam applications
include appliances (e.g., refrigerators, freezers, and air conditioners), packaging
for high end electronics, and transportation. In the absence of MDI, consumers
would be forced to use less effective materials and would experience significant
losses of utility (e.g. inferior insulation properties, increased breakage or
spoilage).

Other materials, mostly alternate resins, can usually be substituted for


formaldehyde-based materials in most other uses, but they are often more costly
to use and may result in reduced consumer benefits because the products made
from them are inferior to formaldehyde-based products in one or more ways.

Access to formaldehyde-based products provides consumers not only with the


types of direct benefits detailed here, but with secondary benefits as well. These
benefits arise because the economy is able to utilize formaldehyde-based
materials more efficiently than their substitutes thereby avoiding the requirement
to make over $10.5 billion in additional investments.

Executive Summary

Table 1
Economic Benefits of Formaldehyde
(Consumer Perspective)
Economic Value
in 2003
($ billion per year)
Formaldehyde End Use
Urea formaldehyde resin (UF)
Phenol formaldehyde resin (PF)
Polyacetal resin
1,4-Butanediol (BDO)
MDI
Pentaerythritol
Controlled Release Fertilizers
Melamine formaldehyde resin (MF)
All other products & derivative benefits
Total benefits to consumers

$3.41
$4.64
$0.22
$0.14
$2.33
$0.14
$0.11
$0.37
$5.85
$17.22

Source: Global Insight, Inc.


Note: These economic values are additive. Totals may not add due to rounding.

Economic Contributions of Formaldehyde Producers


Formaldehyde and derivative manufacturing facilities located throughout the U.S. and
Canada generate economic contributions at the local, state, and national levels in terms
of employment, wages, and investment. Here are highlights of the major findings for
economic contributions of the formaldehyde industry to the U.S. and Canadian
economies in 2003, using a narrow definition of the industry:

Sales:
o Over $145 billion worth of sales resulted from this industrys
activities.
Employment:
o Nearly 700,000 workers are employed directly in monomer,
polymer and downstream fabrication facilities in the U.S. and
Canada (primarily in the wood products industry). These workers
operate and maintain the formaldehyde and derivative facilities,
and have responsibility for management, research and
development, and sales and marketing. Of these, over 600,000
jobs are in the United States and over 90,000 are in Canada.
o An additional 1.8 million workers are employed indirectly in the
U.S. and Canada. These individuals are employed in the wide
network of supplier industries that provide goods and services (e.g.
raw materials, utilities, capital goods, services) to the
formaldehyde industry.
o An additional 1.5 million individuals in the U.S. and Canada are
supported because of the personal expenditures of all the direct and

Executive Summary

indirect workers. We define this category as expenditure-induced


employment. People who fall into this "expenditure-induced"
category include those who work in stores where people from the
formaldehyde industry shop or those who perform services to
people who work in the formaldehyde industry.
o Thus, the total number of workers in the U.S. and Canada who
depend on the formaldehyde industry is 4.0 million workers.
Wages:
o Using the same definitions as for employment, wages of direct
employees amounted to nearly $20 billion for the year (an average
of $28,300 per worker).
o An additional $58 billion of wages was earned by workers in the
companies that supply the formaldehyde industry (indirect
workers).
o Lastly, over $50 billion of wages was earned by workers in the
general economy (expenditure-induced employees).
o Total wages for all of these workers amounted to nearly $130
billion.
Value of Business Fixed Investment:
o Formaldehyde and derivatives production was carried out in
facilities with an aggregate investment value of nearly $90 billion
in the U.S. and Canada.
Number of Plants:
o There are approximately 11,900 formaldehyde and derivative
plants operating in the U.S. and Canada, with nearly all states and
provinces represented.

In summary, the products of the formaldehyde industry are pervasive in the United States
and Canadian economies. They generate a substantial volume of sales, provide a sizable
number of jobs, and contribute to the local economies in countless visible and not-sovisible ways. The direct economic contributions of the formaldehyde industry are
summarized below.

Executive Summary

10

Figure 2
Employment Contributions of the Formaldehyde Industry
Total and by Segment

Expenditure-Induced
Employment
40.5%

Fabrication
16.2%

Direct Employment
16.69%
Formaldehyde
0.1%
Formaldehyde
Derivative
0.4%
Indirect Employment
42.9%

Source: Global Insight, Inc.

Executive Summary

11

Table 2
Highlights of the Economic Contributions of Formaldehyde, 2003
(Producer Perspective)
Units
Value of Sales

$Billion/Year

Total Plants

United States

Canada

Total

127.3

19.3

146.5

Plants

10,045

1,942

11,987

Processing plants

Plants

229

51

280

Fabrication plants

Plants

9,816

1,891

11,707

Total Employment

Workers

3,634,750

596,332

4,231,082

Direct

Workers

607,270

90,890

698,160

Indirect

Workers

1,557,480

274,060

1,831,540

Induced

Workers

1,470,000

231,382

1,701,382

$Billion/Year

112.1

16.8

128.9

Direct

$Billion/Year

17.1

2.5

19.5

Indirect

$Billion/Year

50.7

7.6

58.3

Induced

$Billion/Year

44.4

6.6

51.0

Fixed Investment

$Billion

77.4

11.0

88.4

Purchases

$Billion/Year

56.0

8.5

64.5

Raw materials

$Billion/Year

33.6

5.1

38.7

Utilities

$Billion/Year

22.4

3.4

25.8

Total Wages

Source: Global Insight, Inc.


Note: These economic values are not additive.

Executive Summary

12

Figure 3
Formaldehyde in the House
House Construction
Asphalt shingles
Sheathing & cladding
Walls & wall panels
Floors
Roof
Insulation

House Interior
Electrical boxes & outlets
Furniture
Countertops
Cabinets & cabinet doors
Bedding
Seating
Carpet underlay
Appliances: washers, dryers,
dishwasher
Plumbing: faucets, showerheads,
valve mechanisms,
Paints & varnishes

Figure 4
Formaldehyde in Automobiles

Fuel System Components


Pump housings
Filters
Impellers
Reservoirs
Senders
Gas caps

Under the Hood


Molded components
Engine & metallic parts
Automatic transmission parts
Carburetor floats

Exterior
Exterior primer, clear coat, & trim
Tire cord adhesive
Bumper

Executive Summary

Interior
Seats
Steering wheel
Interior trim
Brake pads
Dashboard & fascias
Instrument knobs
Hooks, fasteners, clips
Locks
Speaker grilles
Trunk release levers
Door handles
Door panels
Window cranks
Seatbelt buckles
Windshield wiper parts
Cup holders
Head rests

13

Figure 5
Formaldehyde in Airplanes

Airplane
Brake pads
Landing gear
Lubricants
Seats
Seatbelt buckles
Insulation of doors and
windows
Interior walls and floors
Tire cord adhesive

Executive Summary

14

2.

THE NATURE OF THE RESEARCH

This chapter describes the methodology undertaken on behalf of the Formaldehyde Council
Inc. by Global Insight, Inc. to quantify the contributions of the formaldehyde industry to
the U.S. and Canadian economies and the economic benefits to consumers.
Economic Contributions Methodology
The methods used to estimate the economic contributions of the formaldehyde industry as
measured by employment, wages, and investment are those used frequently by economists
to assess the impact of a specific industry. Global Insight assembled a database from
various sources on the sales and production of formaldehyde-based products in the U.S.
and Canada in 2003, the number of employees by sector, plant capacities and locations, and
purchases of raw materials. From these data, Global Insight estimated the direct
contributions of the formaldehyde industry. Global Insight then employed its Industrial
Analysis Service economic model, which uses a modified input/output analysis of demand,
to estimate indirect impacts of the formaldehyde industry on the economy through the
industrys suppliers; it then used its Macroeconomic Model to capture the expenditureinduced impacts that flow from the personal expenditures for goods and services of the
workers employed in all these companies. A detailed description of these methods can be
found in Chapter 13.
Consumer Benefits Methodology
The methodology used to estimate the consumer benefits of the formaldehyde industry is
more novel and merits a fuller description for the reader here:
Consumers who have access to formaldehyde-based products choose them in place of
products that use alternative materials. Numerous alternatives are available, ranging from
other synthetic resins and organic chemicals to solid wood products and metals; however,
consumers value the attributes of formaldehyde-based products and select them. The
properties of formaldehyde that consumers find valuable are the ones that permit the
product to be fabricated easily into components that are stronger, lighter, easier to install or
use, longer-lived, or more resistant to high temperatures and environmental stresses than
those made of substitute materials that have lower costs per pound. In other cases, the
formaldehyde-based products have properties such as resistance to moisture, chemical
resistance, strength and dimensional stability that result in better performance and longer
service life. These features reduce the life-cycle cost of the items into which they are
incorporated. In yet other cases, the mechanical properties, stiffness, and self-lubricating
properties of formaldehyde-based products provide benefits for the products that are
otherwise unattainable in a cost effective way.
The decision to choose formaldehyde-based materials over an alternative is rarely made
based on an evaluation of only one physical property or the relative cost of materials.
Usually a number of physical, manufacturing, or compatibility issues are raised, such as the
requirements and constraints of other components in a system, the required service life and
conditions, product formability, material cost, and aesthetics. All of these factors would

The Nature of the Research

15

have to be considered in reverse if a formaldehyde-based product were to be deselected


in favor of a substitute, resulting in the loss of the benefits brought to consumers. The
methodology used to estimate the benefits of formaldehyde across the U.S. and Canadian
economies is described in the following sections of this chapter, and the results of applying
this methodology to the range of formaldehyde-based products to which consumers have
access is presented in the succeeding chapters.
To summarize: the economic benefits provided by formaldehyde-based products in the
economy are simply the total net dollar value of the savings that consumers enjoy by using
them instead of substitutes. Viewed from another perspective, consumer savings are the
increased costs that consumers would have to bear if they lost access to the formaldehydebased products they now enjoy. The benefits arise from the properties of formaldehyde
that allow products to be manufactured at lower costs than possible with alternative
materials and provide greater utility to consumers in the form of extended use, improved
performance, and more desirable aesthetics.
For purposes of estimating these economic benefits, the domestic consumption of
formaldehyde in 2003 was separated into nine major derivatives shown in Table 3. These
derivatives account for approximately 84% of current consumption.
Table 3
U.S./Canada Formaldehyde Consumption, 2003
United States
Canada
Total
('000 of
('000 of
('000 of
Formaldehyde Derivative
Metric Tons)
Metric Tons)
Metric Tons)
Urea Formaldehyde Resins
Phenol Formaldehyde Resins
Polyacetal Resins
Melamine Formaldehyde
Resins
Pentaerythritol
MDI
1,4-Butanediol
Controlled Release Fertilizers
All Other Consumption
TOTAL CONSUMPTION

990
725
540

375
275
-

1,365
1,000
540

136
213
395
430
140
743
4,312

36
10
696

172
213
395
430
140
753
5,008

Source: SRI International, Chemical Economics Handbook, 2004.

Next, the kinds of products made from each type of material were identified, and the
amounts of material used in each of its major end-uses or applications were estimated. The
types of substitute materials that are also currently usedor might be usedin each enduse or application were also identified, together with the salient reason that formaldehyde
or the alternative materials are normally selected or rejected. The amount of each type of
formaldehyde-based product and the potential alternative or substitute materials for each
major end-use or application are presented in the following chapters.

The Nature of the Research

16

When the types of formaldehyde materials have been classified and the amounts consumed
and possible substitutes have been identified, the benefits of access to the formaldehydebased materials can be determined if the likely consumer responses can be identified and
all of the costs of the consumers responses can be estimated. The general range of
consumers' responses is shown schematically in Figure 6.
Figure 6
Range of Potential Consumer Responses

Consumer Benefits Methodology


Identify Product
Specify Consumer
Response
Switch to Approximate
Substitute

Switch to Drop-In
Substitute
Calculate Price Difference
Between Products

Calculate Price Difference


Between Products
Calculate Other Costs of
Approximate Substitute

Forego Consumption
Altogether
Calculate Tangible Costs
of Losing Product

Multiply Per Unit Costs Times Aggregate


Sales Volume

Source: Global Insight, Inc.

Estimating the costs of perfect substitution of an alternative drop-in material for a


formaldehyde-based product is simple, conceptually, as shown at the left in Figure 6: we
calculate the price difference between products and multiply by the aggregate sales volume.
In perfect substitution, the formaldehyde-based and substitute products have identical
attributes, including ease of manufacturing and performance-in-service, so that the
consumer notices only the difference in the initial cost of the product.
In many cases, it is not possible to identify a perfect, drop-in substitute for a formaldehydebased product in a particular application. In these cases, we perform the analysis following
the course depicted in the center of Figure 6. In these applications, substitution for the
formaldehyde-based product would entail a loss of utility to the consumer, for example
decreased quality of particleboard or shorter useful life of the gears of a small appliance. In
other instances, the substitute product may have attributes that are similar to the
formaldehyde-based product it would displace, but would be more difficult and costly to
manufacture, install, or use, or would have a reduced service life.
The Nature of the Research

17

In some industries, the loss of a key raw material would require consumers to forego
consumption altogether because there would be no appropriate substitute. No explicit
instances of this situation were identified in this analysis for the formaldehyde industry. A
more detailed discussion of the methodology and assumptions used in this analysis for
making quantified estimates of the benefits of formaldehyde-based products is contained in
Chapter 13.
Organization of this Report
The following nine chapters of this report present the results of both the economic
contribution and consumer benefits analyses for each segment of the formaldehyde
industry. Each chapter provides background information on the type of formaldehydebased product being evaluated, its properties and the features that consumers find desirable,
the ranges of potential substitutes in each end-use application and their limitations, and
estimates of the net benefits to consumers for each formaldehyde derivative. The report
concludes with a chapter on macroeconomic and state level impacts, a chapter on
methodology, and a list of major assumptions used in the analysis.

The Nature of the Research

18

3.

UREA FORMALDEHYDE RESINS

The U.S. and Canada consumed about 1.2 million metric tons of urea formaldehyde resins
in 2003, with 80% being used as an adhesive in particleboard and medium-density
fiberboard production. Owing to its simple molecular structure, relatively low feedstock
costs, and inexpensive conversion costs, urea formaldehyde is, pound for pound, the least
expensive synthetic adhesive material available. Alternative adhesives are available at
significantly higher cost and reduced performance. Limited availability of products to
make the substitution at the product level reduces the potential for indirect substitution to
5% or less for most applications.
Total cost of substitutes for urea formaldehyde the net benefits consumers enjoy because
they have access to urea formaldehyde are approximately $3.41 billion per year. In
addition, some $2.6 billion in capital expenditures for capacity additions or plant retrofit are
avoided because of the presence of urea formaldehyde in the marketplace. In 2003 urea
formaldehyde manufacturers generated over $2 billion in sales and bought over $900
million worth of raw materials and utilities. The sector supported some 2,900 jobs in the
U.S. and Canada.

Introduction
Urea formaldehyde (UF), along with melamine formaldehyde (MF) and melamine urea
formaldehyde (MUF) are the most important amino resins. The other classes of amino
resins (benzoguanamine, aniline, and toluene sulfonamide) are comparatively smaller in
terms of commercial volume and value, and will not be included within the benefits
calculation. Amino resins are generally sold in a liquid form with moisture content of
about 50%. They are cured through the application of heat, which removes the moisture or
solvent, resulting in fusion of the resin into a polymeric matrix.
Economic Contributions of Urea Formaldehyde Resin Producers
In the U.S. and Canada, there are three major producers of urea formaldehyde resins:
Hexion Chemicals (formerly Borden), Dynea Chemicals, and Georgia Pacific Resins Inc.
There are a number of much smaller participants, many of whom produce for captive use.
In 2003 producers made 1.16 million metric tons of urea formaldehyde resins.
Manufacturers in the United States made 861 thousand metric tons of urea formaldehyde,
and their Canadian counterparts manufactured another 302 thousand metric tons. Together,
producers in the U.S. and Canada bought $902 million worth of raw materials and utilities
from their suppliers, and generated over $2 billion in sales. The sector supported
approximately 2,900 jobs in the U.S. and Canada.

Urea Formaldehyde Resins

19

Table 4
U.S./Canada Urea Formaldehyde Resin Economic Contributions
2003
Production ('000 MT)

1,163

Sales (MM$)

2,050

Purchases (MM$)
Employment

902
2,900

Source: Global Insight, Inc.

Properties and Advantages of Urea Formaldehyde Resins


Light in color, strong, and abrasion resistant, UF resins are also the least costly
formaldehyde resin to produce. However, the moisture and abrasion resistance they
provide is inferior to both melamine formaldehyde (MF) and phenol formaldehyde (PF).
UF resins are generally used in applications requiring dimensional stability but only
moderate exposure to heat or moisture, such as particleboard or medium density fiber board
used in furniture or cabinet making.
Being one of the lowest-cost, commercially available adhesive substances, UF resins are
the binder of choice for a variety of commodity-like end-use applications that are extremely
cost sensitive (e.g. composite panels and roofing tiles). UF resins typically compete with
other formaldehyde resins within its end-use applications; since UF resins are generally
sold for about 75% of the cost of a PF resin of similar solids content, and about 50% of the
cost of MF, they are favored unless the end-use application requires the specific properties
provided by PF or MF. Other potential substitute adhesives are all considerably more
expensive than UF. The most important properties of UF resins are:

Low cost
Water borne (can be applied in an aqueous suspension)
Fast curing
Very good hardness and abrasion resistance
Excellent dimensional stability
Clear glue line
Color retention
Moderate water resistance
Moderate heat resistance
Good chemical resistance
Good arc resistance (the ability to resist a high voltage electric arc)
Good flame resistance

Urea Formaldehyde Consumption


The U.S. and Canadian market for UF resins is approximately 1.2 million metric tons (dryweight basis). Building and construction applications, including composite panels, roofing

Urea Formaldehyde Resins

20

tiles, hardwood plywood, and coatings, account for approximately 95% of UF resin
demand in the U.S. and Canada.
Figure 7
U.S./Canada UF Resin Demand by End-Use Market, 2003

Surface coating
1%

Textiles
1%

Molding
Hardwood plywood compounds
(HWPW)
3%
6%

Other
2%

Roofing mats
7%

Medium density
fiberboard (MDF)
20%

Particleboard (PB)
60%

Source: SRI International, Chemical Economics Handbook, 2004

Urea formaldehyde resin is consumed principally in the production of construction and


building materials, such as particleboard, medium density fiber board, hardwood plywood,
and fiberglass based roofing tiles. The binder properties required for construction material
applications are low cost, dimensional stability, hardness, clear glue line, and fast curing
time. Not all binder or adhesive materials produce a "clear glue line," which is the point at
which the wood product and adhesive meet in an adhesive binding. UF resins are also
used in molding compounds, primarily for electrical applications, such as switches and
circuit breakers, but also for stove hardware buttons and small housings. The binder
properties required for molding applications include hardness, dimensional stability, heat
tolerance, electrical resistance, and color ability. While once commercially important as
paper coatings additives and paper wet strength additives, UF resins have largely been
displaced because of the emergence of other materials that offer improved cost
performance, as well as the shift from acid-based to alkaline or neutral paper-making,
which favors alternative coating and wet-strength compounds. Relatively minor
applications of UF resins include wood-working adhesive (competing with PVA
adhesives), textile finishing (a market now dominated by a minor class of formaldehyde

Urea Formaldehyde Resins

21

resins based on glyoxal), fertilizers, and additives to PF-based foundry and insulation
binders.1
Table 5
Major Product Applications for UF Resins
Category

Construction Materials
and Home
Improvement

Molding Compounds
Paper Treatment
Textiles
Other

Material
Composite panels (Particleboard,
Medium density fiberboard)
Glass fiber roofing mats (for
asphalt shingles)
Hardwood plywood
Fiberglass insulation
Surface coatings (alkyd-urea
finishes)

Applications
Cabinets, furniture, flooring
countertops, decorative
molding

Roofing
Furniture, interior finishing
Architectural insulation
Kitchen cabinets, furniture,
lacquers
Countertops (laminating
Wood Adhesive
adhesive)
Electrical switches, circuit
breakers, stove hardware,
Molded plastic products
buttons, housings
Coated paper, paper towel,
tissue
Coatings, wet strength resins
Textile treatment
Finishing compound
Slow release fertilizer, foundry binder

Source: SRI International, Chemical Economics Handbook, 2004 and industry sources

Substitutes for Urea Formaldehyde


Since most urea formaldehyde resins are used to provide a binding, adhesion, or coating
service to an end-product material, there are two potential levels of substitution. First, it
may be technically feasible to substitute the service that the formaldehyde resin provides
with an alternative binder or coating material. Other potential substitute adhesives are
modified soy adhesive, methylenebis(4-phenyl isocyanate) (MDI) and other polyurethanes,
polyvinyl acetate (PVA) and ethyl vinyl acetate (EVA), emulsion polymer isocyanates
(EPI), acrylic adhesives, polyesters, and epoxies. The second level of substitution can
occur by replacing a UF-containing material with another material at the point of
application.
Particleboard and medium density fiberboard (MDF)

Particleboard and MDF both require binders that possess high dry strength, dimensional
stability, moderate temperature and moisture resistance, and for processing considerations,
are fast curing and preferably water solubility (low viscosity). UF adhesive is by far the
principal adhesive used in particleboard and MDF production owing to its low cost,
physical characteristics, and processability. There is a small volume of particleboard
produced with PF resins, and industry sources confirm that it is feasible technically to
1

Greiner, Elvira O. Camara, Amino Resins, Chemical Economics Handbook, SRI International,
February 2004: 1-87.

Urea Formaldehyde Resins

22

produce particleboard and MDF using polymeric MDI-type (or pMDI) adhesives. Potential
substitute adhesives for particleboard and MDF include natural adhesives such as soybean,
blood, casein, or lignocellulosic, and other synthetic adhesives, such as emulsion polymer
isocyanate (EPI), polyurethanes (PU), and vinyl acetate emulsions (VAE).
The potential for soybean adhesives has attracted considerable attention because they are
low cost, made from renewable resources, and because there is substantial feedstock and
primary processing capability (grinding and milling). However, 100% soybean adhesives
do not have sufficient dry strength for panel board applications. Dry and wet strength
performance can be improved by mixing with phenol formaldehyde, blood adhesive, or
other natural protein adhesives.
In May 2005 several companies announced the development of a new type of soy-based
adhesive that incorporates synthesized mussel protein. The first commercial application for
this product by Columbia Forest Products will be hardwood plywood (HWPW).2 The
advantage of this product is that it possesses high dry and wet strength, good dimensional
stability and abrasion resistance. The high viscosity of the current generation of modified
soy adhesives has thus far limited its application to HWPW.
Blood adhesive, made from dried blood albumen, is applied in a liquid state, and cured
using heat pressing.3 Blood adhesive is inexpensive but there is only limited availability of
feedstock. In addition, board processing using blood adhesive can create objectionable
workplace conditions due to odor and flies. The performance characteristics of blood
adhesives can be improved by formulating it with phenol formaldehyde, and it is used as a
foaming agent with PF resins at some plywood mills.
Casein adhesive, derived from milk, is another possibility, as it possesses high dry strength,
intermediate temperature resistance, and better moisture resistance than either blood or
straight soy adhesives. However, the cure time for casein adhesives is likely too long for
them to be commercially viable for particleboard or MDF production since they have a
short pot life, tend to stain certain wood species, and are subject to microbial attack.4 Pot
life is the amount of time available for use after the resin and curing agent are mixed.
While casein glues are cost competitive with UF resins, their availability is limited as most
of the feedstock material (milk) is used by the food products industry.
Another natural adhesive is lignocellulosic residue extracted from wood. It possesses good
dry strength and moderate wet strength, but it is not as durable as synthetic resin-based
adhesives. Like blood adhesives, its performance can be improved by mixing with phenol
formaldehyde.

Columbia Forest Products to eliminate formaldehyde in its hardwood plywood production,


Facilities Management News, April 29, 2005, www.fmlink.com.
3
Vick, Charles B., Adhesive Bonding of Wood Materials, Chapter 9 of Wood handbook Wood
as an engineering material, U.S. Department of Agriculture, Forest Service, Forest Service
Products Laboratory, 1999: 9-1 to 9-24.
4
Eckelman, Carl A., Brief Survey of Wood Adhesives, Purdue University, Forest and Natural
Resources, November 2004: 110.

Urea Formaldehyde Resins

23

Emulsion polymer isocyanate (EPI) is a possible synthetic alternative to UF.5 EPI is a twopart system comprised of a liquid emulsion, such as an acrylate, polyurethane, or vinyl
acetate emulsion, and a separate isocyanate hardener, such as MDI. EPI is used in such
wood product applications as laminated beams, finger-jointing, and to laminate metals or
plastics to wood panels. EPI possesses high dry and wet strength, moisture resistance, and
clear glue line. It can be formulated in a variety of viscosities and can be cured quickly at
high temperature or with radio-frequency curing techniques. The draw backs of EPI are
higher cost, the additional process steps needed for metering and mixing, and application
challenges due to its high tackiness. To be considered as a formaldehyde-free substitute, it
is assumed that the MDI used as a cross-linker would be derived from a formaldehyde-free
route, which would increase the overall cost of the EPI adhesive by 20% to 30%.
Polyurethane adhesives could also be used as a substitute for UF. The most likely
candidate would be poly-methylenebis(4-phenyl isocyanate) or pMDI, which is already
used for oriented strand board (OSB). Polyurethane-based adhesives, applied in a liquid
form at about 50% solids and heat cured, are technically feasible for particleboard and
MDF production. These adhesives possess high strength and superior heat and temperature
resistance to UF. The limitations of pMDI are its hydrophilic nature, resulting in potential
premature bonding of high moisture content wood fiber, high tackiness with a tendency to
stick to press plates, and high toxicity. In addition, the conventional process route for
pMDI production involves the use of formaldehyde, and while an alternative nonformaldehyde route may be technically feasible, initial estimates suggest that the cost per
pound of MDI would be up to three times the current market price (see Chapter 8).
Other polyurethane adhesives include solvent-based elastomeric polyurethane,
polyurethane dispersions and reactive polyurethane hot-melts.6, 7 Of these, polyurethane
dispersions are the most likely candidate for replacing UF because they can be applied as
an aqueous suspension. Polyurethane dispersions are more commonly used as coating
materials but they are also used in some wood-working applications, such as profile
laminating, and laminating wood to plastics. They have good bonding strength and
abrasion resistance, and heat and temperature stability. Besides higher cost, the main
limitation of PU dispersions for panel board production are their longer cure time relative
to UF- or pMDI-based adhesives, which would lower the overall productivity of the board
mill.
Vinyl acetate emulsions (VAE) such as polyvinyl acetate (PVA) or ethyl vinyl acetate
(EVA) are common wood-working adhesives that could be potentially be used for
particleboard and MDF. While possessing good dry strength characteristics, PVA and
EVA are limited by their poorer performance under moderately high temperatures (over
50C), moist or humid conditions, and their tendency to creep under load. In addition,
they have higher viscosity than water-based adhesives, thus requiring industry to invest in
5

Wood Adhesives Science and Technology, U.S. Department of Agriculture Forest Service
Product Laboratory, Publication # FS-FPL-4703.
6
Petrie, Edward M., Reactive polyurethane adhesives for bonding wood,
www.specialchem4adhesives.com, Jan. 4, 2004: 19.
7
Cognard, Philippe, Adhesive bonding of wood and wood based products,
www.specialchem4adhesives.com, May 11, 2005: 111.

Urea Formaldehyde Resins

24

application technology before they could be used for panel production. Cross-linked PVA
glues have better water resistance and resistance to creep, but they do not have the
dimensional stability of UF and they are even more viscous than regular PVA.8
Other potential substitute adhesives for particleboard and MDF are epoxy resins. Epoxies
are water resistant, have low creep, and are dimensionally stable. Due to their high cost,
they tend to be used for specialty wood-working applications such as boat building.
Besides their high material cost, epoxy resins require metering and mixing equipment, are
toxic, and generally have a longer cure time than UF resin, factors that panel board
producers would need to consider.
Particleboard and MDF are commodity materials and highly sensitive to material input
cost. A substantial increase in the cost of adhesive raw material or processing cost can
increase the board cost to a point where it is susceptible to replacement by alternative panel
products such as edge-glued solid wood panels.
Asphalt roofing shingles

Due to their low cost, long life, and fire safety rating, asphalt roofing is the most prevalent
roofing material in the U.S. and Canada, accounting for over 60% of residential roofing and
80% of commercial roofing.9 Current U.S. and Canadian asphalt shingle production is 210
million squares (21 billion square feet), of which approximately 92% is of the asphalt
fiberglass type and 8% is of the organic, cellulose fiber type. The use of wet laid glass
fiber mats, which provide increased service life, strength, and improved fire resistance, has
largely replaced the older cellulose felt mat technology. However, fiberglass lacks the
natural inter-fiber bonding that is inherent in the natural organic fiber such as cellulose and
requires the use of a suitable binder.10
In the making of the fiberglass shingles, the fiberglass mats are only coated with asphalt,
rather than impregnated. While this results in an approximately 30% reduction in the
amount of asphalt used (and hence a significant cost reduction over organic type shingles),
it also gives a significant decrease in the rigidity of the shingle. 11 Therefore, the binder of
the fiberglass mat must be capable of providing good mat strength for handling without
loss of flexibility. Also, the fiberglass mats require a binder that will produce physical
properties of high inherent stability and good aging, as well as good bonding of the glass
fibers to each other and with the asphalt. UF resins have these properties and are also
significantly less costly than any other polymeric binding system. UF/polyvinyl acetate
8

Jewitt, Jeff, Woodworking Glues Some Facts That Will Stick, Homestead Finishing
Products, 2000. See www.homesteadfinishing.com.
9
Estimate based on telephone interview with Asphalt Roofing Manufacturers Association,
February 21, 2004.
10
Hannes, George John et al (Inventors), Fibrous mat especially suited for roofing products,
U.S. Patent # 4,112,174, Johns Mansville Company (Assignee), September 5, 1978: 110.
11
White, Sr., et al. (Inventors), Water soluble one-component polymeric resin binder system for
fiberglass mats, U.S. Patent# 4,571,356, Reichold Chemicals Incorporated (Assignee), February
18, 1986: 18.

Urea Formaldehyde Resins

25

copolymer and UF/acrylic blends have also been developed for this application. Acrylic
lattices are the only identified non-formaldehyde binder for this application.
Hardwood plywood

Hardwood plywood is used primarily for furniture and decorative interior applications.
Much of U.S. and Canadian hardwood plywood is produced by laminating surface sheets
onto imported cores. UF resin is the adhesive of choice because of its high dry strength,
dimensional stability, clear glue line, and good stand time. Before use, the UF is
formulated into a viscous glue with the addition of wheat flour and other additives, and is
applied using a roller-spreader. A possible substitute for UF resin is PVA-based adhesive,
which is already used in veneer applications (adhering a hardwood veneer onto a substrate
of plywood or composite board.) The limitations of using PVA include higher adhesive
cost, limited stand time (PVA begins to cure as soon as it is applied thus limiting the time
available to set up the panel prior to pressing), poorer dimensional stability, and poorer heat
and moisture resistance. It is possible to improve the final product qualities (stiffness and
moisture resistance) of PVA by using cross-linking agents but alternate chemistries would
have to be developed to replace the most prevalent cross-linking systems for PVA which
incorporate formaldehyde or formaldehyde-based derivatives. EPI is another logical
substitution candidate for HWPW, and it is already used to make some specialty exterior
panels.
Columbia Forest Products, North Americas largest HWPW manufacturer, has recently
announced its intention to switch from UF resins to modified soybean adhesive at all of its
mills. This adhesive is described as possessing equivalent performance attributes of UF
resins at a comparable cost. However, there is a question of availability on the merchant
market, as Columbia has exclusive rights to its use for this application.
Molding Compounds

UF resin molding compounds have largely been supplanted in many areas of application by
thermoplastic polymers, such as ABS and polypropylene. UF based molding compounds
tend to be used in applications requiring high mechanical strength, chemical resistance,
good arc resistance, high dielectric strength, and good flame and heat resistance, such as
electrical switches, circuit breakers, stove hardware, and housings. They are also used for
non-electrical applications such as door knobs and toilet seats. ABS could substitute for
UF molding compounds for non-electrical components at a significantly higher material
cost. Potential replacements for UF for electrical applications include epoxies, polyester
thermosets, and silicones. Polyester thermosets are likely the most cost effective substitute
for UF resins. They can be formulated to have excellent strength, temperature, and
electrical properties.
Other

In surface coating applications, UF resins are used to cross link other coatings polymers
such as alkyds, acrylics, and polyesters in order to provide scratch and chemical resistance.
Products using such coatings include kitchen cabinets, furniture, and baked coatings for
metal parts and machinery. Alternative coatings systems, such as powder coating and

Urea Formaldehyde Resins

26

radiation cure, can be used to replace UF resins for furniture applications, and epoxy
coatings for machinery and metal applications.
For paper treatment, UF is used primarily as a wet strength resin, though its use has
declined in favor of polyamide-epichlorohydrin (PAE) resins, which are more efficient and
can be cured in an alkaline paper making environment. As for textile treatment
applications, the principal substitutes for UF resins are glyoxal resins, which have already
supplanted UF for much of the market. UF resins are sometimes used as a coated abrasive
binder, but PF is more commonly used due to its superior thermal resistance.
Table 6
Substitutes for Urea Formaldehyde
End-use Market
Particleboard (PB)
Medium density
fiberboard (MDF)

Substitute binder or resin

Substitute end-use material

Soy, blood, EPI, VAE

Edge glued solid wood

Soy, blood, EPI, VAE

Edge glued solid wood

Roofing mats
Hardwood plywood
(HWPW)

Acrylic

Organic type asphalt shingles

Modified soy, EPI, PU

Solid wood

Molding compounds

ABS, epoxy, silicone, polyester

Surface coating

Epoxy

Textiles

Glyoxal resins

Radiation curing (furniture)

Source: Global Insight, Inc.

Economic Benefits of Urea Formaldehyde


The most significant economic benefit of UF is its application as an adhesive and binder.
Due to its simple molecular structure, relatively low feedstock costs, and inexpensive
conversion costs UF is, pound for pound, the least expensive synthetic adhesive material
available. The panel board and roofing shingle industries rely on the fact that UF is both
water borne and fast curing (with heat) to maximize their production line speeds. In
addition, UF is thermosetting, providing strength, durability, and other desirable physical
attributes to the end-products. Once shaped into a permanent form, usually with heat and
pressure and with a curing agent, a thermosetting resin cannot be remelted or reshaped
because the basic polymeric component has undergone an irreversible chemical change.
The substitution cost for replacing UF in its current applications is approximately $3.4
billion per year. This annual cost includes a capital recovery charge that reflects the
investment to produce the incremental volumes of the substitute material, as well as to
retrofit plants at the point of application so that they can switch to substitute binders. The
total capital investment required by industry to switch to substitutes of UF is

Urea Formaldehyde Resins

27

approximately $2.6 billion in order to have sufficient capacity to produce the required
volumes of acrylic and vinyl acetate emulsions and emulsion polymer isocyanates.
If UF were no longer available, polymer emulsions would be the primary replacements
for nearly 85% of UF. These emulsions include EPI, VAE, and acrylates. Most of these
substitute materials will be used in wood products applications, such as particle board,
MDF, and hardwood plywood. In addition, there will be some increase in the use of
natural adhesives for panel board applications (blood, soy), but limitations in the
effectiveness and/or supply of these materials will restrict more widespread adoption.
Acrylic emulsions will be used primarily as the binder for fiber glass roofing representing
approximately 8% of UF consumption. Other thermoplastic and thermoset materials
(ABS, polyester, polyurethanes, and glyoxal) would replace approximately 5% of current
UF consumption primarily in molding, coating, and textile applications.
If the recently announced development of soy-based adhesives with improved properties
can be accomplished at modest price premiums over the less-efficient, currently
available, soy-based products, they could be preferred over higher-priced EPI and VAEbased adhesives for particleboard and medium density fiberboard, and this would reduce
the magnitude of the direct economic benefits estimated in Table 7. Successful
development of this alternative would reduce new capital requirements somewhat
although significant investments could be required in the mills to form products with
properties that differ from UF, and economic benefits would be reduced as well.
Indirect substitutes would account for approximately 6% of UF substituted. These include
edge-glued solid wood panels and other wood products. Cost and restricted availability
would limit the potential of these materials to substitute for the UF-based product. For
instance, it is possible to replace particleboard or MDF with imported edge-glued
hardwood but the total global supply of this material would fulfill less than 10% of the
composite panel requirements of the U.S. and Canada.
The total specific benefits of UF, that is, the dollar benefits per metric ton of UF displaced,
are about $3,000 per metric ton on average. This high cost of substitution reflects the basic
differential in material cost between UF and the next best (non-formaldehyde) binders that
can provide the same functionality.

Urea Formaldehyde Resins

28

Table 7
Economic Benefits of Urea Formaldehyde
Direct
Indirect
End-use market
($ MM/year)
($ MM/year)
Particle board (PB)

Total
($ MM/year)

2,120

50

2,170

Medium density fiberboard (MDF)

700

705

Roofing mats

275

275

Hardwood plywood (HWPW)

95

20

115

Molding compounds

90

90

Surface coating

50

50

neg

neg

3,330

75

3,405

Textiles
Total
Source: Global Insight, Inc.
Note: Totals may not add due to rounding.

Urea Formaldehyde Resins

29

4.

PHENOL FORMALDEHYDE RESINS

The U.S. and Canadian market for phenol formaldehyde (PF) resins is approximately
915,000 metric tons (dry-weight basis), of which building and construction applications
account for approximately 75% of PF resin demand, while automotive applications, friction
materials, and foundry binders accounts for another 15%. Though more expensive than UF
resins, PF resins are still among the least expensive adhesive option on the market. As
such, substituting PF resins would not only require substantial capital expenditure to
retrofit or expand production facilities but also significantly raise the cost of products.
The total costs for substitutes for PF, which are the net benefits that consumers enjoy
because they have access to PF, are approximately $4.65 billion per year. Moreover,
approximately $2.7 billion worth of capital costs for new equipment to produce and use
substitutes is avoided through the continuing use of PF. In 2003 PF manufacturers
generated sales of $1.8 billion, and purchased raw materials and utilities valued at over
$800 million. The sector also supported some 2,550 jobs in the U.S. and Canada.
Introduction
Phenol formaldehyde (PF) resin is generally regarded as the first synthetic polymeric
material. It was invented by Dr. Leo Baekeland around 1909, and sold under the trade
name Bakelite. Early applications for Bakelite included telephones, radio housings, and
electrical insulators. Applications for phenol formaldehyde resins greatly expanded in the
period following World War II.
There are two classes of phenolic resins resols and novolacs. Resols are produced by
reacting phenol and formaldehyde at a temperature range of 70 100C under alkaline
conditions. 12 Resols do not require the presence of cross-linking agents to cure and most
resols are cured using heat. Resol phenolics are used as binders and adhesives in end-use
applications that emphasize end product hardness and dimensional stability as well as heat,
moisture, and chemical resistance such as plywood, insulation binder, and paper saturating
resins. Novolacs are produced in a two-stage process. Phenol and formaldehyde are first
reacted under acid conditions to produce a novolac polymer, which is usually dehydrated
and shipped in a dried form. At the application point, a cross-linking agent is applied,
usually hexamethylenetetramine (hexa or HMTA) resulting in an infusible polymer. The
process of making novolacs results in a lower cross-linking density than resols. This makes
them less hard than resols, but also less brittle and more impact resistant (i.e., tougher). For
these reasons, novolacs are used in applications requiring both high service temperatures as
well as high toughness, such as in friction, foundry, and abrasive binder applications.

12

Greiner, Elvira O. Camara, Phenolic Resins, Chemical Economics Handbook, SRI International,
April 2002: 1-63.

Phenol Formaldehyde Resins

30

Economic Contributions of Phenol Formaldehyde Resin Producers


Three producers, Hexion Chemicals, Dynea Chemicals, and Georgia Pacific Resins Inc.
(GPRI), account for a substantial proportion of the PF resins produced in the U.S. and
Canada. Hexion and Dynea operate plants in both the U.S. and Canada, while GPRI has
facilities throughout the U.S. Additionally, there are some smaller regional and/or captive
suppliers to the forest products sector (Tembec, Uniboard, Woodchem) and a number of
producers of specialty phenolics for industrial (i.e., non-wood) applications (Ashland,
Schenectady, Cytec, Plenco, DSM, Durez). In 2003 PF manufacturers in the United States
and Canada purchased $803 million of raw materials and utilities from their suppliers and
produced 974 thousand metric tons of PF resins, which commanded some $1.8 billion in
sales for the industry. Approximately 59 thousand metric tons of PF resin was exported.
The PF resin sector supported about 2,550 jobs in the U.S. and Canada.
Table 8
U.S./Canada Phenol Formaldehyde Resin Economic Contributions
2003
Production ('000 MT)
Sales (MM$)
Purchases (MM$)
Employment

974
1,825
803
2,550

Source: Global Insight, Inc.

Properties and Advantages of Phenol Formaldehyde Resins


Like UF, PF resins are among the least expensive adhesives available. Typical PF resins
cost about 25% to 30% more than a UF resin of similar moisture content. Resol PF resins
offer comparable strength and dimensional stability to UF resins but have higher moisture
and chemical resistance than either UF or MF resins. For this reason, PF resins are the
adhesives of choice for structural grade board material, such as plywood and oriented
strand board. The main limitation of PF resins is that the resin is colored a deep red to
black, and this coloration can bleed though wood-grains. This limits the application of PF
resins in end-uses where a clear glue line or color tinting is required. Resol phenolics are
used in a wide variety of applications, including structural panel boards, glass insulation
binder, paper lamination, coating abrasives, phenolic foams, and fiber reinforced panels.
Novolac PF resins are dimensionally stable at high temperatures, abrasion resistant, yet not
brittle. These are the very qualities needed in applications such as foundry binders and
friction materials (for example, automotive clutch plates and brake pad linings).
The most important properties of PF resins are:

Water borne
Fast curing
Excellent hardness and abrasion resistance
Excellent dimensional stability
Excellent resistance to creep

Phenol Formaldehyde Resins

31

Excellent moisture resistance (better than UF or MF)


Excellent thermal stability
Excellent chemical resistance
Very good flame and smoke resistance
Toughness

Phenol Formaldehyde Consumption


The U.S. and Canadian market for PF resins is approximately 915,000 metric tons (dryweight basis). Building and construction applications, including structural panels,
insulation binders, and laminates account for approximately 75% of PF resin demand,
while automotive applications, including molding compounds, friction materials, and
foundry binders accounts for about 15%.
Figure 8
North America PF Resin Demand by End-Use Market, 2003
Coated & bonded
abrasives
1%
Friction materials
3%

Molding
compounds
5%

Protective coatings
Foundry
1%
6%
Specialty wood
adhesives
2%

Other
5%

Plywood, LVL
25%

Paper
impregnation
8%
Insulation binder
10%

Oriented strand
board
34%

Source: SRI International, Chemical Economics Handbook, 2004

Resol phenolics are used in a wide variety of applications, including structural panel
boards, glass insulation binders, high pressure laminates, coating abrasives, phenolic
foams, and fiber reinforced panels.
The two principal structural panel applications for phenolic resins are plywood and oriented
strand board (OSB.) Plywood and OSB are used in residential construction, remodeling
and repair uses, and in industrial applications, such as packaging, transportation, and

Phenol Formaldehyde Resins

32

furniture making. In 2003 North American production of plywood and OSB was 42 billion
square feet, with total market value (FOB mill) of $15 billion. 13 According to the APAEngineered Wood Association, approximately 85% of U.S. housing starts (including wood
frame, panelized, and modular construction) involve the use of structural panel boards
directly. 14 As structural panels are also used extensively as forms in concrete construction,
it is clear that they comprise a keystone material for the construction industry in North
America.
PF resin is also used in the manufacture of fiberglass insulation and high pressure
laminates. It is the principal material used to bind fiberglass threads into fiberglass
insulation, although polyacrylic acid has recently been introduced into the market as a
competing binder material. The fourth major end use for resol type PF resins is high
pressure lamination (HPL) used for decorative and industrial laminates. High pressure
lamination involves laminating a sheet of MF impregnated decorative paper onto several
sheets of PF-impregnated Kraft paper at high pressure (1,0001,500 p.s.i.) and
temperature (130C). The resulting laminated sheet is extremely tough and moisture and
temperature-resistant. The laminated paper is then adhered to a substrate material,
usually particleboard or plywood, and is used for countertops, furniture tops, cabinet and
drawer faces, wall cladding, automobile interiors, laminated flooring, and wall coverings.
Specialty applications of PF resins include molding compounds for appliances,
housewares, electrical applications, automotive components, coated abrasives (sand paper,
scouring pads), bonded abrasives (grinding wheels, cutting wheels), protective coatings
(food container linings), rubber processing additives, and phenolic foams.
Novolacs are typically used in applications where service temperatures are high and the
binder needs to be abrasion resistant but not brittle such as under-the-hood molded
automotive components; bonded abrasives (grinding wheels, cut-off wheels, finishing
wheels); friction materials (clutch facings, drum brake blocks, disk brake pads); and
foundry binders.
Foundry binders are used to make metal molds used to cast metal parts. The main end use
industries include automobile production, aerospace, and machine tools. There are a
number of different molding techniques not all of which require the use of foundry binders.
The primary foundry techniques requiring the use of foundry binders are no-bake, coldbox, shell molding, and hot-box. The no-bake process involves the use of a resin, sand, and
a curing agent. An advantage of the no-bake process over the older hot-box technique is
that heat is not needed in curing, and thus energy costs are lower. Phenolic urethanes and
straight phenolic binders account for about 75% of the no-bake binder market, with furan
binders, sodium silicates, and alkyd-oil isocyanates accounting for the balance. 15 Cold-box
resins are similar to no-bake in that curing occurs at room temperature, but a gas is used as
a curing agent rather than a liquid. The primary method involves use of phenolicisocyanate resin cured by triethylamine vapor. Other systems include furan resin cured by
13

Jannke, Paul et al, North American Wood Panels Forecast, Resource Information Systems Inc.
(RISI), April 2004: 1219.
14
Craig Adair, Regional Production and Market Outlook for Structural Panels and Engineered
Wood Products: 2002 -2007, APA The Engineered Wood Association, 2002: 161.
15
Greiner, op. cit., 2002.

Phenol Formaldehyde Resins

33

sulfur dioxide, and acrylic and epoxy-acrylic systems cured by sulfur dioxide gassing. In
the shell molding technique, hot or warm sand is coated with phenolic novolac hexa
solution, which is then blown or compressed into a mold pattern. In the hot box technique
a liquid resin, together with an acid catalyst and dry sand, are blown into a heated pattern
box. The heat induces that acid to cure the resin. This technique uses resol-type PF resins
and to a minor extent furan-type resins.

Market

Table 9
Major Product Applications of PF Resins
Material
Applications
Structural panels (plywood
and oriented strand board)

Construction Materials & Home


Improvement

Hardboard, molded wood,


particleboard
Fiberglass insulation

Decorative laminates
Automotive

Molding compounds
Friction materials
Foundry resins
PF Saturated paper or cloth

Industrial

Coatings
Other

Coated and bonded


abrasives
Sheet molding, phenolic
composites

Cabinets, furniture, flooring


countertops, decorative
molding
Tabletops, furniture, paneling,
door material, flooring, window
assemblies
Architectural insulation, pipe
insulation
Countertops, cabinets,
furniture, flooring, wall
covering, sheathing,
automobile interiors
Under-the-hood components
(engine, transmission, brakes)
Brakes, clutches, automatic
transmissions
Cast metal parts
Gears, bearings, rings, valves,
printed circuits
Grinding wheels, sand-paper

Train and aircraft interiors,


automotive
Food containers, drum linings,
Protective coatings
storage tanks
Rubber processing chemicals, oil field, phenolic foams

Source: Global Insight, Inc.

Substitutes for Phenol Formaldehyde


Plywood and oriented strand board

Plywood and oriented strand board are used extensively in home construction for interior
and exterior applications, where high strength, dimensional stability, moisture resistance,
and thermal stability are needed. Beyond the required adhesive properties, adhesives used
in panel board production must have certain working characteristics for a satisfactory
performance with current production methods. For example, in many operations,
manufacturing plywood or laminated wood products, the panels are pre-pressed cold prior
to heat setting of the adhesive. By pre-pressing the assembled panels, the capacity of the

Phenol Formaldehyde Resins

34

heated platen press is increased and the quality of the plywood improved. In cold prepressing, the adhesive must have sufficient tack to permit the handling of the pre-pressed
panels without shifting of the plies after the pressure is removed (i.e. good wet strength).
After consolidation of the panel, it is stored or held for various lengths of time until the
panel can be subjected to high temperature and pressure to finally set the adhesive. The
hot-pressing operation is a more involved procedure using more costly equipment and
usually is the limiting production factor in the mill. An adhesive that permits the
consolidated panel to be stored for long periods of time, for example a hold time of 16 to
40 hours before hot pressing, gives considerable flexibility to the mill. 16
Phenol formaldehyde resin is the primary adhesive/binder used for plywood and OSB
because of its relatively low cost, high dry and wet strength, moisture resistance, and
thermal stability. It also offers the properties that are advantageous to the production
process. pMDI provides similar end-use functionality but because it is more difficult to
work with (high tack, toxicity, hydrophilia), it is not used for plywood. In North America it
is used as a binder for only about 25% of OSB produced. Melamine formaldehyde and
resorcinol formaldehyde also possess the combination of adhesive properties and moisture
resistance needed for exterior grade structural panels, but their higher cost limits their use
to specialty applications.
Prior to the development of synthetic adhesives, plywood was produced using blood
albumin adhesives which, when hot pressed, provides high dry strength and moderate
resistance to damp conditions and microorganisms. Plywood based on casein adhesives
were also used for interior applications; however, blood albumin or casein adhesives do not
meet the service requirements of exterior grade plywood or OSB. 17, 18 The raw materials
for blood and casein adhesives are also limited: North American slaughterhouses produce
sufficient blood albumin for only about 5% of the total adhesive requirements for panel
board production while most of the feedstock for casein adhesives are used by the food
products industry. Soybean adhesives have been touted as possible replacements for
phenol formaldehyde in panel board production, but they are generally lower in strength
and are less moisture tolerant. Soybean adhesives have been produced with improved
moisture resistance through cross-linking with phenol formaldehyde or mixing with blood
albumin.
The modified soybean adhesive discussed in Chapter 3 as a replacement of UF for particle
board and medium density fiber board is a potential substitution candidate. If, as claimed,
it possesses many of the needed strength and serviceability characteristics of PF resin, it
may become an economically viable substitute. However, it has yet to be commercialized
for use in plywood or OSB applications.
pMDI adhesives are likely substitutes for PF in OSB and plywood production as they are
already used in about 25% of OSB plants. However, the conventional route to produce
MDI involves the use of formaldehyde, and a potential alternative route results in a
16

Blackmore; Kenneth A. E. et al Phenolic Adhesives, U.S. Patent# 3,956,207, Georgia Pacific


Corporation (Assignee), May 11, 1976: 111.
17
Vick (1999).
18
Eckleman (2004).

Phenol Formaldehyde Resins

35

substantially higher product cost (see Chapter 8 of this report). Emulsion polymer
isocyanates (EPI) formulated for exterior applications would be a more likely choice, as
they possesses high wet and dry strength, dimensional stability, and moisture resistance.
Since EPI uses MDI as a cross-linker, its cost would increase since the MDI would need to
be synthesized using the alternative, more expensive process or an alternative cross-linker
would need to be developed. This would increase the cost over currently available
products. In addition, board plants would experience higher costs because of the relative
difficulty of handling and applying EPI versus PF resins.
Another synthetic alternative is polyurethane dispersions. Unlike vinyl acetate emulsions
(VAE), polyurethane dispersions can be formulated for exterior grade applications.
Besides possessing superior heat and moisture resistance, PU dispersions are harder, more
dimensionally stable, and more creep-resistant that VAE. PU dispersions are used in niche
applications, such as some structural wood products. They are single-part systems, so endusers do not have to deal with metering, mixing, or pot life considerations. Their biggest
draw-back is the substantially higher cost compared to MDI, PDI, or VAE.
Water borne epoxy systems, or emulsions consisting of epoxies and acrylic, vinyl acetate,
or styrene butadiene copolymers, are potential substitutes. 19 These systems would possess
properties of excellent hardness, toughness, moisture, and thermal stability.
If formaldehyde resins were not available for use, the cost of production of plywood or
OSB would increase due to the higher adhesive cost and processing considerations.
Dimensional wood and structural panel construction technology is the most prevalent
construction method in North America used in about $500 billion worth of home and
commercial construction, as well as in repair and renovation work. Higher panel board
costs would result in some switching to alternative materials and construction technologies.
Before the development of synthetic resins and the expansion of the plywood industry in
the 1950s, wood frame houses generally used solid wood (1x8 or 1x10) as sheathing and
cladding material. These materials are used infrequently today due to higher cost, but some
substitution would be expected as the price of structural panels increases. 20
Other indirect substitutes of plywood and OSB include cement board and acrylic coated
gypsum board, both of which can be used in structural applications. However, these
materials are more expensive, and builders would incur additional costs if they were used
exclusively to replace structural wood panels. Cement board, for example, is much heavier
than structural wood panels. If cement board was used exclusively in sheathing, cladding,
flooring, and roofing applications, then more dimensional lumber would be needed to
provide the bracing needed for the additional weight, and installation costs would increase.
Alternative building technologies are also available such as insulating concrete form, steel

19

Kamikaseda, Takeshi et al (Inventors), Emulsion Adhesives, U.S. Patent # 4,634,727,


National Starch and Chemical Company (Assignee), January 6, 1987: 1-10.
15
Random Lengths, A Weekly Report on the North American Forest Products Markets, Vol. 58,
Issue 26, June 28, 2002.

Phenol Formaldehyde Resins

36

frame, concrete, or brick construction. These alternative building technologies range from
3% to 15% more expensive than wood frame construction on a per square foot basis. 21
Insulation binder

Due to its low cost, versatility, ease of application, excellent insulating properties, and fire
and moisture resistance, glass fiber insulation is the most widely used architectural
insulation material in North America. Resins for the fiberglass industry are traditionally
based on water soluble phenol-formaldehyde resol resins, with urea sometimes added to
lower the cost, and melamine added to improve product rigidity. After mixing the solution
is sprayed onto a continuous stream of hot amorphous glass fibers, which is formed into a
continuous mat and allowed to warm, thus curing the resin. 22 The resin must be
structurally stable, but flexible, as mats are compressed prior to shipping, and must be able
to expand to their designed thickness for optimal insulating properties. Incorporating
melamine resin improves high temperature resistance, a property that is important for
fiberglass pipe insulation, which may have to withstand very low or high service
temperatures from below 0C to above 500C. Recently, fiberglass binders for
architectural applications have been developed using polyacrylic acid. 23 The latest
generation of glass mat insulation made from acrylic binders has performance attributes
similar to phenolic resin-based insulation; however the material cost is higher (acrylic resin
is two to three times more expensive than phenolic resin) and the manufacturing process
incurs additional maintenance costs due to the corrosive nature of acrylic acid.
Paper Lamination

Phenol formaldehyde saturated resins provide the core sheets for decorative laminates and
are used in the production of industrial laminates. Decorative laminates are composite
products in which the top sheet (graphic or pattern) is impregnated with melamine
formaldehyde resin. The finished decorative sheet is often laminated onto a substrate of
plywood or particleboard. Therefore, a formaldehyde-free substitute for a laminate
countertop involves substituting three materials the MF resin used in the decorative layer,
the PF resin used in the core layer, and the UF or PF resin used in the production of the
substrate material. Substitute decorative laminate materials include polyester,24 vinyl ester,
and epoxy. These materials are typically not used for decorative laminates because of their
higher cost. Laminated countertops can also be substituted with Corian, marble, granite,
slate, solid wood, or other materials.
21

U.S. Department of Housing and Urban Development.


Strauss, Carl R. Owens (Inventor) Fibrous glass binders U.S. Patent # 5,318,990, Owens
Corning Fiberglas Technology Inc. (Assignee), June 7, 1994: 118.

22

23

Arkens, Charles Thomas et al (Inventors), Curable aqueous composition and use as fiberglass
nonwoven binder U.S. Patent # 5,661,213, Rohm and Haas Company (Assignee), August 26,
1997: 126.

24

Nakatsuka, Ryuzo et al, Process for preparing dry, laminating impregnated papers or cloths,
and process for producing decorative plates using the same U.S. Patent # 4,057,674, Sumitomo
Bakelite Company Limited, November 8, 1977: 18.

Phenol Formaldehyde Resins

37

Industrial laminates are made by impregnating a PF resin into a substrate such as Kraft
paper, cotton, or canvas. The laminate is used to make a variety of end products, such as
gears, bearings, rings, valves, seals, pump impellers, printed circuit boards and electronic
components. Industrial laminates need to have good strength and dimensional stability,
hardness, heat and moisture resistance. An advantage of PF-based industrial laminates is
their low cost versus substitute materials, which include epoxy, polyimid, and unsaturated
polyester. 25
Molding Compounds

The most desirable properties of phenolic molding compounds include moldability,


toughness, dimensional stability, thermal stability, electrical insulation, chemical resistance,
compressive strength, and superior load-bearing capability at elevated temperatures.
Design engineers specify phenolics for close-tolerance precision moldings that must
function in hostile environments.26 Potential substitutes for phenolic molding compounds
in industrial applications include glass-filled engineering thermoplastics (such as
polyamide, polyethylene terephthalate, polycarbonate, ABS, and polyacetal resins).
However, these materials are generally about twice as expensive on a cents per cubic inch
basis, and their physical properties (creep modulus, hardness, flexural modulus,
temperature, and compression strength) are markedly inferior to PF, and in many cases
unsuited for the required service conditions. Polyester bulk molding compound (BMC)
could substitute for some applications and, in many cases, industry would be forced to
revert to heavier and more expensive metal parts. For houseware and home appliance
applications, substitutes include polybutylene terephthalate, PET, and glass-reinforced
thermoplastic polyester. Polyester bulk molding compounds and engineering
thermoplastics are also substitutes for electrical applications.
Abrasives binders

PF is one of the two common substrates used in bonded abrasives (abrasive particles bound
into a matrix for use in cutting, grinding, or milling). The other major type is vitrified
abrasives. Vitrified abrasives are used for grinding applications while PF wheels are used
for milling, de-burring, and precision machining.27 Qualities required for this application
include strength, toughness, thermal shock resistance and productivity/cost impact.
Besides vitrified types, alternative binders include ceramic, shellac, and rubber. However,
grinding or cutting wheels made from these substitute binders cannot operate at the same
speed as PF-based wheels, so the productivity of the machining shop will decrease if PF
bonded abrasives were no longer available.
PF is also the binder of choice for coated abrasives (abrasive particles bound to a substrate
such as paper, cloth, or plastic film) because of its superior thermal resistance to any other
system.28, 29 Coated abrasives made from PF resins are used in machine-based sanding
operations under high heat conditions and intermediate-to-heavy stock (substrate)
25

Manufacture of Industrial Laminates. See www.ilnorplex.com/manufacturing.htm.


Phenolic Molding Compounds. See www.durez.com.
27
The Manufacture of Bonded Abrasives. See www.saint-gobain.com.
28
How to Choose the Right Sandpaper. See http://woodworking.about.com.
29
Greaves, Scott Good Stuff about Sandpaper. See http://homeallianceecable.net.
26

Phenol Formaldehyde Resins

38

removal.30 PF-based systems are also used in wet sanding conditions. The commercially
available substitute for PF (and to a lesser extent UF) coated abrasives are animal hide
glues. Animal hide glues, made from the collagen on the flesh side of a cattle hide, is the
system used in the pre-synthetic resin days. Collagen glues are more flexible than PF
resins, and are suitable for hand sanding and light load applications. However, they cannot
operate at high speed and high loads or in wet conditions, and they have a limited useful
life because they are subject to microbial attack. If the metal working industry were unable
to use PF coated abrasive binders, they would likely be forced to develop alternative
synthetic binding technologies based on epoxy resins since collagen-based adhesives would
not likely be able to meet the service requirements of many applications.
Phenol formaldehyde is generally the most cost effective of the various foundry binding
systems, which is why it is the predominant foundry binder used. Substitute binding
systems include furan (no-bake, cold-box, and hot-box), silicates (no-bake), isocyanates
(no-bake), and acrylic (cold-box), and epoxy). 31, 32, 33
Other

Phenol-resorcinol formaldehyde (PRF) is used in the manufacture of glue-lam beams while


PF resins are used in making I-joists. These are specialty wood products, often used for
engineering applications. The adhesives used in these applications are typically specified
for particular performance attributes, including high strength, dimensional stability, and
moisture and abrasion resistance. Emulsion polymer isocyanates (EPI) and epoxy
adhesives are potential direct substitutes for PRF and PF for engineered wood products,
and solid wood or steel beams are indirect substitutes.
Phenolic fiber reinforced polymer (PFRP) composites are typically specified in
applications that require superior flame and heat tolerance, as well as low smokability, such
as aerospace, passenger trains, and offshore drilling rigs. These applications also require
excellent dimensional stability, toughness, and thermal stability. PF is the most widely
used polymer resin for these applications, and it is unlikely that other thermoset material
(unsaturated polyester, epoxies, vinyl esters, or polyurethanes) have all the required
properties.34

30

FAQs about Abrasives. See www.woodartistry.com.


Woodsone, Wayne D. et al (inventors), Cold-box foundry binder systems, U.S. Patent #
6,686,402, Ashland Inc. (assignee), February 3, 2004: 115.
32
Chang, Ken K.(inventor), Furan no-bake foundry binders and their use, U.S. Patent #
6,593,397, Ashland Inc. (assignee), July 15, 2003: 112.
33
Woodson, Wayne D. et al (inventors), Cold box foundry binder systems having improved
shakeout, U.S. Patent # 6,662,854, Ashland Inc. (assignee), December 16, 2003: 113.
34
Tang, Benjamin, Fiber Reinforced Polymer Composites Applications in USA, DOT-Federal
Highway Administration, January 29, 1997. See www.fhwa.dot.gov/bridge/frp/frp197.htm.
31

Phenol Formaldehyde Resins

39

Table 10
Substitutes for Phenol Formaldehyde
Substitute binder or
End-use Market
Substitute end-use material
resin
Plywood, LVL

Blood, soy, EPI, PU

Oriented strand board

Blood, soy, EPI, PU, MDI

Insulation binder

Polyacrylic acid

Alternative to wood frame


housing (concrete, steel frame,
insulating concrete form)
Alternatives to wood frame
housing (concrete, steel frame,
insulating concrete form)

Paper impregnation

Epoxy, silicone, polyester

HPL: Corian, granite


LPL: vinyl film, decorative foils,
low basis weight paper

Molding compounds

Consumer and appliance


applications: thermoplastics,
polyester bulk molding
compounds

Automotive - metal

Friction materials
Coated and bonded
abrasives
Foundry
Specialty wood adhesives

Carbon fiber
Coated: animal glue, epoxy
Bonded: ceramic, shellac,
rubber
Furan, silicates,
isocyanates, acrylic
Epoxy, EPI

Die casting
Solid or laminated wood, steel,
concrete

Source: Global Insight, Inc.

Economic Benefits of Phenol Formaldehyde


Like UF, there are both direct and indirect substitutes available for most, if not all PF-based
applications. As might be expected, the more commodity-like the application, the
narrower the range of direct substitute materials since higher priced substitutes on a
price/functionality basis become less attractive. In addition, in the more commodity-like
applications, the market share held by the low-cost application technology tends to be high.
Most substitution will occur at the level of the resin functionality (direct substitution) rather
than indirect substitution. Indirect substitution will occur further down the value chain
where the costs are higher. For example, the FOB plant value of the structural panel
market in North America is approximately $12 billion. If the only substitute binder
available resulted in a doubling of the FOB price, the impact on the economy would be $12
billion per year. This estimate may seem high but it provides a perspective on the
importance of PF in the construction market. If structural panels were no longer available
and the industry has to switch to an alternative construction methodology, it might choose
to use insulated concrete forms at a cost about 4% per square foot more than dimensional
lumber/structural panel construction. Given that the home construction and
repair/renovation market in North America is about $500 billion per year, the impact of
such a switch would be about $20 billion per year. The other reason that substitution will
Phenol Formaldehyde Resins

40

tend to occur further up the value chain, is that the incremental impact on business fixed
investment will be lower because there will be less capital "stranded" due to shut-downs of
existing factories and because fewer links of the value chain will need to be replaced.
The cost of substitution per metric ton of PF replaced is higher for indirect substitutes
because the resin component makes up only a fraction of the final weight of the end use
product. An extreme example illustrated in Table 11 is replacing laminate-type horizontal
surfacing (e.g., countertops) with granite or solid surface material. The amount of resin
used to make horizontal surfacing (PF and MF) is about 8 to 10 pounds per hundred square
feet. However, a hundred square feet of -inch solid surface countertop material weighs
thousands of pounds.
Although substitutes are available for most PF applications, some applications such as
brake and friction linings and phenolic fiber reinforced paneling used in the interiors of
aircraft specifically require properties that currently only PF or PF derivatives can provide.
The total costs for substitutes for PF, which are the net benefits that consumers enjoy
because they have access to PF, are approximately $4.65 billion per year, of which $3.25
billion per year are saved from direct material substitutes (binders, adhesives, and coating
systems), and $1.40 billion per year are saved from indirect substitution (alternative
building technologies, alternative countertop materials, alternative structural sheathing
materials). The economic benefit of PF includes $850 million in alternative solid surface
replacements for high pressure laminates, such as granite counter tops. The economic
benefit of indirect substitution for HPL is included only in the PF section, though HPL uses
both PF and MF as laminating resins. The total capital investment required by industry to
switch to substitutes of PF is approximately $2.8 billion due primarily to additional
volumes of EPI, polyester, acrylic, and epoxy resins.
Polymeric dispersions, principally EPI and polyurethanes, account for over 65% of PF
substituted. These materials are the most likely synthetic substitutes for PF in structural
wood product applications due to their bond strength, dimensional stability and ability to
withstand both interior and exterior service conditions. A further 5% of PF will be
substituted by blood-based and soy-based adhesives which can be used in interior wood
panel applications. MDI will also be used, both as a cross-linking agent for EPI and, to a
lesser degree in the use of polymeric-MDI binders. However, as MDI would need to be
produced using a more expensive, formaldehyde-free route, its potential as a replacement
product is limited. Acrylic polymers account for about 15% of PF substituted (not
including volumes used in EPI or solid surfacing). Epoxy resins would replace an
estimated 9% of PF. While substantially more expensive, epoxy compounds are one of
the few materials that possess sufficient bond strength, dimensional stability, and
toughness to partially or wholly replace PF in paper impregnation, molding, friction,
abrasives, and coating applications. Other thermoplastics and thermoset materials
(polyester, furan, silicates) account for about 10% of PF substituted. These materials
would be used primarily in molding and foundry applications.
As in the case with UF resins, the successful development of relatively low cost,
formaldehyde-free cross-linked soy based adhesives would provide a lower cost alternative
Phenol Formaldehyde Resins

41

to the use of EPI, polyurethane, polyester, and acrylic based adhesives. If successful, this
development could reduce our estimates of new capital requirements and reduce our
economic benefit estimate.
Indirect substitution accounts for a disproportionate amount of the economic benefits due
to the substantially higher cost that is incurred by replacing an entire product, material or
system rather than simply the adhesive or binder component of a material. Because of the
higher cost of switching to indirect substitutes, direct substitutes will be used when
possible. However, the changes in the cost, attributes, and quality of materials traditionally
produced using PF resins would result in some switching to alternative materials and
technologies.

Table 11
Economic Benefits of Phenol Formaldehyde
Direct
Indirect
Total
End-use market
($ MM/year)
($ MM/year)
($ MM/year)
Plywood, LVL

860

270

1,130

1,200

260

1,460

Insulation binder

355

355

Paper impregnation

540

855

1,395

Molding compounds

10

10

100

100

30

30

Foundry

130

130

Protective coatings

neg

neg

30

10

40

3,255

1,395

4,650

Oriented strand board

Friction materials
Coated & bonded abrasives

Specialty wood adhesives


Total
Source: Global Insight, Inc.
Note: Totals may not add due to rounding.

Phenol Formaldehyde Resins

42

5.

MELAMINE FORMALDEHYDE RESINS

The North American market for MF resins is approximately 175,000 metric tons (dryweight basis) of which laminates and surface coating applications account for
approximately 75% of MF resin demand by volume. Other applications for MF include
molding compounds, paper coatings, wood adhesives, and textile treating. Due to its
higher cost, MF resins have more possibilities of higher cost material substitution and
hence lower economic benefits compared to UF and PF resins. The largest economic
benefit of MF is in laminates, where its displacement could force consumers to switch to
materials with higher price points, such as granite countertops and hardwood flooring.
The total costs for substitutes for MF, which are the net benefits that consumers enjoy
because they have access to MF, are approximately $370 million per year. Additionally,
approximately $300 million worth of capital costs for new plant and equipment to produce
and use substitutes is avoided through the continuing use of MF. In 2003 MF
manufacturers generated sales of over $300 million, and purchased raw materials and
utilities valued at over $130 million. The sector also supported some 450 jobs.
Introduction
Melamine formaldehyde (MF) resins were developed in the 1930s and 1940s in
companies such as American Cyanamid, Ciba and Henkel. Today, the major producers
are Hexion Chemicals, Dynea Chemicals, and Cytec. There are numerous smaller
participants, many of whom produce MF for captive requirements. Early applications
included fabric impregnation and adhesives and were followed by the introduction of
molding powders containing cellulosic fibers, pigments and fillers.
Outstanding properties such as clarity, stability to heat, light, chemicals, abrasion and fire
resistance led to a great surge in MF resin demand after World War II. Principal among
these applications was high pressure MF-faced decorative laminate sheets used for heavy
duty surfaces. The development of MF fine faced chipboard allowed rapid production of
light duty decorative panels for furniture application in very high volumes which
continues today.35 Another development was the use of MF molded domestic table and
kitchenware as an attractive and durable alternative to china ware. Other MF applications
include adhesives, paints, electrical moldings and glass-reinforced substrates. MF can
also be copolymerized with other formaldehyde resins to produce a resin with many of
the performance attributes of MF at a lower cost.
Economic Contributions of Melamine Formaldehyde Resin Producers
In terms of economic contributions, MF resin makers purchased over $130 million worth of
raw materials and utilities from their suppliers and generated approximately $300 million
35

Greiner, February 2004.

Melamine Formaldehyde Resins

43

in sales during 2003. The level of employment supported by the sector was around 450
workers. MF resin trade was about 33 thousand metric tons. The jobs were concentrated
mainly in North Carolina, Quebec, and Michigan.
Table 12
U.S/Canada Melamine Formaldehyde Resin Economic Contributions
2003
Production ('000 MT)

138

Sales (MM$)

305

Purchases (MM$)

134

Employment

450

Source: Global Insight, Inc.

Properties and Advantages of Melamine Formaldehyde Resins


Melamine formaldehyde resins are similar in chemical behavior and properties as urea
formaldehyde resins. Like UF resins, MF resins are light in color and, therefore, provide a
clear glue line or can be colored. In addition, MF resins are tougher, more thermally stable,
and are more moisture and chemically resistant than UF resins. Relative to PF resins,
however, MF resins are not as moisture resistant and are at least 25% more costly. Thus,
MF resins tend to be used in applications that have higher physical service requirements
relative to UF but also require a binder, or saturating resin with excellent cosmetic
characteristics. For example, laminated countertops will typically incorporate several
layers of PF saturated paper as the core layers, with a single layer of MF saturated paper on
top, forming the graphic image. The most important properties of MF resins are:

Water borne
Fast curing (faster than UF)
Excellent hardness and abrasion resistance (better than UF and PF)
Excellent dimensional stability
Clear glue line
Color retention (better than UF)
Very good water resistance (better than UF, inferior to PF)
Excellent heat resistance
Excellent chemical resistance
UV stability
Excellent flame resistance

Melamine Formaldehyde Consumption


The U.S. and Canadian market for MF resins is approximately 175,000 metric tons (dryweight basis). The major end-use markets for melamine formaldehyde are laminates and

Melamine Formaldehyde Resins

44

surface coatings, with minor applications including molding compounds, paper coatings,
wood adhesives, and textile treating.36

Figure 9
North America MF Resin Demand by End-Use Market, 2003

Textiles
3%

Other
4%

Wood Adhesive
5%
Paper Treatment
6%
Molding
Compounds
7%

Laminates
43%

Surface Coatings
32%

Source: SRI International, Chemical Economics Handbook, 2004

Decorative laminates are the largest single market for MF. Decorative laminates include
both low pressure and high pressure lamination. Low pressure lamination (LPL) involves
laminating MF resin impregnating paper directly onto a substrate of particleboard or MDF.
LPL is used for applications involving relatively light service conditions, such as drawer
fronts.37 High pressure lamination involves laminating a sheet of MF-impregnated
decorative paper onto several sheets of PF-impregnated Kraft paper at high pressure and
heat. The resulting laminated sheet is extremely tough and moisture and temperature
resistant. The laminated paper is then adhered to a substrate material, usually particleboard
or plywood, and is used for counter-tops, furniture tops, cabinet and drawer faces, wall
cladding, automobile interiors, laminated flooring, and wall coverings.
Like UF resins, MF resins are used as cross-linkers with a variety of surface coating
polymers such as alkyd, acrylic, or polyester resin. Modified MF resins improve the
36

Greiner, February 2004.


Troxel, Rick, High Pressure Laminate and Thermally-Fused Melamine: A Study in Form and
Function, Roseburg Forest Products, Fall/Winter 2002: 14.
37

Melamine Formaldehyde Resins

45

toughness, moisture and chemical resistance, and ultraviolet stability of surface coatings;
they are used extensively in automobile coatings, appliance coatings, and surface coatings.
The automobile market accounts for about 40% of MF resin consumed in the surface
coating market. Modified MF resins are used as cross linking agents for acrylic enamel
top-coats and as curing agents for polyester based primer-surfaces. MF resins are also used
as cross-linking agents for metal containers, metal furniture, coil coatings, and electrical
appliances.
MF provides functionality similar to UF resins as a paper coating additive and wet-strength
resin. MF is also used as a wood adhesive in specialty applications where the service
requirements exceed those that can be provided by UF resins, such as curved plywood,
marine grade plywood, train and truck bed flooring, and fire-proof surfacing. It can also be
used as a binder or adhesive for structural panels (plywood and OSB) for interior
applications, though its higher cost relative to PF has limited its use. MF resins provide
similar functionality as UF in textiles applications, such as crease-resistance, mildew
protection, water repellency, and fire retardation.
Table 13
Major Product Applications of Melamine Formaldehyde
Category

Construction Materials and Home


Improvement

Surface Coatings

Molding Compounds
Paper Treatment
Textiles
Other

Material

Applications

Countertops, cabinets,
furniture, flooring, wall
Paper impregnation
covering, sheathing,
and lamination
automobile interiors
Curved plywood, truck and
train car beds, marine
grade plywood, interior
Wood adhesive
structural panels
Ceiling tiles
Ceiling tiles
Automobile, metal
containers and furniture,
Alkyd, acrylic
coil coating
Dinnerware, knobs,
Molded plastic
handles, buttons, circuit
products
breakers
Coatings, wet strength Coated paper, paper towel,
resins
tissue
Textile treatment
Finishing compound
Tire cord adhesive, tanning agent, cross-linking
agent, water treatment resin

Source: Global Insight, Inc.

Substitutes for Melamine Formaldehyde


Laminates

Since melamine formaldehyde resins are used in the top decorative sheet for both high
pressure and low pressure laminates which use other formaldehyde resins in the substrate,
substituting a formaldehyde-free substance for a laminate countertop involves replacing
three materials the MF resin used in the decorative layer, the PF resin used in the core
layer, and the UF or PF resin used in the production of the substrate material. Substitute
Melamine Formaldehyde Resins

46

decorative laminate materials include polyester resins, epoxy resins, acrylic/polyvinyl


alcohol copolymer dispersions,38 and amorphous silica.39 Laminated countertops can also
be substituted with solid surface countertops (e.g. Corian, Silestone), marble, granite,
slate, solid wood, or other materials. Substitute materials for vertical applications of low
pressure laminate include vinyl film, tile, and solid wood.
Surface Coatings

Modified MF (methylated, butylated, or isobutylated) resins are used as cross-linkers with


alkyd, acrylic, or polyester resins. A substantial proportion of modified MF resin is used in
automotive applications (acrylic clear coats, acrylic base coats, and polyester primersurfaces.) In the clear coat market, substitute products include solvent-borne urethanes and
carbamate coatings. MF resins are cross linked with acrylics for exterior coatings of
beverage and food containers. MF resins are cross linked with high solids polyesters for
metal surface coating. Alternative coating systems for this application include powder
coating.
Molding compounds

Most melamine molding compounds are used in the production of dinnerware products
such as cups, bowls, and food trays. MF resins that contain up to 40% filler (typically
cellulose) have excellent hardness and thermal properties, can be molded using a variety of
molding techniques, and can be colored or decorated using color transfer or silk-screen
methods. ABS plastic, though more expensive, is a replacement for melamine molding
compounds for dinnerware products. Melamine molding compounds are also used for
other consumer and electrical products such as buttons, circuit breakers, appliance
housings, and components (knobs and handles.) Potential substitutes for these applications
include ABS in non-electrical applications and polyester thermosets (polyester bulk
molding compound) for electrical applications.
Paper treatment

Like UF resins, MF resins are used in paper treatment applications that are based on the
older, acid-based paper making technique. Seventy percent of MF resins are used as a
cross linking agent for pigment binding in acid paper making. The economically viable
alternative to this technique is alkaline paper making, which does not require the use of
modified starch binders. If no substitutes for MF resins could be identified, then the costs
would be the conversion of the remaining acid-based coated paper manufacturers over to
alkaline paper making. Other applications for MF resins in paper making are for wet
strength resin. Like UF resins, these are being replaced by polyamide-epichlorohydrin wet
strength resins as the paper making industry shifts to alkaline paper making techniques.

38

Matscheko, Horst et al (Inventors), Decorative sheets used in the production of laminated


panels, U.S. Patent # 5,851,684, Arjo Wiggins Deutschland GmbH, December 22, 1998: 16.

39

Mehta, Mahendra et al (Inventors), Low scratch, abrasion-resistant overlay and decor papers,
U.S. Patent # 5,141,799, Mead Corporation (Assignee), August 25, 1990: 110.

Melamine Formaldehyde Resins

47

Specialty wood applications

MF resins are used in specialized wood-working applications, such as curved plywood,


marine grade plywood, train and truck bed flooring, and fire-proof surfacing. These
applications require high dimensional stability, high moisture resistance, smoke/fire
resistance, and good cosmetic properties. Possible substitutes include EPI, polyurethanes,
and epoxy dispersions. Substitute end-use materials are solid wood or steel.
Table 14
Substitutes for Melamine Formaldehyde
End-use Market

Substitute binder or resin

Substitute end-use material

Laminates (paper
impregnation)

Polyester, epoxy

Horizontal: granite, marble


Vertical : vinyl, wood
Flooring: carpeting, tile, wood

Surface Coatings
Molding Compounds
Paper Treatment
Wood Adhesive
Textiles

Polyester, epoxy, acrylic


ABS, polyester thermosets
Wet strength resin - PAE
EPI, PU, epoxy
Glyoxal resins

Powder coating, carbamate coating


Alkaline paper making
Wood, steel

Source: Global Insight, Inc.

Economic Benefits of Melamine Formaldehyde


Due to its higher cost, MF resins face more material substitution (both direct and indirect)
across its applications than either UF or PF (with the exception of high pressure lamination,
where MF is by far the dominant system for outer and decorative layers). The higher cost
of melamine as well as the generally longer batch cycle times for MF resin production
result in somewhat higher prices per metric ton than either UF or PF resins. Since many of
the substitute resins are similar (acrylic, epoxy, polyester, PVA) to those that replace UF or
PF, the average price differential, and hence the economic benefit, is generally lower for
MF.
The total costs for substitutes for MF, which are the net benefits that consumers enjoy
because they have access to MF, are approximately $380 million per year, of which $360
million per year are saved from direct material substitutes (binders, adhesives, and coating
systems), and $10 million per year are saved by indirect substitution (LPL substitute
materials). The total capital investment required by industry to switch to substitutes of MF
is approximately $300 million.
The largest economic benefit of MF comes from its paper impregnation applications in
laminates. Although alternative HPL impregnation systems exist, they are either more
expensive (epoxy), not as durable (acrylic) or offer lower final product aesthetics (epoxy,
polyester). The alternatives to MF-based LPL include vinyl or paper foil. These
alternatives are less expensive materials that do not match the aesthetic attributes of MFimpregnated paper. Removing MF would limit the color and pattern selection of countertop materials, certain types of furniture, as well as the laminate flooring market.

Melamine Formaldehyde Resins

48

Consumers would need to switch to materials with considerably higher price points (solid
surface countertops, real hardwood flooring) in order to match the versatility and pattern
range of MF-based laminated materials. The annual benefit that MF provides to the
laminate sector is approximately $240 million per year. An additional $650 million per
year in indirect benefits are included in the PF analysis discussed in Chapter 4.
Polyester, acrylic, and epoxy could also serve as replacements in other MF applications
including coatings, molding compounds, and paper treatment. In addition to their use in
paper lamination, these polymers could substitute for between 80%-85% of MF
consumption in the U.S. and Canada. The remaining substitutes will include ABS
(molding applications), EPI (specialty wood), glyoxal (textile treatment), PAE (paper wet
strength), and PVA (specialty wood). Some light duty paper laminate applications such as
vertical surfaces will likely be replaced by other materials, such as vinyl film.
Table 15
Economic Benefits of Melamine Formaldehyde
Direct
Indirect
Total
End-use market
($ MM/year)
($ MM/year)
($ MM/year)
Paper impregnation

215

10

245

Surface Coatings

65

65

Molding Compounds

15

15

Paper Treatment

25

25

Wood Adhesive

35

35

Textiles

neg

neg

Total

355

10

365

Source: Global Insight, Inc.


Note: Totals may not add due to rounding.

Melamine Formaldehyde Resins

49

6.

POLYACETAL RESINS

The U.S. and Canadian market for polyacetal resins (POM) is approximately 157,000
metric tons, of which nearly 50% of polyacetal resin consumption is in industrial and
automotive applications. POM has replaced many metal products. In the absence of POM,
the market would either go back to metals or move to alternative thermoplastics (e.g.
polyolefins, polycarbonates, polyesters, and nylons). However, there are tradeoffs: the
metals are much heavier, and the thermoplastics have inferior mechanical and chemical
properties and are more difficult to fabricate.
The total costs for substitutes for POM, which are the net benefits that consumers enjoy
because they have access to POM, are approximately $220 million per year. In addition,
approximately $90 million worth of capital costs for new plant and equipment to produce
and use substitutes is avoided through the continuing use of POM. In 2003 POM
manufacturers generated sales of nearly $500 million, and purchased raw materials and
utilities valued at nearly $220 million. The sector supports approximately 700 jobs.
Introduction
Polyacetal, also known as acetal polymers or polyoxymethylene (POM), is a
formaldehyde-based thermoplastic that has been available commercially for over 45 years.
Due to its superior properties, including high stiffness and strength, low coefficient of
friction and good lubricity, and good solvent resistance, polyacetal has become
commercially important and is used widely in industrial, transportation, agricultural,
construction, and consumer markets. Polyacetal resin manufacture consumes nearly 13%
of the North American formaldehyde production. The largest U.S. producers of polyacetal
resins are DuPont and Ticona (a business unit of Celanese). There are no producers of
polyacetal resins in Canada. In 2001, Canada imported 7,600 metric tons, over 90% of
which are from the U.S.40
Polyacetal is available in a number of grades ranging from low cost commodity resins,
specialty grades with properties tailored to the application, and filled grades with higher
strengths. Various grades of polyacetal copolymer resins include glass-filled, mineralfilled, low-wear and low-friction, ultraviolet light-stabilized, antistatic and
electroconductive, electroplatable, and toughened grades.
Economic Contributions of Polyacetal Resins
In 2003 polyacetal resin manufacturers generated nearly $500 million in sales and
purchased nearly $220 million worth of raw materials and utilities. Production of
polyacetal resins were 180 thousand metric tons in 2003. The sector supports
approximately 700 jobs.
40

Jamie Lacson with Goro Toki, "Polyacetal Resins," Chemical Economics Handbook, June
2002: 580.0950 W.

Polyacetal Resins

50

Table 16
U.S./Canada Polyacetal Resins Economic Contributions
2003
Production ('000 MT)

180

Sales (MM$)

496

Purchases (MM$)

218

Employment

700

Source: Global Insight, Inc.

Properties and Advantages of Polyacetal Resins


Polyacetal resins are crystalline, high-performance engineering polymers. They are valued
for their chemical and mechanical properties, relative ease of processability, and ability to
be fabricated into complex shapes with high precision.
Important properties include:

Excellent strength
Excellent creep resistance
Excellent fatigue resistance
Self lubricating
Very good chemical resistance
Very good water resistance

The many commercially attractive properties of polyacetal resins are due in large part to the
inherent high crystallinity of the base polymers. This crystallinity makes acetals stiffer and
stronger than most thermoplastics and contributes to their excellent resistance to most
chemicals, including many organic solvents. General purpose acetal resins are
substantially stiffer than general purpose polyamides (e.g. nylon) when the polyamides
have reached equilibrium water content.41 Unless the other polymers have fillers, POMs
stiffness is superior.
The polymers are derived from formaldehyde either directly or through its cyclic trimer,
trioxane. Acetal resins are classified by two chemical types: homopolymers and
copolymers. All acetals contain various stabilizers which are added by the supplier.
Homopolymers are produced by polymerizing formaldehyde and are 100% formaldehydebased. DuPont introduced the homopolymer polyacetal resin in 1960 under the name
Delrin. Homopolymers account for about 85% of the resin sold at the producer level and
have excellent mechanical properties. Copolymers are 98% formaldehyde-based and are
produced by polymerizing trioxane. Trioxane is a compound that is formed from three
formaldehyde molecules arranged in a ring structure. The ring structure makes it a
desirable form, as it is easy to purify. Hoechst Celanese introduced a copolymer polyacetal
resin, Celcon in 1961. Copolymer specialty grades accounts for the remaining 15% of
41

John Wiley & Sons, Inc., "Acetal Resins", Kirk-Othmer Encyclopedia of Chemical Technology,
Dec 2000.

Polyacetal Resins

51

the resin and have excellent processability, although at some sacrifice of mechanical
properties.
Polyacetal Resin Consumption
The U.S. and Canada consumed approximately 157,000 metric tons of polyacetal resins in
2003, nearly half of this consumption being in the industrial and automotive markets.42
Products made from polyacetal have widespread applications based on their favorable costperformance balances. Gears, bearings, housings, and various parts are important
applications in the industrial sector. Gears account for the largest segment across all
markets. Not only are they found in automobiles and industrial products but also in
consumer articles and appliances, such as cameras, DVD players, and printers. The plastic
used in gears must be strong enough to prevent the teeth on the gears from breaking, have
good stiffness and wear resistance to retain their shape, and minimum friction resistance.
POM is an excellent choice of plastic in this application because of its stiffness and lowwear properties.
Figure 10
U.S./Canada Polyacetal Resins Demand by End-Use Market
Appliances &
Tools

Other

Electrical &
Electronic

Automotive

Other
Clips & Fasteners
Electrical
Fuel System
Housings & Parts
Conveyor
Linkages

Plumbing &
Irrigation

Valves & Fittings

Industrial

Gears & Bearings

Consumer Goods

Source: CEH, Polyacetal Resins, June 2002

The largest application for POM in the automotive industry is in fuel system components.
All fuel pumps are made with POM due to its superior chemical resistance. The two major
characteristics of polyacetal resins that make them attractive in transportation applications
are excellent resistance to gasoline, including gasoline blends with ethanol and methanol,
and excellent inherent lubricity.43 In the fuel system component application, there is no
other resin substitute that can match POM's chemical resistance. The next largest
42
43

Estimated value
Nexant, Inc./Chem Systems, "Polyacetal", PERP 01/02S12, September 2002: 80.

Polyacetal Resins

52

application for POM in the automotive industry is seatbelt systems. Here, POM is valued
for its frictional and stiffness properties.
Table 17
Major Product Applications of Polyacetal Resins
Industrial Applications
Gears, cams, bearings, levers, pulleys, sprockets, bushings, valves

Gas meters & water flow meters

Chemical mixing screws

Pump impellers

Conveyor systems

Police nightsticks

Fan and blower blades

Pumps and beverage valves

Farm machinery

Sausage presses

Food and dairy machinery

Scaffolding hardware

Automotive Applications
Automatic transmission parts

Gear selector for automatic gearbox

Car heater plates

Locks, hooks, fasteners, clips, mirror housings

Carburetor floats

Seatbelt systems

Control switches & instrument knobs

Steering column shear pin parts

Door handles, door catches and window cranks

Suspension links

Door module

Tire valve stems

Electrical switch parts

Trunk release levers

Exterior and interior trim

Window transport mechanisms

Fan parts and car ventilation grille

Windscreen washer nozzles

Fuel systems components

Light sockets

Consumer Articles
Aerosol spray valves

Roller-skate brake supports

Can opener drive train

Mixers and blenders

Cannula disposal unit for dental practices

Pen components

Cell phone cover

Marine fittings, fishing reels

Disposable lighters, lighter bodies

Scrubbing discs on power rug cleaners

Disposable syringes

Sliding mast for windsurfers; parts for


surfboards, sailboats, and sailboards

Electric toothbrushes

Snow and water ski bindings and straps

Garage door opener components

Temperature control timer gears

Gears in watches

Utensils and bowls

Gun components and accessories

Zippers

Hospital bed (height adjustment mechanism)

Plumbing & Irrigation


Agricultural irrigation systems, turf maintenance sprinkler systems

Garden hose nozzles

Ballcocks, taps, pipe couplings, valve mechanisms

Showerheads

Faucets

Water softener components

Appliances & Power Tools


Clothes washers and dryers

Polyacetal Resins

Kitchen appliances

53

Dishwashers

Laser welding

Fans and vacuum cleaners

Paint sprayer parts

Garden chemical sprays and tools

Powered craft tools

Electrical & Electronic


Business machines

Keyboard push buttons

Coil forms

Laser printer (gear trains)

Computer printers and plotters

Precision instruments

Electromechanical counter frames

Relay components, buttons, knobs

Internal ratchets and other moving parts

Switches

Other
Artificial heart valves

Neck and foot prostheses

Pacemakers
Source: SRI International, Chemical Economic Handbook (CEH), Nexant/Chem Systems and
company product literature.

Substitutes for Polyacetal Resins


Polyacetal incorporates formaldehyde directly in its polymer skeleton and cannot be
produced by alternate chemistries. Substitutes made from other materials would have to be
found if formaldehyde were not available.
In most applications, POM competes with other engineering resins. Intermaterial
competition with various grades of nylon occurs in many products. Competition also exists
with polyethylene terephthalate (PET) and polycarbonate (PC) as well as other resins,
including polybutylene terephthalate (PBT), polyphenylene oxide (PPO), and polyvinyl
chloride (PVC) in various situations. POM has displaced metals and these competing
resins in applications where its lower cost in service provides consumers with economic
benefits. Not only are competing resins of comparable grade more expensive, pound for
pound, compared to POM, these alternatives are also more difficult to process in the
equipment used to fabricate parts from POM so manufacturing costs are higher. Therefore,
the cost to produce parts that are equivalent in service to those made from POM are
significantly higher, even though parts made from most of the competing resins may be
lighter in weight than POM. Metal parts are much heavier than parts made to the same
dimensions from POM, and would only be used where their superior mechanical properties
are required. In many applications, the substitutes will have properties that are not as
favorable as POM, so consumers will experience a loss of utility from decreased service
life, increased maintenance requirements and decreased functionality.
Substitutes for POM cannot match all elements of its functionality in terms of stiffness,
weight, moisture and chemical resistance, and lubricity. Polyacetal resins are generally
harder, tougher, and longer-lasting than other plastics and are used in many areas of
application in which metallic materials were previously used. In automotive applications
and appliances end uses, polyacetal resins are replacing metals because of their preferred
properties: they are light weight, long lasting, have no corrosion concerns, and no painting
is required.

Polyacetal Resins

54

Table 18
Substitutes for POM
End-Market Market
Industrial
Automotive
Consumer articles
Plumbing and irrigation
Appliances and tools
Electrical and electronic
Other

Thermoplastic Engineering
Resins Substitute
Nylon, polyester
Nylon, polyester
ABS, nylon, polystyrene
ABS, nylon, polystyrene
Polycarbonates, polyolefins

Metal Substitutes
Brass, steel, die-cast zinc
Steel, die-cast zinc
Brass
Brass, steel, die-cast zinc
-

Source: Global Insight, Inc.

In industrial applications, polyacetal resins compete with metals, nylons, and polyester
resins. Polyacetals are preferred over metals and nylons as materials for bearings because
of their low coefficient of friction and greater lubricity. In food and dairy machinery,
polyacetal resins have better hydrolysis resistance than the substitute materials nylon and
polyester resins. Conveyor systems made from polyacetal resins are corrosion-free, can be
made anti-static to prevent dust buildup, and have lower energy requirements because of
the reduced weight compared to metal counterparts.44 Furthermore, polyacetal components
produce less noise, making the conveyors much quieter.
In automotive applications, polyacetal resins compete with metals and other engineering
resins. Polyacetal resins compete against steel, nylons and polyesters in window crank
transport and windshield wiper mechanisms. Given their excellent mechanical properties,
durability and a low coefficient of friction, polyacetal resins make simpler, lighter and
longer lasting parts. As a competing material and potential substitute, however, polyesters
offer higher heat distortion temperature. Reinforced nylons, thermoplastic polyester
engineering resins, and die cast zinc which are also used in door handles and window
cranks, can replace polyacetal resins should polyacetals become unavailable to consumers.
The same is true for metals and polycarbonates substitution in loudspeaker grills.
In consumer articles, polyacetal competes with ABS, polystyrene, and nylon in
videocassette and audiocassette platforms and reel hubs. In some less demanding
applications, these substitutes are already preferred because they are lower priced. This
limits the economic benefits of POM in this end-use market. For plumbing and irrigation
applications, however, polyacetals are preferred over and have largely substituted for
brass. Their non-corrosive properties resist scale buildup for long term maintenance-free
operation. In medical uses, including pacemakers, artificial heart valves, and neck and
foot prostheses, polyacetals compete against such substitutes as polyolefins and
polycarbonates.

44

SRI Consulting and Noni Suk-Chin Lim, "Acetal Resins", Process Economics Program Report
69A, September 2002: 3-4.

Polyacetal Resins

55

Economic Benefits of Polyacetal Resins


The substitution cost for replacing polyacetal in its current applications is over $220
million per year. If polyacetal were no longer available, thermoplastic engineering resins
would be the primary replacements for about 94% of the material. These resins include
nylons, polyester (PET), polycarbonates (PC) and other resins. Of all the thermoplastic
engineering resins, nylons would be the most important substitute as they would replace
more than half of the displaced polyacetal. Nylons would also bear the highest total cost
of substitution at about $100 million. Utility losses in water and solvent-sensitive
applications contribute to the costs of substitution of POM by nylon. Other thermoplastic
engineering resins have a lower cost per pound than POM; however their stiffness and
chemical resistance properties are inferior on a per-weight basis. Substitution costs are
lowest where the competing resins are most nearly drop in substitutes for the POM
parts that would no longer be available.
Metals, including brass, steel, and die-cast zinc, would replace the remaining 6% of the
polyacetal. Metal parts would only be used where their superior mechanical properties
are required. Substitution costs of metals are high because the weights of metals
substituted are so much higher for parts of the same size and shape.
Table 19
Economic Benefits of Polyacetal
Substitute Material

POM Displaced
('000 MT)

Cost of
Substitution
($ MM/year)

Cost of
Substitution
($/MT POM)

Nylon resins

84

100

1,180

PET resin

24

20

830

PC resin

20

35

1,750

Other resins

19

15

790

50

6,250

157

220

1,400

Metals
Total
Source: Global Insight, Inc.
Note: Totals may not add due to rounding.

About 85% of the total costs of substitution result from the direct costs of switching to
less efficient, more expensive materials. The remaining costs result from utility losses for
the products substituted and the charges for the additional capital that must be employed.
New investments of about $90 million will be required to produce the additional
substitute materials required and to process them, and consumers enjoy derivative
benefits since the costs of the additional capital required for the alternative resin capacity
are not passed on to other products made from them.

Polyacetal Resins

56

7.

1,4-BUTANEDIOL

The U.S. and Canadian consumption of 1,4-butanediol (BDO) is approximately 385,000


metric tons, of which approximately half goes into the production of tetrahydrofuran. BDO
is used as an intermediate to make products for automotive engines and parts, electrical and
electronic components, pharmaceutical manufacturing, and consumer goods. Since
formaldehyde-free production processes for BDO are already available and
commercialized, the elimination of formaldehyde would primarily involve replacement of
the formaldehyde-based production plants.
The total costs for substitution of BDO, which are the net benefits that consumers enjoy
because they have access to BDO, are approximately $140 million per year. In addition,
approximately $600 million worth of capital costs for new plant and equipment to produce
and use alternative processes is avoided through the continuing use of formaldehyde-based
BDO. In 2003 BDO manufacturers generated sales of nearly $500 million, and purchased
raw materials and utilities valued at over $200 million. The sector supports approximately
450 jobs.
Introduction
There are four producers in the United States who make 1,4-butanediol (BDO) but only
two BASF (Geismar, LA) and DuPont (LaPorte, TX) use formaldehyde in their
production process. Five commercial processes currently exist for BDO production, three
of which are used by U.S. producers. BDO is most commonly produced in the Reppe
process which is based on the reaction of acetylene with formaldehyde. Access to cheaper
raw materials and the necessary production technologies have led two U.S. producers to
use alternative processes that do not use formaldehyde.
BDO is consumed in the manufacture of other chemicals, including tetrahydrofuran (THF),
polybutylene terephthalate (PBT), gamma-butyrolactone (GBL), as well as polyurethanes.
These products are versatile intermediates found in automobile engines and parts, electrical
appliances and components, plumbing equipment, consumer appliances and in the
production of pharmaceuticals. In 2003 BDO consumed approximately 9% of
formaldehyde production.
Economic Contributions of 1,4-Butanediol
We only consider the economic contributions from the two manufacturers (BASF and
DuPont) who use formaldehyde to make BDO. These producers made approximately 245
thousand metric tons of BDO in 2003 and generated nearly $500 million in sales. They
bought over $200 million worth of raw materials and utilities and support about 450 jobs in
Louisiana and Texas.

1,4-butanediol

57

Table 20
U.S./Canada 1,4-Butanediol Economic Contributions, 2003
2003
Production ('000 MT)45

245

Sales (MM$)

486

Purchases (MM$)

214

Employment

450

Source: Global Insight, Inc.

Properties and Advantages of 1,4-Butanediol


BDO is a non-corrosive, colorless, high-boiling point liquid with a low order of toxicity
under normal handling and use conditions. BDO is completely soluble in water, most
alcohols, esters, ketones, glycol ethers and acetates and may be immiscible or partially
miscible in common aliphatic and aromatic or chlorinated hydrocarbons.
BDO is used mainly as a co-monomer in classical diol-condensation reactions used to
produce many other products, such as tetrahydrofuran (THF), polyurethane foams,
elastomers, and adhesives. In addition to condensation reactions, it can be converted to
simple esters and halides, dehydrated to tetrahydrofuran, and dehydrogenated to
butyrolactone. In general, polymers produced from BDO exhibit greater hydrophobicity,
crystallinity, strength, hydrolysis resistance and better low temperature flexibility than
those produced from ethylene glycol. The physical properties of BDO make it useful as a
plasticizer and humectant. A humectant is a substance that promotes the retention of
moisture.
1,4-Butanediol Consumption
In 2003 U.S. and Canadian consumption of BDO was over 385 thousand metric tons.
BDO is largely used as an intermediate in the production of many other products, such as
tetrahydrofuran (THF), polybutylene terephthalate resins (PBT), gamma-butyrolactone
(GBL) and polyurethane, which are important in automotive markets (engines and parts),
electrical and electronic components, production of pharmaceuticals, and consumer goods.

45

Excludes production from non-formaldehyde based processes.

1,4-butanediol

58

Figure 11
U.S./Canada 1,4-Butanediol Demand by End-Use Market
Polyurethanes

Other

Solvent for PVC


cement and
coatings
gammabutyrolactone (GBL)

Tetrahydrofuran
(THF)

PTMEG

Polybutylene
Terephthalate (PBT)

Source: SRI International, Chemical Economics Handbook, 1,4 Butanediol, June 2004.

In the U.S., tetrahydrofuran is the largest market for BDO, accounting for 51% of
consumption in 2003. Close to 80% of all THF consumption is used to produce
polytetramethylene ether glycol (PTMEG). PTMEG is an ether polyol, which combines
with an isocyanate in the manufacture of urethane elastomers and polyurethane fibers. In
the production of polyurethanes, PTMEG is used as the soft-segment building block and
provides exceptional flexibility and elasticity to its end-products.46 Consumer products
based on PTMEG include spandex fibers (Lycra) as well as in elastomeric products
(buttons, rollers and wheels) that take advantage of its flexible properties. The remaining
20% of THF consumption is used to manufacture polyvinyl chloride cement and coatings,
in magnetic tape, and in the production of pharmaceuticals.47
Seventy-seven thousand metric tons of 1,4-butanediol were used to manufacture
polybutylene terephthalate resins (PBT) in 2003, representing 20% of BDO production.
PBT exhibits high impact strength and good chemical resistance. These resins are used
widely in the automotive industry as well as in electrical and electronic components and
parts. The automotive industry takes advantage of PBT's excellent physical properties
(stiffness and durability), its high degree of moldability as well as its appearance as a
finished product. PBT also exhibits high dimensional stability and is a good flameretardant. It is these properties that have led PBT to be widely used in the electrical and
electronics industry as connectors, insulators and relays. PBT can also be found in

46

See http://www.lyondell.com/html/products/products/thf> .
Koon-Ling Ring with Thomas Kalin and Kazuteru Yokose, "1,4-Butanediol," Chemical
Economics Handbook, June 2004: 1-25.
47

1,4-butanediol

59

plumbing equipment, consumer appliances and other miscellaneous uses (buttons, zippers
furniture and hardware fixtures).
Another 77 thousand metric tons of BDO was used to produce gamma-butyrolactone
(GBL) in 2003. GBL can be used as a solvent in lube oil extraction, electronics
applications, paint strippers and engineering resins. Additionally, GBL is used to
manufacture 2-pyrrolidone/N-vinyl-2-pyrrolidone/polyvinylpyrrolidone and can be found
in cosmetics, hair sprays, germicides, papers, textiles and can aid in beverage
clarification.148
Table 21
Major Product Applications of 1,4-Butanediol
Automotive
Metal/mechanical parts in engines
Car Bumpers

Adhesives
Coating for magnetic tape
Polyvinyl cements & coatings

Applications
Cosmetics
Hair sprays
Germicides

Consumer
Skate wheels
Belts
Rollers
Buttons
Zippers
Printing Inks

Appliances
Plumbing equipment (pipe fittings)
Furniture
Hardware fixtures
Electronics
Connectors
Insulators
Relays

Fibers & Solvents


Spandex
Oil lube extraction
Electronic appliances
Paint strippers

Source: SRI International, Chemical Economics Handbook, 1,4-Butanediol, June 2004

Substitutes for 1,4-Butanediol


There are currently five processes used worldwide to manufacture 1,4-butanediol and three
are used by the producers of BDO in the U.S. There are no BDO production facilities in
Canada. Formaldehyde is a key raw material in the Reppe process which is based on the
reaction of acetylene with formaldehyde. Raw materials for the competing technologies
include propylene oxide and n-butane (the Geminox process). These two technologies
may have certain advantages over the Reppe process and may be favored when new BDO
plants can be constructed with preferential access to one of the alternative feedstocks.
Since formaldehyde-free BDO production processes have already been developed and
commercialized, inability to access formaldehyde would not eliminate BDO from the
market. Therefore, production of BDO without formaldehyde requires only process knowhow, feedstock access and the capital necessary to construct the new capacity to displace
existing Reppe process plants.
48

Ibid.

1,4-butanediol

60

Economic Benefits of 1,4-Butanediol


In the case of BDO, the benefits that consumers currently experience derive from the fact
that 67% of current U.S. BDO production is based on formaldehyde while the remaining
production is based on alternative raw materials propylene oxide/allyl alcohol or nbutane. In the absence of formaldehyde, the industry would be forced to abandon their
existing Reppe plants and convert to alternative technologies. The benefits, therefore, are
simply the avoided capital and any operating costs differential in not having to build
plants for the other processes.
Global Insight estimates that the avoided capital expenditures would be in the range of
$400 million to $700 million depending on whether or not the alternatives to nonformaldehyde BDO production were greenfield (a whole new system) or brownfield
plants and the scope of the projects. The avoided costs of the required return on
investment would depend on the project scope. There may also be operating cost
differentials which could amount to $30 million per year either way depending on the
feedstock chosen (either propylene or n-butane). Thus, the total substitution cost for
replacing formaldehyde-based BDO production in its many applications is approximately
$140 million per year. In addition, approximately $600 million worth of capital costs for
new equipment to produce and use alternative processes is avoided through the
continuing use of formaldehyde-based BDO.

1,4-butanediol

61

8.

METHYLENEBIS(4-PHENYL ISOCYANATE)

The U.S. and Canadian market for methylenebis(4-phenyl isocyanate) (MDI) is


approximately 768,000 metric tons, the majority of which goes into the production of rigid
polyurethane foams. The primary substitutes of MDI are alternative isocyanate-based
polyurethanes (toluene diisocyanate (TDI) and aliphatic isocyanates), expandable
polystyrene, and other thermoplastics, latexes and elastomers. While many of these
substitutes are cheaper to produce than MDI-based polyurethanes, their insulating value
and other properties are inferior on a per-weight employed basis.
The total costs for substitutes for MDI, which are the net benefits that consumers enjoy
because they have access to MDI, are approximately $2.33 billion per year. In addition,
approximately $2.9 billion worth of capital for new plant and equipment to produce and use
substitutes is avoided through the continuing use of MDI. In 2003 MDI manufacturers
generated sales of $2.8 billion, and purchased raw materials and utilities valued at $1.2
billion. The sector also supported approximately 4,400 jobs in Texas, Louisiana, and Ohio.
Introduction
Methylenebis(4-phenyl isocyanate) (MDI) is one of the isocyanate family of chemicals that
includes diisocyanates and polyisocyanates a group of low molecular weight aromatic
and aliphatic compounds containing functional isocyanate groups. It is used mainly in the
manufacture of polyurethanes that are produced in a variety of forms: rigid and flexible
foams and used in binders, coatings, adhesives, sealants and elastomers. Rigid
polyurethane foams account for over 50% of all MDI consumption, with the majority of the
rigid foams being used in construction applications as insulation.
Economic Contributions of MDI
In 2003 MDI manufacturers produced some 963 thousand metric tons of MDI using $1.2
billion worth of raw materials and utilities purchased from its suppliers. Together, MDI
manufacturers generated $2.8 billion of sales and supported approximately 4,400 jobs in
Texas, Louisiana, and Ohio.
Table 22
U.S./Canada MDI Economic Contributions, 2003
2003
Production ('000 MT)
Sales (MM$)
Purchases (MM$)
Employment

963
2,761
1,215
4,400

Source: Global Insight, Inc.

MDI

62

Properties and Advantages of MDI


MDI is the most important diisocyanate in commercial use. MDI is soluble in acetone,
benzene, octane, and kerosene; however, it is insoluble and can be very reactive with water.
A white to light yellow solid, MDI is produced commercially in a phosgenation process, to
form a mixture of MDI known as polymeric MDI. Its precursor, diamino dephenyl
methane, is produced by the reaction of aniline with formaldehyde. Polymeric MDI can
then be purified to form pure MDI.
MDI is more expensive than the other high-volume isocyanate, toluene diisocyanate (TDI),
but provides better performance characteristics. MDI is converted into a variety of forms
by reaction with various polyols: rigid and flexible polyurethane foams, binders, coatings,
adhesives, sealants and elastomers. End products exhibit durable and versatile qualities
that make them very useful and important to consumers. Rigid foams provide excellent
structural stability and have excellent insulating properties making them ideal for
construction and appliance applications. They can be molded in any shape to fit specific
requirements, and in many applications are sprayed or poured-in-place, reducing energy
costs. Cushioning and resiliency are important characteristics of flexible foams based on
MDI.
Other important properties of products made from MDI are:
High strength
Lightweight
Good chemical resistance
Good higher temperature/fire resistance
Excellent abrasion resistance
Impact and shock resistance
Oil and solvents resistance
MDI Consumption
The U.S. and Canadian consumption of MDI was approximately 768 thousand metric tons
in 2003.49 There are four U.S. producers of MDI BASF Corporation (Geismar, LA),
Bayer Corporation (Baytown, TX), Dow Chemical U.S.A. (LaPorte, TX) and Huntsman
ICI Chemicals LLC (Geismar, LA) but none in Canada.50
The majority of MDI is used to manufacture rigid polyurethane foams. Most alternative
low density thermal insulation products must be supported with additional materials and
are soft or less resistant to moisture; this is not the case with rigid polyurethane foam.51
Rigid foams are excellent insulators that reduce costs in a variety of construction
49

Estimated value.
Henry Chinn with Walter E. Cox and Akihiro Kishi, "Diisocyanates and Polyisocyanates,"
Chemical Economics Handbook, February 2002: 1-52.
51
See Polyurethane and Polyisocyanurate Foams," Alliance for the Polyurethane Industry. See
http://www.polyurethane.org.
50

MDI

63

applications. Excellent insulation qualities and strong adhesive characteristics of


polyurethanes make them ideal for use in the walls and roofs of commercial and residential
buildings. Also, rigid foams can be fabricated into self-supporting products, ideal for
insulation panels and other construction applications.52 In fact, nearly 60% of all MDI
rigid foam consumption was in the construction industry. Rigid foams are also found in
appliances (insulation of refrigerators and freezers and in air conditioners and boilers),
packaging, and transportation. Rigid foams are used in automobile doors for insulation,
and can be used as flotation devices.
Figure 12
MDI Demand by End-Use Market
PU Fibers
Thermoplast ic Elast omers
Surf ace Coat ings

Other

Cast Elast omers

Transportation
Ind Insulation

Microcellular Product s

Packaging
Adhesives and Sealant s

Appliances

Rigid Foams

Flexible Foams

Construction

Binders

Source: SRI International, Chemical Economics Handbook, Diisocyanates


and Polyisocyanates, February 2000.

Another form of rigid foam polyisocyanurate rigid foam also utilizes MDI in its
production. Used predominantly in the construction industry (insulation for commercial
and industrial low slope roofs, residential sheathing insulation, in structural panels) polyiso
foam has a higher MDI content compared to polyurethane foam and has enhanced
performance characteristics. It is also higher priced than its polyurethane counterpart.
Polyiso foams provide improved fire resistance enabling products to withstand higher
temperatures for a longer period of time. With a high R-value that allows for thinner
insulation and reduced material costs, polyiso foams tend to be more energy and cost
52

John Wiley & Sons, Inc., "Isocyanates Organic," Kirk-Othmer Encyclopedia of Chemical
Technology, December 2000.

MDI

64

efficient in some applications. Moreover, polyiso foams can be cut and formed more
rapidly and, therefore, produced more quickly than polyurethane rigid foams.
MDI is used directly in some applications, especially as a binder in the manufacture of
fabricated wood products. See Chapter 3 for a more detailed discussion of this application.
Binders represent the second largest portion of U.S. MDI consumption, representing
approximately 100 thousand metric tons consumed. MDI is used to bond wood chips into
wood products, making products such as oriented strand board (OSB). The use of MDI as
a binder has been one of the fastest growing MDI markets.
Flexible foams accounts approximately 12% of U.S. MDI consumption. Most flexible
foams are made from MDI combined with a polyether polyol, with only a small percentage
based on polyester polyols.53 Flexible foams versatility and cushioning characteristics are
very beneficial to consumers. Used mostly as furniture and carpet cushions, these foams
provide excellent support and comfort. Flexible foams are also found in mattresses and
other beddings, car seats, headrests, bumpers and spoilers, packaging materials, and in the
soles of shoes.
Polyurethane coatings, adhesives, sealants and elastomers (CASE) products make up
slightly over 20% of total MDI consumption. Many products benefit greatly from the
functionality of these materials. The automotive industry uses polyurethane coatings as
finishes, sealants for doors and windows and adhesives to secure the bumpers, spoilers,
interior panels or other elastomer products. Elastomers are the largest portion of the CASE
products and are used in many products where their properties of moldability and abrasion
resistance are desired. Elastomers can be either thermoplastic or thermoset (cast)
depending on the functionality of the monomers used.54 Thermoplastic elastomers have a
low functionality with regard to the ability to return to their original shape after being
compressed: cast elastomers have a higher functionality with higher tear and abrasion
resistance.

53

See "Polyurethane and Polyisocyanurate Foams". Alliance for the Polyurethane Industry.
John Wiley & Sons, Inc., "Urethane Polymers," Kirk-Othmer Encyclopedia of Chemical
Technology, December 2000.
54

MDI

65

Table 23
Major Product Applications of MDI
Rigid Foams
Insulation
Roofing
Windows/doors
Metal panels
Appliance insulation
Freezers
Refrigerators
Air conditioners/water heaters
Flotation devices
Surface Coatings
Paints
Concrete flooring
Adhesives & Sealants
Used in bonding and insulation
Automotive interiors
Textile laminates
Indoor/outdoor athletic surfaces

Flexible Foams
Furniture
Office chairs
Stadium/arena seats
Automotive
Headrests
Fenders
Interior parts/panels
Exterior trim
Packing/packaging
Carpet underlays
Bedding/mattresses
Polyurethane Elastomers
Cast Elastomers
Gaskets
Shoe soles
Tires

Binders
Binds wood chips into wood products
Adhere rubber chips/flakes to surfaces

Microcellular Products
Auto panels/interior parts
Bumpers
Spoilers

PU Fibers
Sportswear
Spandex

Thermoplastic Elastomers
Flexible tubing, hose
Film

Source: SRI International, Chemical Economics Handbook, Diisocyanates and Polyisocyanates,


February 2000.

Substitutes for MDI


Polyurethanes based on alternate isocyanates and polyols and expandable polystyrene
(EPS) are the most important substitutes for MDI-based materials, accounting for about
half of the total amount substituted. The most direct type of substitution comes from the
use of polyurethanes based on an alternative isocyanate (TDI or other aromatic or aliphatic
isocyanate) and polyol combinations, whose compositions would be selected to give
properties that approached those of MDI-based materials. These direct substitutes could
replace up to 35% of total MDI consumption. Other substitutes require a change of
materials and manufacturing steps rather than a more simple, nearly drop-in substitute. The
thermoplastic substitutes, including EPS, expanded polyethylene (EPE), expanded
polypropylene (EPP), and expanded polyvinyl chloride (PVC), could replace about 30% of
MDI consumption while fiberglass, polycarbonate structures, styrene-butadiene/styrenebutadiene rubber (SB/SBR) latexes and elastomers, as well as other latexes and elastomers,
could substitute for the remaining 35%.

MDI

66

Table 24
Substitutes for MDI
Polyurethane
Thermoplastic Substitutes
Substitutes

End-Use
Market
Rigid Foam
Binders
Flexible Foam
Adhesives &
Sealants
Polyurethane
Elastomers
Coatings

TDI, other aromatic


isocyanates
TDI, other aromatic
isocyanates
TDI, other aromatic
isocyanates
TDI, other
isocyanates
TDI, other
isocyanates
TDI, other
isocyanates

Others

EPS, EPP, expanded PVC,


polycarbonate structural foam

Fiberglass

Latexes

EPS, EPP, EPE, expanded PVC,


polycarbonate structural foam

SB/SBR and
other elastomers
SB/SBR and
other latexes
SB/SBR and
other latexes
Various other
latexes

EPP/EPE
-

Source: Global Insight, Inc.


Note: Alternate polyols would be used with the other isocyanates

The substitute polyurethanes are more costly than MDI-based products and the selection
would be limited for rigid foams. TDI or other isocyanates with appropriate polyols could
be used as a direct substitute in pour-in-place insulating applications in appliances (e.g.,
refrigerators and freezers) and some construction applications with low cure times. If a
change of system is required, then EPS would be a significant substitute for rigid foams
used for their insulation value. Other systems, such as structural polycarbonate insulating
foams, would be required for products in which the structural insulation needed was
foamed-in-place. EPP, EPE and PVC foams as well as fiberglass could all also be used in
insulation applications but they are not as efficient as polyurethane or polyiso foams.
Thicker layers of insulation would be needed, thereby increasing costs. PVC has a low
heat resistance and would be best used in cold storage insulations.
TDI-based products would be more efficient substitutes for other applications, especially
for flexible foams. Currently, approximately 90% of consumption of TDI is used for
flexible foams since products made from it have excellent compression properties.55
Compared to MDI-based foams, TDI-based foams will spring back more easily to their
original shape and have a softer feel in applications such as cushions and seats. However,
in recent years toxicity issues and new standards have led manufactures to move away from
TDI in flexible foams. Other thermoplastics could also be effective as flexible foam
substitutes. EPE has good heat and sound insulation along with excellent shock absorbing
capability, properties that are useful for packaging, automotive and construction
applications. EPE can be used to pack high-end electronics such as televisions, personal
computers, and printers, as well as in pipe insulation.

55

Henry Chinn with Walter E. Cox and Akihiro Kishi, "Diisocyanates and Polyisocyanates,"
Chemical Economics Handbook, February 2002: 1-52.

MDI

67

Aliphatic isocyanate-based urethanes are acceptable substitutes for coatings since they are
primarily used in applications based on their outstanding weatherability.56 Their excellent
UV protection properties have led to their use in many outdoor coating applications such as
automotive and concrete support finishes. They could also be used for hardwood floor and
machinery finishes. Although aliphatic isocyanate-based systems provide increased
protection, they are more costly to produce than systems based on either MDI or TDI.
Formaldehyde Free Route to MDI
The currently practiced, four-step route to MDI is mature, efficient with respect to the
consumption of raw materials, and produces the required distribution of isocyanate
isomers. The use of formaldehyde to couple aniline to form the diamine precursor to MDI
is central to this technology. No formaldehyde-free routes to MDI have been shown to be
technically and economically feasible, although it is possible to conceive of chemistries
that would support such routes. They would be adopted if it could be shown that their
costs were lower or if they had significant environmental or other benefits.
For this analysis we have conducted a scoping level evaluation of the costs for a five-step
route for the production of MDI that would not require formaldehyde. The five steps are:
1. The chlorination of toluene to form benzyl chloride. This technology currently is
practiced commercially although not widely.
2. The Friedel Crafts catalyzed condensation of benzyl chloride with benzene to
form diphenyl methane. This has been used as a preparatory procedure, but yields
are low and it has not been commercialized.
3. The nitration of the diphenyl methane to form dinitro diphenyl methane. It has
been assumed that this step would be analogous to the current commercially
practiced nitration of benzene, but the distribution of the isomers that would be
formed is not known.
4. The hydrogenation of the dinitro diphenyl methane to form the diamine precursor
to MDI. It has been assumed that this step would be analogous to the current
commercially practiced production of aniline, although it probably would have to
be done in the liquid phase.
5. The phosgenation of the diamine to form MDI, and its separation and the
formation of pMDIs, as is currently practiced commercially.
Steps 1 and 2 could be carried out in integrated facilities, and the diphenyl methane could
then be converted by Steps 3 and 4 to the diamine in other integrated facilities. The
diamine could then be converted to MDI in existing facilities, assuming that its purity and
the distribution of isomers formed are essentially the same as produced by the current
route.

56

John Wiley & Sons, Inc., "Isocyanates Organic," Kirk-Othmer Encyclopedia of Chemical
Technology, December 2000

MDI

68

The capital requirements for the process plants required to produce approximately 770
thousand metric tons per year of MDI by this formaldehyde-free route were developed
using a pre-design estimating technique that requires knowledge only of such key process
parameters as the number of process steps, the limiting process temperatures and
pressures, materials of construction, and the average plant throughput. Neither details of
the process technology nor site-specific details that can affect costs are comprehended by
this methodology, so the estimating uncertainty is high, of the order of plus or minus 33%
-50%.
Operating cost estimates for the process plants were developed based on input-output
balances for the major raw materials using estimated yields and conversion costs for
analogous processes. Site-specific costs and special arrangements with respect to raw
materials costs are not comprehended so that the uncertainty in estimated operating costs
is also high, of the order of plus or minus 20%-25%.
The capital requirements to produce MDI by this formaldehyde-free route to MDI are
approximately $4,000 per metric ton of MDI, assuming that no additional investments are
required for the final phosgenation step. Thus, total new investments of approximately
$3 billion would be required to produce the MDI consumed in the production of
polyurethane foams and other products. The cash costs for raw materials and their
conversion would be about $6,300 per metric ton of MDI at current raw material prices.
Therefore, the estimated required selling price for MDI produced by this route would be
about $7,100 per metric ton, approximately three times the current posted price for MDI.
The substantial increase in price is due to the less efficient use of raw materials caused by
poorer yields, particularly in the second step, the additional conversion cost of an extra
step, and the requirement to obtain an adequate return on the new capital investments. If
the substitutes identified in Table 24 could be manufactured at lower cost that this, there
would be no incentive to develop such a process.
Economic Benefits of MDI
The use of more expensive polyols and isocyanates that would be required to develop
products whose properties approach those based on MDI and the capital requirements and
utility losses that result from their substitution drive the substitution costs for the
alternative polyurethanes. TDI is cheaper than MDI but has significant performance
losses when compared to MDI in all end-use applications other than flexible foams.
Aliphatic isocyanates are more costly to produce than either MDI or TDI and usually do
not show any significant performance benefits other than increased weatherability. In all,
over 200 thousand metric tons of MDI would be replaced with alternative polyurethanes
costing more than $730 million per year.
The substitute thermoplastics, latexes and elastomers all have lower costs than MDIbased polyurethanes. However, their insulating value and other properties are inferior on
a per-weight basis. More materials are needed to achieve the required performance in
most applications. Additional layers may be added to other thermoplastic foams to
provide increased thermal protection thus increasing costs. The result is larger products,
more production steps, or more difficult installation which also increases costs. The

MDI

69

direct costs of substitution of the less efficient materials accounts for about half of total
cost. About 20% of the cost results from utility losses of utilizing the materials. The
remaining costs are for additional capital. The total cost for substitutes for MDI, which
are the net benefits that consumers enjoy because they have access to MDI, are
approximately $2.3 billion per year. In addition, close to $2.9 billion in capital
expenditures for capacity additions are avoided because of the presence of MDI in the
marketplace.
The specific benefit of MDI is about $3,000 per metric ton and reaches almost $4,200 per
metric ton depending on the substitute. The actual substitution occurs at the polyurethane
level, however, where specific costs are somewhat lower, at about $1,700 per metric ton
of urethane. These costs, while significant, are still estimated to be substantially lower
than the cost to produce MDI by a formaldehyde-free route, so one would not need to be
developed. The availability of formaldehyde-based MDI also provides significant
derivative benefits by avoiding the capital required for the production of alternative
materials.

Substitute
Material

Table 25
Economic Benefits of MDI
Cost of
Cost of
MDI Displaced
Substitution
Substitution
('000 MT)
($ MM/year)
($/MT MDI)

Alternative
Polyurethanes

235

730

2,730

EPS

120

400

2,980

Fiberglass

44

165

3,375

EPP/EPE

44

150

2,990

Expanded PVC

46

160

3,125

PC Structural Foams

52

240

4,180

SB/SBR Latexes

26

90

3,010

Other Latexes

29

95

2,950

SB/SBR Elastomers

41

135

2,920

Other Elastomers

37

125

3,090

Other Materials

35

3,370

685

2,325

3,025

Total

Source: Global Insight, Inc.


Note (1): The benefits of MDI consumed as a binder in the manufacture of wood products are included in Chapter 3 and 4.
Note (2): Totals may not add due to rounding.

MDI

70

9.

PENTAERYTHRITOL

The U.S. and Canadian market for pentaerythritol (penta) is approximately 72,000 metric
tons, of which over 60% is used in alkyd resins for OEM product finishes and architectural
coatings. The use of penta in alkyd resins is not a growth market as use of glycerin poses
stiff competition. Penta is also used to make aviation and refrigeration lubricants; aviation
lubricant is the end-use market where substitution is most difficult and, hence, it is the area
where penta has significant economic benefits.
The total costs for substitutes, which are the net benefits that consumers enjoy because they
have access to pentaerythritol, are approximately $140 million per year. In addition,
approximately $60 million worth of capital costs for new plant and equipment to produce
and use substitutes is avoided through the continuing use of pentaerythritol. In 2003
pentaerythritol manufacturers generated sales of $165 million, and purchased raw materials
and utilities valued at nearly $75 million. The sector also supported approximately 250
jobs in Texas, Missouri, and Ohio.
Introduction
Penta is a neopentyl polyhydric alcohol produced from formaldehyde and acetaldehyde.
Pentaerythritol's versatile chemistry makes it a building block for a wide range of
performance chemicals and materials. It is consumed mainly in the manufacture of alkyd
resins, neopolyol esters for lubricants, tall oil and rosin esters, and explosives. It exhibits
high thermal stability and imparts desirable characteristics that are valuable in the product
performance of coating resins and synthetic lubricants. The use of penta in alkyd resins is
not a growth market and is under competitive pressure. Penta competes with glycerin in its
use of alkyd resins for paints and coatings. The two largest markets for penta-based
neopentyl polyols are in aviation lubricants and refrigeration lubricants.
The three largest U.S. producers of pentaerythritol are: Celanese Ltd. (Bishop, TX),
Perstorp Polyols, Inc. (Toledo, OH.), and Hercules Incorporated (Louisiana, MO). Canada
no longer has any producers of pentaerythritol after Celanese Canada Inc. closed its
Edmonton plant in September 2001.57
Economic Contributions of Pentaerythritol
In 2003 the pentaerythritol sector produced 65,000 metric tons of product. In doing so,
pentaerythritol manufacturers purchased nearly $75 million of raw materials and utilities
from their suppliers and generated $165 million in sales. The sector supported
approximately 250 jobs in Texas, Missouri, and Ohio.

57

Sebastian N. Bizzari with Thomas Kalin and Akihiro Kishi, "Neopentyl Polyhydric Alcohols,"
Chemical Economics Handbook, December 2002: 44.

Pentaerythritol

71

Table 26
U.S./Canada Pentaerythritol Economic Contributions, 2003
2003
Production ('000 MT)
Sales (MM$)
Purchases (MM$)
Employment

65
165
73
250

Source: Global Insight, Inc.

Properties and Advantages of Pentaerythritol


Pentaerythritol is a white, odorless, crystalline powder. Penta is soluble in water, slightly
soluble in alcohol, and insoluble in most hydrocarbons. Dipentaerythritol, an off-white
powder less soluble than pentaerythritol, and tripentaerythritol, are higher homologues of
pentaerythritol which are also produced in the manufacturing process.
Pentaerythritol is manufactured from formaldehyde and acetaldehyde in the presence of an
alkaline catalyst such as sodium or calcium hydroxide. Three sequential aldol reactions
initially produce pentaerythrose, which is then crossed with formaldehyde ultimately to
produce pentaerythritol. Three grades of monopentaerythritol are produced including
mono grade, technical grade, and nitration grade. Dipentaerythritol and tripentaerythritol
are purified coproducts. Reactant ratios used in the synthesis determine the proportion of
the products. The amount of monopentaerythritol produced increases and dipentaerythritol
decreases as the ratio of formaldehyde to acetaldehyde is increased.
Pentaerythritol and other neopentyl polyhydric alcohols are characterized by possessing
high steric hindrance and by having no hydrogens in the highly reactive beta position,
increasing their stability at high temperatures. The structure and chemistry of
pentaerythritol make it particularly valuable in making alkyd resins, fatty acid rosin and tall
oil esters. Important properties of penta-based coatings include:

Durability
Versatility
Low cost
Short drying times
Gloss retention
Water and chemical resistance
Heat and color stability

Pentaerythritol Consumption
The U.S. and Canada consumed approximately 72,000 metric tons of pentaerythritol in
2003. Pentaerythritol consumption accounts for 4% of formaldehyde production. More
than 60% of pentaerythritol was used in alkyd resins, most of which were used in
architectural coatings. Pentaerythritol is an excellent material for these applications
because of its relatively low cost, versatility and long familiarity to end users. Other

Pentaerythritol

72

product applications of penta include neopolyol esters (NPEs) for lubricants, rosin and tall
oil esters for printing ink and coating adhesives, and pentaerythritol tetranitrate (PETN) for
explosives. Other miscellaneous uses include flame retardant paints, polyvinyl chloride
(PVC) stabilizers, antioxidants for olefins, and pentaerythritol triacrylate.
Figure 13
Pentaerythritol Demand by End-Use Market
PETN
Other

Special-Purpose
Coatings
Architectural
Coatings Interior

Rosin and Tall Oil


Esters

Architectural
Coatings Exterior

Neopolyol Esters
for Lubricants

Alkyd Resins
Product
Finishes - OEM

Source: SRI International, Chemical Economics Handbook, Neopentyl Polyhydric Alcohols, December 2002.

Pentaerythritol's largest use in the United States and Canada is in alkyd resins. The largest
U.S. producers of alkyd resins are Eastman Chemical, Reichhold, Valspar, and Cook
Composites. Nearly all alkyd resins are used in alkyd surface coatings for architectural
coatings, original equipment manufacturer's (OEM) product finishes, and specialty
coatings. Manufacturers of alkyd coatings blend penta with various glycols to balance a
specific coating's properties with its cost.
Esterification of pentaerythritol results in the production of neopolyol esters (NPEs).
Pentaerythritol is the largest-volume neopolyol used to manufacture NPEs because of its
cost and performance attributes. NPEs are used mainly in the production of synthetic
lubricants for refrigerants. Mechanical components of a refrigeration system must be
lubricated well and reliably since the systems are sealed. Key components include the
compressor and various valves throughout the system. A good lubricant will protect
moving parts, improve sealing in the compressor (viscosity), be chemically compatible
with the refrigerant and the other materials within the refrigeration system, have low
solubility in refrigerant, and be safe.58 The lubricant and the refrigerant must be
compatible. Lubricants compatible with the older chlorofluorocarbon (CFC) refrigerant
systems have been replaced with pentaerythritol-based NPE lubricants used in the newer,
58

McQuay Air Conditioning, Refrigerant Application Guide AG 31-007, 2002: 16.

Pentaerythritol

73

environmentally friendlier hydrochlorofluorocarbon (HCFC) and hydroflouorocarbon


(HFC) based refrigeration systems.
The superior thermal stability for NPEs also make excellent lubricants for aviation turbine
engines, automotive gasoline and diesel engines, and small two-cycle engines used in
recreation vehicles like outboards motors and snowmobiles.59 Because airplane engines
must withstand extreme heat and cold temperatures, the high temperature stability and low
temperature flow properties of penta-based products make them practically the only ones
that can be used in airplane engines. Biodegradable lubricants based on penta are used as
additives to fuel in motor oils and 2-cycle engines; they reduce waste, increase the lifespan
of the engine, and increase the lifespan of the lubricant.
Table 27
Major Product Applications of Pentaerythritol
Alkyd Coating Resins
Architectural Coatings:
Exterior and interior enamels, flat house paints, flat wall paints, semi-gloss and gloss paints
Product Finishes OEM:
Automotive and transportation, machinery and equipment, metal furniture and fixtures, wood furniture
Special-Purpose Coatings:
Aerosols, automotive refinishing, industrial maintenance coatings, marine, traffic paints

Neopolyol Esters (NPEs)


Synthetic lubricants:
Aviation turbine oils (military and civilian jet aircraft), gasoline and diesel engine cars and trucks, refrigerator
oils, two-cycle engines, plasticizers, synthetic waxes

Rosin and Tall Oil Esters


Adhesives, caulking compounds, flooring materials, inks, surface coatings, varnishes

Pentaerythritol tetranitrate (PETN)


Detonating cord, detonators, military uses, priming compositions, sheet and plastic explosives

Other
Medication for angina, antioxidant for olefins, flame retardant paints, radiation curing
Source: SRI International, Chemical Economics Handbook, Neopentyl Polyhydric Alcohols,
December 2002.

Substitutes for Pentaerythritol


No formaldehyde-free chemistries have been developed for its manufacture, so penta
would have to be substituted with products based on glycerin and other polyols, or by
materials based on entirely different chemistries. Since products manufactured from penta
have unique properties based on their structural and chemical properties, most alternatives
would be imperfect substitutes and their use would entail loss in utility. Even though not
all alkyd resins or neopolyol esters are produced using pentaerythritol, and other neopentyl
59

Pentaerythritol." The Innovation Group. See www.the-innovationgroup.com/ChemProfiles/Pentaerythritol.htm.

Pentaerythritol

74

polyhydric alcohols are used to produce these resins and NPEs, the potential alternatives to
neopentyl polyhydric alcohols are also manufactured by the reaction of formaldehyde with
another aldehyde.
Glycerin is the largest competitor of pentaerythritol for use in alkyd resins and has been
gaining market share as its price has fallen in recent years. There is a high interest in
producing biodiesel which would generate glycerin as a by-product. However, glycerin is a
low-end alkyd resin constituent with performance trade-offs in durability, versatility, and
flow properties. Pentaerythritol-based alkyd coating resins are preferred over the substitute
glycerin-based alkyds because they are faster drying, have greater gloss retention, have
greater water and chemical resistance, are more durable, and have greater heat and color
stability.
Other alkyd resin substitutes include waterborne coating systems and other coating
technologies. Waterborne acrylics compete in architectural coatings. Powder coatings,
high-solids polyesters and waterborne systems compete in some product finishes. Acrylic
latexes, epoxies, and urethanes compete in special-purpose coatings and surface coatings.
Latex-based systems are easier to use and clean, since oil based paints need solvents for
cleaning, and are widely used in consumer applications that do not require alkyds
durability. Other surface coating alternatives include polyester and vinyl-based systems.
The use of penta in alkyd resins is not growing in the U.S. and Canada. This is partly in
response to environmental regulations concerning VOC (volatile organic compound)
emissions.60 VOC describes the level of organic solvent in a system, which flashes off into
the atmosphere. The lower the VOC, the less potential there is for organic materials to be
released into the atmosphere.
There still are a few older aircraft with engines designed to use diesters or dibasic acid
esters, but they perhaps only represent 5% of all commercial and military aircraft. Almost
all new commercial, military, and private jet aircraft are designed to use NPEs. They have
been selected because NPEs exhibit suitable properties such as high temperature stability
and low temperature flow. NPEs used in aviation applications also are more desirable than
diesters because of improved oxidation and thermal stability. Other advantages include
good low-temperature viscosity, very good high-temperature stability, high flash point, low
volatility and good oxidation-corrosion resistance. Not only are diester blends less
effective, they cannot be used as a drop-in substitute for NPEs. Jet engines would need to
be redesigned to use an alternate lubricant, which would be costly and require an extended
period of time for testing and certification.
Alternate materials used for lubricants in refrigeration include mineral oils, alkylbenzenes,
NPE lubricants, polyalkene glycols, modified polyalkylene glycols and polyvinyl ethers.
The manufacturer of refrigeration systems usually recommends the type of lubricant and
bases its warranty on its use. Recommendations are based on several criteria which can
include lubricity, miscibility, compatibility with materials of construction, thermal stability,

60

Kirschner, Mark, "Chemical Profile: Pentaerythritol," May 12, 2003, No. 19, Vol 263, p. 31.

Pentaerythritol

75

and compatibility with other lubricants.61 The two most familiar for commercial air
conditioning applications are mineral oils and NPE lubricants. CFC refrigerants often used
mineral oils for lubricants. HCFC refrigerants use mineral oils or synthetic lubricants.
HFC refrigerants typically require a synthetic lubricant, such as NPE lubricants. While
HFC refrigerants will not mix with conventional lubricants, substitutes are likely to be
made for the NPEs.
Alternatives for rosin and tall oil esters in coating systems are hydrocarbon resins.
Substitutes for PETN and its explosive applications are other high explosives including
TNT and RDX. In its booster applications there are no suitable substitutes.

End-Use Market

Table 28
Substitutes for Pentaerythritol
Substitutes

Alkyd Resins
Neopolyol esters (NPEs) for
lubricants
Rosin and tall oil esters
PETN (Explosives)

Glycerin or other polyol-based alkyds,


latex, waterborne coating systems,
epoxy, urethane, vinyl
Dibasic acid esters, diesters, mineral
oils, alkylbenzenes, polyalkene glycol,
polyvinyl ethers
Hydrocarbon resins
TNT, RDX

Source: Global Insight, Inc.

Economic Benefits of Pentaerythritol


If pentaerythritol were no longer available, glycerin or other polyol-based alkyds would be
the primary replacement in the pentaerythritol-based alkyd resin applications, representing
half of the displaced penta. The substitute glycerin alkyds have lower costs than pentabased resins; however their performance characteristics are inferior. Consumers would
experience a loss of utility unless other steps are taken to improve the performance of these
substitute materials due to the superior durability, versatility, and flow properties of the
penta-based alkyds.
Other substitutes, representing another 15% of the displaced penta, include waterborne
coating systems, powder coatings, acrylics, latexes, epoxies, and urethanes. The two
primary applications of neopolyol esters for lubricants are aviation oils in military and
civilian jets, and refrigerator oils. Substitutes do not readily exist for lubricants in aviation
due to the unique chemical structure allowing lubricants to withstand extreme hot and cold
temperatures. Diester blends are ineffective and cannot be substituted as a "drop in" for
NPE lubricants. Jet engines would need to be redesigned to use an alternate lubricant,
which would be costly and require an extended period of time for testing and certification.
Instead, new investments must be made to develop a new chemistry that would be
compatible with the turbines.

61

DuPont Suva Refrigerants, "DuPont Suva HP Refrigerants Properties, Uses, Storage, and
Handling," H-47122-5, July 2004:13.

Pentaerythritol

76

Substitutes for refrigeration oils are not as difficult in some applications. While many
refrigerants only mix with specific lubricants, substitutes are likely to be made with
alkylbenzenes, polyalkene glycols, modified polyalkylene glycols and polyvinyl ethers.
Hydrocarbon resins would be substituted for the rosin and tall oil ester applications, while
TNT and RDX would be replaced for PETN in explosives. Much of the total cost of
substitution results from the direct costs of switching to less efficient materials.
We estimate the substitution cost for replacing pentaerythritol in its many applications is
approximately $140 million per year, with new investment of about $60 million required to
produce the additional specialty polyols needed in reformulated alkyds and other products.

Pentaerythritol

77

10.

CONTROLLED RELEASE FERTILIZER

The U.S. and Canadian market for all types of controlled-release fertilizer (CRF) is
approximately 457,000 metric tons, of which over 40% were urea-formaldehyde (UF)
reaction products. The largest CRF applications in the U.S. are in golf courses and in
professional lawn care and landscaping maintenance. UF concentrates are excellent for
these uses because of convenience and labor cost-savings advantages. Alternative CRFs
are the primary substitutes for urea-formaldehyde products; substitutes include other ureaaldehyde reaction products, synthetic organic products, and coated fertilizers. The use of
newer CRF products have reduced the levels of nutrient loss and levels of nitrogen toxicity,
require fewer fertilizer applications, and have improved agronomic yields.
The total costs for substitutes for UF based controlled-release fertilizer are approximately
$110 million per year. In addition, approximately $150 million worth of capital costs for
new equipment to produce and use substitutes is avoided through the continuing use of UFbased CRFs. In 2003 manufacturers generated sales of over $350 million, and purchased
raw materials and utilities valued at $155 million. The sector also supported approximately
560 jobs.
Introduction
The presence of nitrogen, phosphorous, and potassium in fertilizers yields increased growth
rates and greening. Fertilizers are classified as fast-release or controlled-release. Fastrelease fertilizers release their nutrients all at once. CRFs release their nutrients at a
specific rate over a period of time, providing a more constant source of nutrients to plants,
soils, and turf. Controlled-release fertilizers are safer for plants and the environment and
offer more convenience (fewer applications) than fast-release alternatives.
Urea-formaldehyde reaction products were patented in the U.S. for use as nitrogencontaining fertilizers in 1947 and have been commercially available since 1955.62
Ureaform, methylene ureas and natural organic nutrient sources were the only CRFs
available until the mid-1960s and early 1970s. These materials are slow-acting because of
their chemical properties and modes of nitrogen release. The major U.S. producers of
manufactured urea-formaldehyde CRFs include The Scotts Company, Nu-Gro
Technologies, LESCO, Inc., and Lebanon Seaboard Corp.
Economic Contributions of Controlled Release Fertilizers
In 2003 CRF production generated about $155 million in purchases of raw materials and
utilities, and over $350 million in sales. The level of employment supported by this sector
was about 560, with jobs concentrated mostly in Ohio, Alabama, and Oregon.

62

Sebastian N. Bizzari with Hossein Janshekar and Goro Toki, "Controlled Release Fertilizers,"
Chemical Economics Handbook, November 2004: 8.

Controlled Release Fertilizers

78

Table 29
CRF Economic Contributions, 2003
2003
Production ('000 MT)
Sales (MM$)
Purchases (MM$)
Employment

267
353
155
560

Source: Global Insight, Inc.

Properties and Advantages of Controlled Release Fertilizers


Urea-aldehyde reaction products are produced by reacting urea with various aldehydes,
including formaldehyde. This approach to controlled nutrient release for nitrogen
fertilizers produces materials with controlled or low water solubility. UF reaction products
are produced by reacting excess urea under controlled conditions of pH, temperature,
reaction time, and ratio to formaldehyde.
Controlling the rate or release of material allows the user to tailor the dosage to the
requirement at hand, eliminate wasteful overdosing and repeated applications, and
minimize release of unutilized material to the environment. The release pattern of nitrogen
from UF fertilizers is a multi-step process involving both dissolution and decomposition.
In general, there is some proportion of nitrogen slowly released initially. This is followed
by a more gradual release over a period of several (3-4) months, depending on the type of
product.63 However, the release pattern is also influenced by temperature, moisture, and
soil organisms.
CRFs containing formaldehyde include UF concentrates, ureaform, methylene ureas,
methylene diurea/dimethylene triurea, UF solutions, urea-triazone solutions, and other
slowly soluble fertilizers such as spikes, stakes, tablets and briquettes. Ureaform is the
oldest type of UF fertilizer product and continues to be used in blended fertilizers. It is a
granular substance produced by reacting urea and formaldehyde. Ureaform is composed
largely of higher molecular weight UF polymers. First introduced in the 1960s, methylene
ureas (MU) were produced and marketed as two types: straight nitrogen products (40-0-0)
and granular mixed nitrogen-phosphorus-potassium (NPK) products containing methylene
ureas. New production techniques have improved the release time of nitrogen, resulting in
longer-term feeding and healthier turf.
Methylene diurea/dimethylene triurea (MDU/DMTU) compositions are a class of ureaformaldehyde products developed in the 1980s by The Scotts Company. Like NPK MUs,
MDU/DMTU compositions are produced by reacting UFC with other fertilizer materials in
a granulation process to manufacture blended fertilizers that are used for direct application
to lawns and gardens. MDU/DMTU compositions are predominantly shorter-chain, lowerweight polymers that contain higher percentages of unreacted urea than ureaforms and
MUs.
63

Dr. Martin E. Trenkel, "Controlled-Release and Stabilized Fertilizers in Agriculture,"


International Fertilizer Industry Association, Paris, 1997.

Controlled Release Fertilizers

79

Urea-formaldehyde products can be produced as clear water solutions. They contain


unreacted urea and a UF reaction product characterized as having low molecular weight
and being water-soluble (e.g., methylolureas, methylolurea ethers, MDU, DMTU or
triazone). UF solutions contain no water-insoluble nitrogen and have nitrogen release
periods of eight to twelve weeks. Urea-triazone solution-based fertilizer products are
unique because of the closed-ring configuration of triazone. This structure provides
superior non-burning and storage characteristics as well as controlled release of nitrogen.
As the triazone ring breaks down, the available nitrogen is released uniformly over a
period of eight to twelve weeks.
Blending a binder with fertilizer ingredients produces a solid, compacted product sold as a
spike, stake, tablet or briquette. Some of these formulations include controlled-release
nitrogen materials such as ureaform, while others include the IBDU substitute. Spike and
stake products are used to fertilize trees and shrubs, while smaller spikes are used on
houseplants. This form of fertilization has advantages over soluble fertilizer applications
because of the labor and cost savings they provide.
Controlled Release Fertilizer Consumption
The United States is the largest world market for controlled release fertilizers (CRFs),
consuming 415,000 metric tons during 2003. Canada consumed approximately 10% of
that level. Over 40% of the CRFs were urea-formaldehyde (UF) reaction products. The
two largest CRF applications in the U.S. are in golf courses and in professional lawn care
and landscaping maintenance.
U.S. and Canadian golf courses, lawn care and maintenance, nurseries and green houses
consume 98% of UF controlled release fertilizers. Golf courses alone consumed about 91
thousand metric tons of CRF in 2003, of which 49 thousand metric tons were of the UF
variety. The Scotts Company's lawn and garden fertilizers are homogeneous granular
slow-release products that contain MUs. Many regional and local manufacturers and
blenders incorporate purchased UF with sulfur-coated fertilizers and with other processed
natural organic materials in their consumer lawn and garden CRFs.

Controlled Release Fertilizers

80

Figure 14
Urea-Formaldehyde CRF Products Demand by End-Use Market, 2003

Non-agricultural Use
97%

Consumer
30%

Golf Courses
29%

Agricultural Crop Markets


2%

Prof. Lawn Care &


Landscape Maintenance
19%

Nurseries & Greenhouses


7%
Other Professional Turf
10%
Landscape
3%

Source: SRI International, Chemical Economic Handbook. Data does not include ureaform
formulated in spike, stake and tablet products.

Urea-formaldehyde products are only used in 2% of agricultural crops because they are far
more costly than quick release fertilizers. In agricultural crop markets, UF products are
only used in specialty markets (e.g. strawberries, citrus and other fruits) and there is some
at-planting use of tablet and briquette formulations for tree and vine crops. Liquid UF
products are used on peach and almond trees in California, on cotton crops and on some
other field crops.
New solid UF products, specifically MUs, have become more available and are being used
increasingly in professional lawn care and landscape maintenance. In order to compete
against substitute sulfur-coated fertilizers, the UF products must either have equivalent
performance characteristics at lower costs, or must offer enhanced performance.
Greenhouses use a combination of controlled-release and water-soluble fertilizers. A few
sod producers in Florida use granular MUs and the substitute SCU. However, due to the
high costs of these CRFs, most sod producers use low-cost soluble fertilizers. One
example is light blue nitroform, a 38-0-0 nitrogen fertilizer that is 70 percent "water
insoluble nitrogen" (abbreviated WIN on product labels).64 The rate released is determined
largely by bacterial activity rather than by temperature and water.

64

"Controlled-Release Fertilizers." See www.doityourself.com.

Controlled Release Fertilizers

81

Table 30
Major Product Applications of Urea-Formaldehyde CRF Products
UF Fertilizer Product
Major Supplier
Trade Name
Ureaforms:
38-0-0

Nu-Gro Technologies

Nitroform , UF 38

40-0-0

Nu-Gro Technologies

Nutralene , UF 40

NPK grades

Lebanon Seaboard
Corporation

Country Club ,
Greenskeeper

NPK grades

The Scotts Company

NPK grades

Methylene Ureas:

MDU/DMTU Compositions:

The Andersons Inc.

The Scotts Company


The Andersons Inc.

Scotts , TurfBuilder
ProTurf
Scotts
Contec

UF Solutions:
30-0-0

Georgia-Pacific Resins

GP-4340,
GP-4341 (30-0-2)

30-0-0

Tessenderlo Kerley, Inc.

Formolene -Plus

30-0-0

Morral Companies, LLC

NBN-30

29-0-0

Helena Chemical Company

Folocron

28-0-0

Helena Chemical Company

CoRoN

Urea-Triazone Solutions:
28-0-0

Tessenderlo Kerley, Inc.

N-Sure

30-0-0

Georgia-Pacific Resins

Nitamin 30L

NPK grades

Tessenderlo Kerley, Inc.

Trisert

Source: SRI International, Chemical Economic Handbook and product literature.


a

The Scotts Company manufactures these products under a long-term supply agreement, since the
June 2000 acquisition of Scotts' U.S. professional turf business by The Andersons.

Substitutes for Urea-Formaldehyde CRF


The rate of release of the materials may be controlled in a variety of ways, including
encapsulating them within polymer matrices, but incorporating them directly within soluble
matrices based on formaldehyde and urea is usually the most cost effective approach.
Manufactured UF products compete with other CRFs, with lower-cost soluble fertilizers
and with processed natural organic fertilizers, such as processed sludge and fish and bone
meal. In non-agricultural markets, UF products compete based on advantages in labor cost
savings and increased convenience. In agricultural markets, CRFs are not widely used due
to their higher costs. However, because of increasing environmental concerns about nitrate
pollution caused by leaching and run-off of nitrogen fertilizers, the slow-release and nonleaching properties of controlled-release nitrogen sources have become more important
than price in agricultural fertilizer products selection in some U.S. regions.

Controlled Release Fertilizers

82

Table 31
Substitutes for Urea-Formaldehyde CRF Products
Substitutes
Other urea-aldehyde reaction products
Isobutylidene diurea (IBDU)
Crontonylidene diurea (CDU)
Synthetic organic products
Oxamide
Guanylurea sulfate
Melamine (Triaminotriazine)
Coated fertilizers:
Sulfur-coated fertilizers (SCU)
Polymer-coated sulfur-coated fertilizers (PCSCU)
Polymer-coated fertilizers
Other slowly soluble fertilizers
Fertilizer spikes, stakes and tablets
Metal ammonium and potassium phosphates
Natural organic nutrient sources
Processed sludge
Fish and bone meal
Fast-release fertilizers
Source: SRI International, Chemical Economics Handbook.

Among the manufactured slow and controlled-release fertilizers, urea-formaldehyde based


products still have the largest share worldwide. Urea-formaldehyde competes with ureaisobutyraldehyde (IBDU) and urea-crotonaldehyde (CDU) as the two other nitrogen
reaction products designed for professional turf and landscaping. IBDU is used in
horticultural and professional turf applications in the U.S. IBDU may be used alone or in
fertilizer blends. CDU, manufactured in Japan, tends to degrade more slowly than IBDU.
Three alternate synthetic organic products are oxamide, guanylurea sulfate, and melamine
(triaminotriazine). Oxamide is not produced in the U.S. as a commercial fertilizer. Small
volumes of melamine crystal are used in some CRF spikes and stakes used to fertilize
house plants, shrubs and trees.
Coated or encapsulated CRFs are another type of controlled release fertilizer that competes
with the UF-based products. Sulfur-coated fertilizers (SCU), polymer-coated sulfur-coated
fertilizers (PCSCU), and polymer-coated fertilizers are the main types of encapsulated
fertilizers. These are conventional soluble fertilizer materials with rapidly available
nutrients which are given a protective coating to control the water penetration and nutrient
release. Coatings are applied to control their rate of dissolution and fertilizer-soil reactions.
The greatest increase in consumption in recent years for CRFs has been with the polymercoated fertilizer types, especially NPKs. Costing about twice as much as a conventional
fertilizer, sulfur-coated fertilizers are the least expensive alternative to CRF, while
polymer-coated fertilizers are the most expensive type. The increased cost reflects the
more complex manufacturing process and higher cost of materials.
Controlled Release Fertilizers

83

Another alternative to urea-formaldehyde CRFs is fast-release fertilizer. While fast-release


fertilizers are less expensive than CRFs, they have many disadvantages in many non-farm
applications. The nitrogen in the fast-release fertilizers is exhausted quickly, and the
application can be washed away. They need to be applied more than once, making it easy
to apply in excess, damaging plants and turf. Controlled-release fertilizers provide a highvalue alternative to traditional fertilizers. Golf courses and other professional landscapers
are willing to pay the higher cost for UF CRFs for the convenience of fewer treatments per
season, reduced labor costs, less risk of environmental harm, and better turf quality.
Economic Benefits of Urea-Formaldehyde CRF Products
If formaldehyde chemistry were not available, alternate, more expensive encapsulates
might be used or repeated low dose applications could be substituted. This would result in
less efficient use of material, higher labor costs, and potential environmental damage..
We estimate that other urea-aldehyde reaction products, such as IBDU or CDU, will be the
largest substitutes to urea-formaldehyde CRF products since they would be the closest
"drop-in" replacement. They might capture as much as 50% of the current CRF market.
Coated fertilizers bear a higher cost of substitution reflecting the more complex
manufacturing process and the higher cost of materials. Conversely, fast-release fertilizers
are cheaper than urea-formaldehyde CRFs, but their performance tradeoffs are inferior
since they require more applications and can easily be washed away.
Overall, we estimate the substitution cost for replacing urea-formaldehyde CRF products
with other fertilizers is approximately $110 million per year, most of which is for the
increased cost of more expensive capsulation systems and the new capacity required to
apply them. In addition, approximately $150 million worth of capital costs for new plant
and equipment to produce and use substitutes is avoided through the continuing use of UFbased CRFs.

Controlled Release Fertilizers

84

11.

ALL OTHER USES OF FORMALDEHYDE AND DERIVATIVE


BENEFITS

This chapter of the report will address all other end uses for formaldehyde, collectively
representing approximately 15% of the total formaldehyde usage. It is organized as
follows:

Four uses each of which represent less than 3% of formaldehyde consumption:


hexamethylenetetramine (HMTA), chelating agents, trimethylolpropane (TMP),
and pyridines
The economic contribution and benefits of these end uses
Health care applications that utilize formaldehyde, including:
o Vaccine manufacturing
o Gelatin capsule manufacturing
o Laboratory usage
The use of formaldehyde for embalming

Hexamethylenetetramine (HMTA)
Introduction

Hexamethylenetetramine (HMTA), also called methenamine or hexamine, is a versatile


chemical intermediate that can be used as an ammonia or formaldehyde donor. The three
primary applications of HMTA are as a curing agent, rubber accelerator, and in the
production of explosives. Other uses of HMTA are found in pharmaceutical, cosmetic, and
technical applications.
The two U.S. producers of granular HMTA are Borden Chemical, Inc. (Fayetteville, NC)
and Wright Chemical Corporation (Riegelwood, NC). Other companies produce liquid
HMTA for captive use only.
Properties and Advantages of Hexamethylenetetramine

HMTA is a specialty chemical produced from formaldehyde and ammonia, and its unique
structure and properties make it indispensable in the production of certain other specialty
materials. It is produced by reacting aqueous formaldehyde with ammonia in the form of
gas, liquid, or in water. HMTA is a white crystalline solid that readily absorbs moisture. It
is a symmetrical, heterocyclic fused ring molecule, and is soluble in water, alcohol, and
chloroform. Its solubility in water varies little with temperature.
Hexamethylenetetramine Consumption

The U.S. and Canada consumed approximately 37,000 metric tons of HMTA during 2003.
More than 80% of HMTA was used as curing agents for novolac resins. Novolac-based
epoxy resins provide resistance against chemicals, acids, abrasions, skids, and mechanical
wear in high temperatures. They are preferred over regular epoxies in demanding
applications due to their overall high performance and superior chemical and temperature
resistance. These industrial high quality coatings are used in high abuse areas as attractive,

All Other Uses of Formaldehyde and Derivative Benefits

85

easy to maintain finishes. They are used in foundry resins, abrasives, friction materials and
molding compounds.
Figure 15
U.S./Canada HMTA Demand by End-Use Market, 2003

Trim ethylene
trinitram ine (RDX)
Rubber accelerators
Other

Novolac resins

Source: CEH, Formaldehyde, January 2004

HMTA is also used as a raw material for high explosives. Nitration of HMTA produces
trimethylene trinitramine, an ingredient in cyclonite (RDX) and cyclotetramethylenetetranitramine (HMX). Mining, construction, and military uses account for the majority of
RDX and HMX.65 Demand varies depending on mining and construction activity, military
operations, and the defense budget.
HMTA is a reagent in chemical analysis. It is used in the preparation of primary amines
and nitrogen heterocyclics and as a methylenating reagent. Formaldehyde and
acetaldehyde react with HMTA to produce pentaerythritol, a neopentyl polyhydric alcohol.
HMTA is also used as an accelerator in rubber vulcanization. Other applications include
use in adhesives, sealants, preservatives, and chemical stabilizers. HMTA acts as an
anticorrosion agent for steel, a shrink-proofing agent in the textile industry, and as fillings

65

Sebastian N. Bizzari, "Formaldehyde," Chemical Economics Handbook, January 2004: 30.

All Other Uses of Formaldehyde and Derivative Benefits

86

for gasmasks. It absorbs poisonous gases and can be used to detect metals. HMTA is also
used in waterproof wallpapers, dye fixative, pesticides, fungicides, and protein modifiers.
Though small in terms of volume, HMTA used as a formaldehyde donor is important.
HMTA, or methenamine, is an active ingredient in many urinary tract infection (UTI)
treatments. It degrades in an acidic urine environment and releases formaldehyde, which
provides bactericidal or bacteriostatic action. It is estimated that the direct health costs of
treating urinary tract infections run well in excess of $1 billion in the United States and
Canada.66 Methenamine UTI treatments in the U.S. are also known as Hiprex,
Mandelamine, and Urex; in Canada, these are marketed as Hip-Rex and Mandelamine.
In addition, the role as a formaldehyde donor makes HMTA an inexpensive and effective
biocide used widely as a preservative in topical creams, cosmetics, and personal hygiene
products. HMTA preservative often appears under the names Quaternium-15 and
Dowicil75 and Dowicil100.
Substitutes for Hexamethylenetetramine

There is no non-formaldehyde route to HMTA. Substitution by other materials is possible,


but would involve significant losses in utility or higher costs, since no other materials have
the functional properties of hexamine as an intermediate.
Regular epoxies are replacements for novolac-based epoxy resins. They are less desirable
than novolac resins in applications that require resistance to temperature and chemicals and
suffer significant loss of utility if substituted.
Urinary tract infection treatments are usually aimed at fighting the infection and easing
discomfort. Medication options include antibiotics or pain relievers. Other prescribed
substitutes to methenamine are amoxicillin, sulfamethoxazole, trimethoprim, nitrofurantoin
or cephalexin. However, methenamine has the advantage that bacterial resistance to
formaldehyde is not known to develop as it can with antibiotics. Over-the-counter
medications such as acetaminophen or ibuprofen do not cure infections, and are very
imperfect substitutes to methenamine.
In terms of the application of HMTA as a preservative, alternatives such as imidazolidinyl
urea (Germall), diazolidinyl urea (Germall II), DMDM hydantoin (Glydant),
bromonitropropane diol (Bronopol), and tris (hydroxymethyl) nitromethane (Tris
Nitro), are currently being used in creams, cosmetics, and personal hygiene products.
However, these are also formaldehyde-releasing preservatives.67 Non-formaldehydereleasing alternatives, in this case, could be:
Methylparaben, ethylparaben, propylparaben, butylparaben,
benzylparaben
66

See Orenstein, Robert and Edward S. Wong, Urinary Tract Infections in Adults, American
Family Physician, March 1999; New Research Shows Urinary Tract Infection (UTI) Knowledge.
Effectively Enhanced with Basic Health Education, The Monthly Cycle: National Association Of
Nurse Practitioners In Women's Health Newsletter, December 2003.
67
DermNet NZ.

All Other Uses of Formaldehyde and Derivative Benefits

87

Methylchloroisothiazolinone
Methylisothiazolinone
Methyldibromoglutaronitrile/phenoxyethanol
Sorbic acid
Propylene glycol

Chelating Agents
Introduction

Chelating agents are used in many applications, including a wide variety of cleaners, pulp
and paper manufacturing, water treatment, photography, agriculture, and textile treatments.
Formaldehyde is used in the production of aminopolycarboxylic acids and sodium salt
chelating agents. Akzo Nobel, BASF, Dow Chemical and Solutia are the
aminopolycarboxylic chelating agent producers in the United States; Canada does not have
any producers and imports aminopolycarboxylic chelating agents from the United States.68
Properties and Advantages of Chelating Agents

Chelating agents are compounds whose molecules can form several bonds, usually in ring
structures, to metal ions. Chelating agents remove metal ions by sequestration or through
metal buffering and solubilization.69 Chelating agents can be used to help control such
undesirable metal ions as iron, copper, calcium, lead, and magnesium in solution.
Aminopolycarboxylic acids are produced in either a one- or two-step process using
formaldehyde, a source of cyanide (either sodium cyanide or hydrogen cyanide), and a
starting polyamine (e.g. ethylenediamine for EDTA or diethylenetriamine for DTPA) or
ammonia (NTA). The one-step process combines the products and uses hydrolysis to form
the aminopolycarboxylic acid, with NTA as a by-product. The two-step process combines
the products and is then distilled to remove by-products. The intermediate is then
hydrolyzed in a separate step to form a pure aminopolycarboxylic chelating agent.
Aminopolycarboxylic acids have many properties that make them desirable in a wide
variety of applications. Chelating agents can be synthesized and are stable at high
temperatures, are inert to most chemicals, can be used over a wide pH range, are insoluble
in organic solvents, and have a low toxicity and good biogradeability. Chelating agents
boost performance of many end-use applications: they prevent discoloration and rancidity,
improve rinsability of soaps and detergents, improve bleachability of pulp, control water
hardness, and preserve color and flavor of foods, beverages, and pharmaceuticals.
Chelating Agents Consumption

The United States consumed almost 97,000 metric tons of aminopolycarboxylic chelating
agents in 2002. Four types of aminopolycarboxylic acids account for the majority of
68

William L. Howard, "Chelating Agents," Kirk-Othmer Encyclopedia of Chemical Technology,


2003.
69
Ibid.

All Other Uses of Formaldehyde and Derivative Benefits

88

chelating agents produced in the United States; there are currently no Canadian producers
of aminopolycarboxylic chelating agents.
Figure 16
U.S./Canada Chelating Agents Demand by End-Use Market,
2003

Metal Finishing
Food,
2%
Pharmaceuticals,
Cosmetics/Toiletries
3%
Gas Scrubbing
3%

Rubber Processing
2%

Misc. Chemical
Processing
6%

Textile Treatment
5%

Pulp and Paper


31%

Photographic
Applications
5%
Agricultural
Applications
6%

Water Treatment
13%

Household, Industrial,
Institution cleaners
24%

Source: SRI International, Chemical Economics Handbook, 2004.

Ethylenediaminetetraacetic acid (EDTA) is the primary chelating agent used, accounting


for nearly 62% of U.S consumption in 2002.70 Diethylenetriaminepentaacetic acid
(DTPA), hydoxyethylethylenediaminetriacetic acid (HEDTA), and nitrilotriacetic acid
(NTA) are also produced. Pulp and paper manufacturing was the primary end use of
aminopolycarboxylic chelating agents.
EDTA, in its tetrasodium form, is the strongest and most widely used aminopolycarboxylic
chelating agent in the U.S. and Canada. Strong chelating power and good stability make it
ideal for many general purpose product applications and due to its great strength only small
concentrations of EDTA are needed. EDTA chelates calcium and magnesium ions above
pH 4, iron below pH 8, and most other metal ions throughout the pH range making it
acceptable in many end uses.
Nearly 70% of all EDTA consumption is used in pulp and paper manufacturing, cleaners,
and water treatment applications. In pulp and paper manufacturing, chelating agents are
used to prevent decomposition of sodium hydrosulfite and hydrogen peroxide, improve
70

Ibid.

All Other Uses of Formaldehyde and Derivative Benefits

89

bleachability, and increase brightness. Metal ions that would hinder the bleaching process
are sequestered, thus improving the systems performance with less need to overbleach,
which lowers costs and reduces downtime.
Many types of cleaners benefit greatly from the use of chelating agents. Chelating agents
boost cleaning performance of household cleaning agents, (dishwashing and other
detergent products) and industrial and institutional products (surface cleaners and
disinfectants). Chelating agents can help to eliminate dishwasher spots, bathtub rings and
water stains as well as prevent discoloration, rancidity, and clouding. They also improve
detergency and rinsing in water and stabilize foaming to improve cleaning action, thereby
reducing the amount of detergent required.
Chelating agents also control water hardness and scale control in treating boilers,
evaporators, and heat exchangers. Scale inhibitors benefit from chelating agents, which
isolate the hard metal ions of calcium and magnesium to prevent deposits from collecting
on surfaces that would interfere in heat transfer.
A variety of agricultural and photographic applications are improved through the use of
chelating agents. Chelants provide micronutrients as fertilizers to fruits, vegetables, grasses
and plants. Specific essential elements are delivered through fertilizers aiding in growth
and yield. They also stabilize herbicides formulated with hard water. In photographic
applications, most chelants are used as bleaching agents and as antioxidant and softeners in
developing and recovery of silver halide in fixer solutions.71 EDTA and DTPA aid
developer solutions leading to higher quality and longevity prints and negatives.
Other important applications for chelating agents include preservation of color, flavor, and
stability of our food and beverages and vitamins, increased performance of oil, creams,
soaps and shampoos, activation of styrene-butadiene polymerization in rubber processing,
and minimization of oxidation in metals. Textile treatment, dyeing, bleaching, and desizing, applications also exist. Chelants remove metals for the prevention of streaking and
spotting and reduction of color.
Substitutes for Chelating Agents

Hydroxycarboxylic acids (gluconic acid), polyphosphates and organophosphonate-based


chelating agents are primary substitutes for the aminopolycarboxylic chelating agents. The
choice of the preferred chelating agent depends on pH range and temperature of the system,
the metal ions to be sequestered, the presence of other interfering materials, and on
biodegradability. While most chelating agents cannot be used interchangeably and do not
compete with each other, some products of the major chelating groups can be
interchangeable for others.72 Usually, there is significant loss of utility for imperfect
substitutes for chelates.

71
72

Ibid.
Ibid.

All Other Uses of Formaldehyde and Derivative Benefits

90

It would also be possible to produce some formaldehyde-based chelating agents using


alternative, formaldehyde-free chemistries. For example, EDTA can be synthesized by the
reaction of EDA and chloracetic acid. However, this route involves the use of more costly
starting materials and the product price would have to increase still more to justify
investments in the new plant and equipment required.
Trimethylolpropane (TMP)
Introduction

Trimethylolpropane (TMP) is a trifunctional alcohol and was one of the first polyalcohols
to be used in the resin producing industry. One major use of TMP is in industrial stoving
or baking of alkyds and saturated polyesters. It is also an important component in various
polyurethane systems for coatings and foams. One of its growing application areas is
radiation-cured acrylates in the printing, coating and electronics industries.
The largest U.S. producers of TMP are Celanese Ltd. (Bishop, TX) and Perstorp Polyols,
Inc. (Toledo, OH). Together they produced 49,000 metric tons of TMP in 2002. There are
no Canadian producers of TMP.
Properties and Advantages of Trimethylolpropane

Trimethylolpropane is a neopentyl polyhydric alcohol produced from formaldehyde and nbutyraldehyde. N-butyraldehyde and formaldehyde initially produce the aldehyde, which
is then crossed with additional formaldehyde to produce TMP. TMP is a white
hygroscopic solid that is soluble in water and various alcohols. TMP and other neopentyl
polyhydric alcohols are characterized by possessing high steric hindrance and by having no
hydrogens in the highly reactive beta position, increasing their stability at high
temperatures. Largely used in surface coating applications, TMP, with its neopentyl
structure, imparts high UV and chemical resistance. It also enhances heat resistance of
coating resins so that it remains stable at baking conditions.73
Trimethylolpropane Consumption

Over 31,000 metric tons of trimethylolpropane (TMP) were consumed in the U.S. and
Canada. The primary product applications of TMP are coating resins for surface coatings,
NPEs for lubricants, multifunctional acrylates/methacrylates for radiation-curable coatings,
and polyether polyols for urethanes.

73

Sebastian N. Bizzari with Thomas Kalin and Akihiro Kishi, "Neopentyl Polyhydric Alcohols,"
Chemical Economics Handbook, December 2002: 62.

All Other Uses of Formaldehyde and Derivative Benefits

91

Figure 17
U.S./Canada TMP Demand by End-Use Market, 2003

Polyether polyols for


urethanes
10%

Other
7%

Coating resins
46%
Multifunctional
acrylates/methacrylate
s
17%

Neopolyol esters for


lubricants
20%

Source: SRI International, Chemical Economics Handbook.

Coating applications are the largest use of TMP worldwide, accounting for approximately
50% of world consumption. Nearly all TMP coating resins are used in surface coatings,
both polyesters and alkyd. Manufacturers of coating resins blend TMP with other
polyhydric alcohols to balance a coating's properties with its cost. Polyester coating resins
are excellent for exterior applications because of high UV and chemical resistance, and the
improved heat resistance of the resin. These resins can be manufactured into high-solids,
waterborne coatings, and powder coatings, making them environmentally friendly. Some
polyester resins are used to produce urethane surface coatings. The high-cost, highperformance urethane coatings benefit from low-temperature curing, high flexibility,
excellent abrasion resistance and good outdoor weathering characteristics.
Esterification of TMP results in neopolyol esters (NPEs). TMP-based NPEs are primarily
used as lubricants in aviation and automotive applications. Less expensive NPEs used in
fire-resistant hydraulic fluids face competition and potential substitution by phosphate
esters.
In the United States, TMP-based multifunctional monomer coatings account for 6% of the
U.S. industrial coatings market. TMP acrylates and methacrylates are used as in radiationcurable coatings, printing inks, and adhesives. They cure rapidly, creating a harder, more
brittle and heat-resistant coating. Radiation-curable coatings and inks that are used as

All Other Uses of Formaldehyde and Derivative Benefits

92

overprint varnishes provide high gloss, blocking and surface protection to the printing ink.
Radiation-curable coatings on plastics are used to create resilient vinyl flooring with a
desirable decorative finish, and a hard, durable, and abrasion-resistant surface. These
floors compete with laminates and hardwood floors.
Substitutes for Trimethylolpropane

Radiation-curable coatings are used in both wood and plastic for finishes on flooring. Both
wood and resilient vinyl flooring benefit from the hard and durable qualities of the surface
coatings. Wood flooring with TMP-based coating competes with and is replacing solventborne formulations, while resilient vinyl flooring with TMP-based coating competes with
laminates and hardwood flooring. Product enhancements of the TMP-based surface
coatings continue to result in increased demand of the coatings for wood and vinyl flooring.
Phosphate esters are the largest competitor of TMP-based fire-resistant hydraulic fluids.
While phosphate esters are more fire resistant, TMP-based hydraulic fluids can be
enhanced by using additives to become more fire resistant. Since these competitors can be
used interchangeably, the TMP-based fire-resistant hydraulic fluids will continue to replace
phosphate esters at minimal cost.
Polyether polyols for urethanes are manufactured with a hydrogen-containing initiator,
such as water, glycols, and polyols, including TMP. TMP-based polyether polyols for
urethanes can be substituted by polyether polyols made from some other initiator.
However, the functionality of the polyether polyol depends on the functionality of the
initiator used. The non-TMP initiators would not produce polyether polyols with the same
properties and would not be perfect substitutes since loss of utility would result from their
use.
Not all polyester and alkyd coating resins or NPEs are produced using TMP. Other
neopentyl polyhydric alcohols also produce these resins and lubricants, but they are also
manufactured by the reaction of formaldehyde with another aldehyde and so would not be
available to substitute for TMP.
Pyridines
Introduction

Until the 1950's, pyridines were mainly obtained by isolating them from coal tars from
coking operations. Now, pyridines are produced synthetically to produce a more consistent
product and to meet demand. Pyridines are produced synthetically by reacting
acetaldehyde and ammonia, with or without formaldehyde.
Properties and Advantages of Pyridines

Pyridine is a heterocyclic molecule that consists of five carbon atoms and one nitrogen
atom. Pyridine is the parent compound of the pyridine bases, including: alpha-picoline (2methylpyridine), beta-picoline (3-methylpyridine) and gamma-picoline (4-methylpyridine).
Pyridines can be produced synthetically or derived from coal to produce a mix of these
bases.

All Other Uses of Formaldehyde and Derivative Benefits

93

When formaldehyde or methanol/formaldehyde is reacted with acetaldehyde, a


pyridine/beta-picoline mix is produced. An alpha- and gamma-picoline mix is produced
when formaldehyde is not added. Formaldehyde is commonly added to alpha-picoline to
produce 2-vinylpyridine (2-VP), the largest derivative of alpha-picoline. Pyridine and
picolines are flammable, colorless liquid bases with a penetrating odor. They are soluble in
water and in alcohol and form azeotropes with water. The mix of bases can be isolated by
distillation.
Consumption of Pyridines

The U.S. and Canada consumed over 32,000 metric tons of pyridines in 2003, of which
90% were produced using formaldehyde. Pyridine and beta-picoline account for over 75%
of world consumption of pyridines, and 85% of US consumption.
Figure 18
U.S./Canada Pyridine Demand by End-Use Market, 2003
Alpha-picoline
Non-form aldehyde
pyridines

Pyridine

Beta-picoline

Source: CEH, Pyridines, April 2004

Source: SRI International, Chemical Economics Handbook, Pyridines, April 2004.

Pyridine accounts for 44% of the total demand for pyridines in the U.S. Pyridine is used as
an intermediate to produce agricultural chemicals, 2-chloropyridine, piperidine, and
solvents. Agricultural chemicals, mainly paraquat and diquat, account for most
consumption of pyridine. The herbicide paraquat is used to control broadleaf weeds and
grasses in vegetable, field, forage and tree crops. It can also be used as a drying agent.
Diquat is used primarily to control aquatic weeds.

All Other Uses of Formaldehyde and Derivative Benefits

94

2-Chloropyridine is converted to pyrithione salts. One of these, zinc pyrithione (ZPT),


inhibits growth of bacteria and mildew in adhesives, carpet backing, cushion and mattress
foam, marine antifouling paints, wire and cable insulation, and weather stripping materials.
Another pyrithione salt, sodium pyrithione, acts as a fungicide in metalworking fluids and
latex paint. Additional uses for 2-chlorophyridine include the antihistamine pheniramine
and the antiarrhythmic disopyramide.
Pyridine is used to produce piperidine, used in the production of dipentamethylene thiuram
tetrasulfide (DPTT). DPTT is used to improve the strength, resiliency, and freedom from
stickiness and odor of rubber. Other piperidine applications include pharmaceutical
specialty solvents, epoxy resin curing agents, and in dye production.
Alpha-picoline is primarily used to produce 2-vinylpyridine (2-VP), which in turn is a
component of styrene-butadiene-2-vinylpyridine terpolymer latexes (SBV latexes). These
latexes are used in tire cord adhesives and other adhesives for bonding textiles to
elastomers. 2-VP also produces acrylic fibers used as a dye assistant, and methridine, a
veterinary agent used to eliminate parasitic intestinal worms.
Beta-picolines account for over 40% of the total demand for pyridines in the U.S. Betapicolines are used in niacinamide, noncaptive 3-cyanopyridine, and agricultural chemicals.
The noncaptive form of 3-cyanopyridine is used as a niacinamide intermediate. Additional
uses of beta-picoline include the production of indivar sulfate, a protease inhibitor for the
treatment of HIV infections.
Beta-picoline is used to manufacture niacinamide (also called nicotinamide) and niacin
(also called nicotinic acid), two basic forms of vitamin B3. The body uses the watersoluble vitamin B3 in the process of releasing energy from carbohydrates, fats and proteins.
The niacin form of vitamin B3 also regulates cholesterol, though niacinamide does not.
The largest market for niacin is in feed supplements for poultry, dairy cattle, swine, and in
pet food. USP-grade niacin is used to fortify flour, pasta, rice, breakfast cereals, infant
formula, and baby food, and is found in vitamin tablets. Niacinamide is also used in
cosmetics and personal care products.
In the United States, beta-picoline is ammoxidated to 3-cyanopyridine, which is hydrolyzed
to niacinamide. In Western Europe, a different process is undertaken to produce niacin; 2methyl-5-ethylpyridine (MEP) is oxydated with nitric acid.
Substitutes for Pyridines

Synthetic processes account for the majority of the U.S. and Canadian production of
pyridines. Pyridines from other sources are a poor substitute for synthetically produced
pyridines since they are more costly and can only supply a small fraction of demand.
Pyridines are not present in raw coal, but are synthesized during the coking process,
without the use of formaldehyde. The amount of pyridine bases isolated from coking
operations is very small, amounting to about 0.07-0.21 pound per ton of coke.
The most likely approach to substitute for formaldehyde-based synthetic pyridines is to
employ alternate chemistries for their synthesis. Chemistries based on acetone and

All Other Uses of Formaldehyde and Derivative Benefits

95

acrylonitrile, or on acrolein, acetaldehyde or propionaldehyde and ammonia are possible,


but it is not clear whether they can be effective in producing all the isomers and derivatives
currently available. An alternate route to beta-picoline is the conversion of 1,5diaminopentanes to pyridines. This is accomplished by hydrogentating 2-methylglutaronitrile, cyclizing to methylpiperidine, and then dehydrogenating to beta-picoline.
Economic Contribution and Benefits of Other End Uses
We summarize below the economic benefits of these four uses of formaldehyde.
o For HMTA, 80% is used in the production of novolac resins. For these
applications, regular epoxies are the most likely replacements. This would involve
some performance losses in utility and higher cost since no other material has the
functional properties of HMTA. We estimate the cost of substitution in this end use
to be about $80 million per year.
o For chelating agents, there are a number of formaldehyde-free chemistries that are
possible alternatives to the formaldehyde-based materials. These alternatives
include hydoxycarboxylic acid, polyphosphates, and organophosphates. We
estimate the cost of substitution in this end use to be approximately $100 million
per year, driven by the higher cost of material and significant loss of utility. In
addition, approximately $110 million worth of capital costs for new plant and
equipment to produce and use substitutes is avoided through the continuing use of
formaldehyde-based chelating agents.
o For TMP, we found no alternative chemistries or products that possessed the same
functionality and performance as TMP. For example, exterior coating applications
that require high UV protection, chemical resistance, and heat resistance use TMP
to achieve this balance at a reasonable cost. We estimate the cost of substitution in
this end use to be about $100 million per year with high utility loss in many
applications.
o For pyridines, we found that consumers could not find reasonable direct substitutes
to pyridines, so that substitution would occur at the manufacturing level. Recovery
of pyridines from coking ovens is technically possible but this is an impractical
alternative due to the environment issues surrounding coke production and the
small amount of pyridine that can be recovered. We estimate the cost of
substitution to be approximately $50 million per year, and the investment required
for the process plants using alternate chemistries to be about $100 million.
We summarize below the economic benefits and contributions of these other uses of
formaldehyde. We estimate that these uses of formaldehyde, excluding pyridines,
generated over $600 million in sales and purchased nearly $270 million worth of raw
materials and utilities. In addition, these uses support approximately 950 jobs.

All Other Uses of Formaldehyde and Derivative Benefits

96

Table 32
Economic Benefits of Other Uses
Ease of Substitution

Performance
Loss

Cost of
Substitution
($ MM/year)

HMTA (epoxies)

Moderate

Low moderate

80

Chelating agents

Moderate difficult

Moderate

100

TMP

Moderate difficult

Moderate

100

At manufacturing level

None

50

Material

Pyridines
Total

330

Table 33
Economic Contributions of Other Uses
Sales
($ Million)

Purchases
($ Million)

Employment
(workers)

HMTA (epoxies)

72

31

100

Chelating agents

406

179

650

TMP

127

56

200

Pyridines

NA

NA

NA

Total

605

266

950

Material

Health Care Applications


Manufacture of Vaccines

Formaldehyde is a strong antimicrobial agent. It is used widely to attenuate or inactivate


bacteria and virus in vaccine production. The worldwide vaccine market is approximately
$8 billion dollars. Economic benefits for every dollar spent on childhood vaccine
administration are estimated to be around $27.74

74

"Sometimes, Vaccines Can Be Good for Business," The New York Times, October 29, 2004.

All Other Uses of Formaldehyde and Derivative Benefits

97

Table 34
Examples of Vaccines That Use Formaldehyde
Company
Vaccine
Type
Aventis Pasteur

DAPTACEL

Aventis Pasteur

IPOL

Aventis Pasteur

TRIPEDIA

Aventis Pasteur

FLUZONE

Aventis Pasteur

JE-VAX

Bioport Corp.

BIOTHRAX

GlaxoSmithKline

INFANRIX

GlaxoSmithKline

PEDIARIX

GlaxoSmithKline
GlaxoSmithKline
Aventis Pasteur

TWINRIX
HAVRIX
ActHIB

Merck

COMVAX

Merck
Merck

RECOMBIVAX HB
VAQTA

Wyeth-Ayerst

FLUSHIELD

Diphtheria, tetanus, acellular


pertussis vaccine
Poliovirus vaccine
Diphtheria, tetanus, acellular
pertussis vaccine
Influenza virus vaccine
Japanese encephalitis virus
vaccine inactivated
Anthrax vaccine adsorbed
Diphtheria, tetanus, acellular
pertussis vaccine
Diphtheria, tetanus, acellular
pertussis, hepatitis B
(recombinant) and inactivated
poliovirus vaccine
Hepatitis A, hepatitis B
Hepatitis A
Haemophilus B conjugate
Haemophilus B conjugate
(meningococcal protein
conjugate)and hepatitis B
Hepatitis B vaccine
Hepatitis A vaccine
Influenza virus vaccine,
trivalent, types A and B

Source: Drugs Information Online

There are four types of vaccines: inactivated or killed, live attenuated, toxoid, and
component. Formaldehyde is used in most inactivated vaccines, toxoid vaccines, and
component vaccines. Inactivated vaccines are stable and safe; they cannot revert to the
virulent form. They often do not require refrigeration, a quality that makes them accessible
to the people of many developing countries, as well as practical for vaccinating people who
are highly mobile, such as members of the armed forces. However, most inactivated
vaccines stimulate a relatively weak immune response and must be given more than once.
Some of the common inactivated vaccines include the flu shot as well as vaccines for
cholera, plague, and hepatitis A.
Toxoid vaccines are made by treating toxins (or poisons) produced by infectious agents
with heat or chemicals, such as formalin, to destroy their ability to cause illness. A toxoid
is an inactivated toxin, the harmful substance produced by a microbe. Many of the
microbes that infect people are themselves not harmful. It is the powerful toxins they
produce that can cause illness. Even though toxoids do not cause disease, they stimulate

All Other Uses of Formaldehyde and Derivative Benefits

98

the body to produce protective immunity just like the germs' natural toxins. Examples of
toxoid vaccines are diphtheria toxoid vaccine and tetanus toxoid vaccine.75
Possible direct substitutes for formaldehyde in vaccine production are glutaraldehyde, betapropiolactone, and application of heat. Glutaraldehyde is used mostly to inactivate toxins
in acellular pertussis (whopping cough) vaccines, and beta-propiolactone mostly used to
inactivate rabies virus. With the application of heat to inactivate virus, there is a risk of
under-attenuation, as well as overheating and denaturing, which renders the vaccine
ineffective.
Live attenuated vaccines are usually created from the naturally occurring infectious agent
itself and formaldehyde is usually not used. In this case, viruses are attenuated by growing
them over and over again in a laboratory under cell culture. This process lessens the
disease-causing ability of the virus. Vaccines are made from viruses whose disease-causing
ability has deteriorated from multiple passages. Examples of vaccines that fall in this
category include measles vaccine, mumps vaccine, rubella (German measles) vaccine, oral
polio vaccine (OPV), and varicella (chickenpox) vaccine.76 Although there are advantages
to live vaccines (e.g. single dose and long-lasting immunity) there is one significant
disadvantage: there is a remote possibility that the organism may revert to a virulent form
and cause disease. As such, people with compromised immune systems such as people
who are taking immunosuppressive drugs, people who have cancer or people living with
HIV are usually not given live vaccines.77
Manufacture of Gelatin Capsules

Formaldehyde is also used to crosslink gelatin to produce enteric capsules or hard capsules
that contain and deliver drugs. The enteric coating slows the dissolution of the capsule and
promotes maximum absorption of its contents. Examples of drugs that use such capsules
are Prilosec, Nexium, Prevacid, and Zelnorm. The manufacture of soft gel and hard
shell capsules is estimated to be a $5 billion industry that currently uses 40,000 metric tons
per year of animal-derived gelatin. In terms of substitution, fish gelatin and starch provide
alternatives to bovine-based gelatin in soft and hard capsule manufacturing. The desire for
alternatives to gelatin capsules, however, stems mostly from concern over BSE (mad cow
disease) risk from using bovine gelatin, not from formaldehyde consumption.
Laboratory Usage

The importance of formaldehyde in its support of the $30 billion life sciences sector is
evident. Formaldehyde is used in research laboratories as a tissue preservative (fixative) or
organic chemical reagent. The most widely used fixatives in diagnostic histology
laboratories are formalin-based (formalin is a formaldehyde-methyl alcohol mixture).78
Also, formaldehyde is employed in electrophoresis, which is a technique used to separate
macromolecules on the basis of charge and mass. Proteins, DNA, and RNA, are examples
75

Center for Disease Control.


Ibid.
77
Immune Central.
78
Haematological Malignancy Diagnostic Service (HMDS).
76

All Other Uses of Formaldehyde and Derivative Benefits

99

of macromolecules that can be electrophoresed. Electrophoresis is a standard "workhorse"


procedure in life science research. In this process, tissue samples are usually fixed with
formaldehyde and electrophoresed through a denaturing gel (e.g. formaldehyde-agarose
gels, polyacrylamide-urea gels). Agarose electrophoresis of RNA requires the inclusion of
denaturing agents in the gel. Of the variety of denaturants which can be used for RNA
analysis, all are toxic or noxious to some extent. Methylmercuric hydroxide (MMH) reacts
reversibly with amino groups on RNA and is a very effective denaturant. However, its
toxicity and high volatility make its use inconvenient and hazardous. Formaldehyde also
denatures RNA but is safer than MMH. Formaldehyde agarose gels provide a denaturing
environment that allows more accurate size determinations and efficient binding to
membrane supports.79 Today, proteomics (study of proteins) and genomics (study of
DNA, RNA) play an increasing role in pharmaceutical research.
Other Uses
Embalming

Formaldehyde is the most widely used substance in embalming. Concern for mortuary
workers' exposures to formaldehyde has prompted research into alternative embalming
chemicals. Ethyl alcohol/polyethylene glycol, glutaraldehyde, and phenoxyethanol are
alternatives to formaldehyde but may possess other worker health and safety concerns.80
___________________________________________
Derivative Benefits
In addition to the direct and indirect benefits enumerated in the preceding chapters,
consumers also obtain derivative benefits from access to formaldehyde-based products.
These benefits arise from the derivative effects of the avoidance of capital expenditures,
and the necessary returns to that capital that would be required to produce substitute
materials. The direct costs of making any necessary investments in new or retrofit capacity
for substitutes have been included in the estimates cited. However, the producers of the
additional material required to displace formaldehyde-based products would not only pass
the cost increases required of the new capacity to consumers of the displaced materials,
they also would pass the corresponding increases in price to all other consumers of the
substitutes.
Thus, the economic impacts would be spread more widely throughout the economy and
avoidance of these impacts is a derivative benefit that accrues to formaldehyde. We
estimate that suppliers of substitute materials would be required to make investments of
about $10.5 billion. Capital recovery charges on these investments, spread throughout the
economy, would cost consumers about $5.5 billion per year, which is the magnitude of the
derivative benefits.

79
80

National Diagnostics; Icoria, Inc.; EMD Bioscience.


The Massachusetts Toxics Use Reduction Institute.

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100

12.

MACROECONOMIC AND STATE/PROVINCIAL LEVEL IMPACTS

The previous chapters evaluated the U.S. and Canadian economic contributions of each
formaldehyde derivative. In this chapter, we provide estimates of the impact of the
formaldehyde industry at the state and province level for employment, wages, and investment.
Following are the highlights of the economic contributions of the formaldehyde industry to the
U.S. and Canadian economy in 2003. For purposes of this portion of the study, a narrow
definition of the industry has been used, as described more fully in Chapter 13.

Sales:
Over $145 billion worth of sales resulted from this industrys activities.
Employment:
Nearly 700,000 workers are employed directly in monomer, polymer, and
downstream fabrication facilities in the U.S. and Canada. The fabrication
facilities are primarily in the wood products industry. These workers operate
and maintain the formaldehyde and derivative facilities, and have responsibilities
for management, research and development, and sales and marketing. Of these,
over 600,000 jobs are in the United States, and over 90,000 jobs are in Canada.
An additional 1.8 million workers are employed indirectly in the U.S. and
Canada. These individuals are employed in the wide network of supplier
industries that provide goods and services (e.g. raw materials, utilities, capital
goods, services) to the formaldehyde industry. Companies in the United States
account for more than 1.5 million of these jobs and companies in Canada for
about 280,000 of these jobs.
An additional 1.5 million individuals in the U.S. and Canada are supported
because of the personal expenditures of all the direct and indirect workers. We
define this category as expenditure-induced employment.
Thus, the total number of workers in the U.S. and Canada who depend on the
formaldehyde industry is approximately 4.0 million.
Wages:
Using the same definitions as for employment, wages of direct employees
amounted to nearly $20 billion for the year ($28,300 per worker). Of this, about
$17 billion was paid to workers in the United States and nearly $3 billion was
paid to workers in Canada.
An additional $58 billion of wages was earned by workers in the companies that
supply the formaldehyde industry (indirect workers). Approximately $50 billion
was paid to workers in the United States and nearly $8 billion to workers in
Canada.
Lastly, over $50 billion of wages was earned by workers in the general economy
(expenditure-induced employees).
Total wages for all of these workers amounted to nearly $130 billion.

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101

Value of Business Fixed Investment:


Direct formaldehyde-related business fixed investment amounted to nearly $90
billion in 2003. Companies in the United States accounted for nearly $80 billion
and companies in Canada for approximately $10 billion.
Number of Plants:
There are approximately 280 formaldehyde monomer and polymer producing
plants operating in the U.S. and Canada. Additionally, there are approximately
11,700 fabrication plants that are critically dependent on formaldehyde and
derivatives, mostly in the wood products fabrication industry.

In summary, the products of the formaldehyde industry are pervasive in the U.S. and Canadian
economy. They generate a substantial volume of sales, provide a sizable number of jobs, and
contribute to the local economies in countless visible and not-so-visible ways. The direct
economic contributions of the formaldehyde industry are summarized below:
Table 40
Highlights of the Economic Contributions of Formaldehyde, 2003
Units
United States
Canada
Total
Value of Sales
Total Plants

$Billion/Year

127.3

19.3

146.5

Plants

10,045

1,942

11,987

Processing plants

Plants

229

51

280

Fabrication plants

Plants

9,816

1,891

11,707

Workers

3,634,750

596,332

4,231,082

Workers

607,270

90,890

698,160

Total Employment
Direct
Indirect

Workers

1,557,480

274,060

1,831,540

Induced

Workers

1,470,000

231,382

1,701,382

$Billion/Year

112.1

16.8

128.9

Direct

$Billion/Year

17.1

2.5

19.5

Indirect

$Billion/Year

50.7

7.6

58.3

Induced

$Billion/Year

44.4

6.6

51.0

Total Wages

Fixed Investment

$Billion

77.4

11.0

88.4

Purchases

$Billion/Year

56.0

8.5

64.5

Raw materials

$Billion/Year

33.6

5.1

38.7

Utilities

$Billion/Year

22.4

3.4

25.8

Source: Global Insight, Inc.


Note: These economic values are not additive

The economic contributions of the formaldehyde industry at the state and provincial level are
presented in the tables below. We provide in Chapter 13 a detailed description of the
methodology for estimating the state and provincial level economic impacts.

Economic Contributions and Benefits Methodologies

102

Figure 19
Regional Distribution of Direct Employment, 2003

Table 41
United States: Employment, Wages, and Fixed Investment of the Formaldehyde
Industry, 2003
Wages
Fixed Investment
Employment(1)
(1)
(MM$)
(MM$)(2)
Alabama

22,407

656

1,853

Alaska

31,250

1,017

43

Arizona

29,893

917

995

Arkansas

35,356

1,093

1,337

California

242,959

7,605

7,234

Colorado

30,684

974

620

Connecticut

21,126

677

684

Delaware

7,250

234

224

District of Columbia

5,060

164

Florida

112,961

3,581

2,465

Georgia

78,669

2,416

3,095

Hawaii

6,245

200

47

Idaho

18,944

602

385

Economic Contributions and Benefits Methodologies

103

Illinois

29,251

886

2,391

Indiana

85,586

2,675

2,633

Iowa

35,036

1,105

990

Kansas

17,872

563

581

Kentucky

29,326

910

1,102

Louisiana

39,083

1,271

2,001

Maine

39,552

1,272

533

Maryland

33,788

1,074

869

Massachusetts

18,624

585

1,081

Michigan

66,655

2,106

2,368

Minnesota

41,749

1,299

1,294

Mississippi

47,686

1,456

2,189

Missouri

30,993

964

1,751

Montana

10,194

315

318

Nebraska

46,240

1,496

322

6,270

192

198

11,442

363

223

Nevada
New Hampshire
New Jersey

19,744

611

2,669

New Mexico

45,632

1,479

112

New York

27,870

827

3,177

North Carolina

61,238

1,696

5,365

North Dakota

92,274

3,001

528

Ohio

75,376

2,383

3,434

Oklahoma

19,433

621

408

Oregon

58,262

1,789

2,219

Pennsylvania

83,335

2,592

3,072

Rhode Island

5,426

169

178

South Carolina

33,716

1,059

1,395

South Dakota

5,632

174

160

42,129

1,295

1,935

143,416

4,569

5,101

Utah

16,446

508

712

Vermont

46,586

1,497

291

Tennessee
Texas

Virginia

23,967

665

2,067

Washington

63,042

2,003

1,186

West Virginia

33,849

1,078

765

Wisconsin

31,449

932

2,710

Wyoming

4,028

129

70

2,165,001

67,745

77,383

Total
(1)

Includes direct and indirect.


(2)
Includes only formaldehyde monomer and derivative polymer plants.

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104

Table 42
Canada: Employment, Wages, and Fixed Investment of the Formaldehyde Industry,
2003
Fixed
Employment(1)
Wages (1)
Investment(2)
('000 workers)
($ MM)
($ MM)
Alberta

38,286

1,067

1,026

British Columbia

50,271

1,402

1,778

Manitoba

13,357

365

399

New Brunswick

8,804

248

322

Newfoundland and Labrador

4,118

116

49

37

8,818

248

142

<1

neg

140,252

3,910

3,731

1,321

37

20

Quebec

89,561

2,489

3,355

Saskatchewan

10,098

283

213

21

<1

364,952

10,167

11,040

Northwest Territories
Nova Scotia
Nunavut
Ontario
Prince Edward Island

Yukon Territory
Total
(1)

Includes direct and indirect.


(2)
Includes only formaldehyde monomer and derivative polymer plants.
Totals may not add due to rounding.

Economic Contributions and Benefits Methodologies

105

Figure 20
Regional Distribution of Direct and Indirect Employment, 2003

Source: Global Insight, Inc.

Economic Contributions and Benefits Methodologies

106

13.

ECONOMIC CONTRIBUTIONS AND BENEFITS METHODOLOGIES

Economic Contributions
In this chapter, we define key terms and the conceptual framework which underlies the
approach to estimating the economic contributions and benefits of the formaldehyde industry.
A dollar spent on formaldehyde-based products will result in direct and indirect changes in
the economy. We divide the total contribution into (a) direct, (b) indirect impact, and (c)
expenditure-induced contributions.
o Direct wages, for example, are the wages earned by employees in the formaldehyde
industry. They operate and maintain formaldehyde and derivative plants, have
responsibility for management, finance, research and development, marketing and
sales.
o Indirect wages are the wages earned by employees in all the many layers of the
supplier industries who provide raw materials, utilities, capital goods, and other goods
and services to the formaldehyde industry.
o Lastly, the spending and incomes generated by all the direct and indirect workers
supports additional economic activity which we define as expenditure-induced
effects.
The direct and indirect activities can be minimally measured in terms of final demand,
investment by the manufacturers, and net trade. The expenditure-induced activities refer to
the changes in the economy caused by the consumption activities of employee and related
labor who are directly and indirectly involved in formaldehyde production. To trace
effectively the economic contribution of the formaldehyde industry, we must assume that
prices, interest rates, and government policies remain the same, regardless of the presence or
absence of formaldehyde products in the economy.
Establish an Operational Definition of the Formaldehyde Industry
For this study, Global Insight used a very conservative definition of the formaldehyde
industry for the purpose of this portion of the analysis. To implement this narrow definition,
we determined the point in the production chain where the economic activity is critically
dependent on formaldehyde-based products versus where formaldehyde is incidental. These
limits are process and material specific, and defining them is somewhat subjective and the
resulting definition of the formaldehyde industry may not reflect common parlance either
inside or outside the formaldehyde industry. However, this narrow definition allows us to
state with assurance that the numbers derived from the contributions portion of the analysis
are not overstated. Therefore, in defining the scope of the formaldehyde industry from which
direct contributions were estimated, we used this major criterion: a manufacturing activity is
counted in the formaldehyde industry if, in the absence of formaldehyde, the manufacturing
activity would be forced to undergo a major conversion.
To elaborate, producers of formaldehyde and phenol formaldehyde resin are included here in
the defined industry because their output contains formaldehyde. However, producers of

Economic Contributions and Benefits Methodologies

107

products derived from phenol formaldehyde resin may or may not be included in the
definition of the formaldehyde industry, depending on whether the manufacturer could
substitute another material and remain in their core business. For example, producers of
consumer products such as toaster ovens and other household appliances use phenolic resins
in part for their resistance to high temperatures. These manufacturers could substitute other
materials (e.g. more expensive polymers) and by modifying their fabrication equipment.
They would not be considered to be part of the defined formaldehyde industry for the purpose
of this analysis because they would continue to produce their products in the absence of
formaldehyde. Producers of other formaldehyde-based products such as particleboard or
plywood manufacturing plants are considered here as part of the formaldehyde industry
because the substitute products (solid wood, metal, etc.) could not be easily made in their
facilities, and they would be unlikely to remain in business in the absence of the
formaldehyde-based product.
In all cases, we assumed that the existing distribution and sales networks would be capable of
supporting the movement of the substitute products, and these networks have not been
included in Global Insights definition of the formaldehyde industry. Since we did not take
into account the significant dislocations that would occur in the distribution networks, our
estimate of economic contributions is understated.
Estimate Direct Impacts
We assembled a formaldehyde database to measure the direct economic contribution of the
formaldehyde industry, as defined above. Key elements of the database and their sources are:

Sales and production (output) of formaldehyde-based products for 2003 were obtained
from members of the formaldehyde industry.

Number of employees by sector was inputted using data from various sources,
including confidential company reports, the U.S. Bureau of Labor Statistics, and U.S.
Census Bureau.

Plant capacities and locations for formaldehyde and derivatives were obtained from
industry sources.

Value of Sales
Global Insight established three primary objectives for measuring the value of these sales:

First, the definition of value should be clear: there should be no double


counting in the estimate. Economic studies of other industries have tended to
inflate the value of sales by counting sales of raw materials, intermediate
products, equipment, and other expendables, thus greatly exaggerating the
importance of an industry. Global Insight eliminates this problem by
measuring the value of sales only once.
Second, the measurement of value should occur as close as possible to the
point of formaldehyde consumption, which also results in a conservative

Economic Contributions and Benefits Methodologies

108

estimate because we do not consider any value-added contributions through


further processing steps.
Third, the unit of association should be based on clearly identifiable plants
whenever possible. This will minimize the use of government classification
systems that do not distinguish formaldehyde and derivative facilities at a fine
level of detail nor identify the nature of the plants output. Where this plantlevel data can be crosschecked with publicly available data from other sources,
it becomes more reliable and credible.
With these objectives in mind, Global Insights methodology of measuring the
value of sales is straightforward. For formaldehyde and the first-level major
derivatives, we multiply the production volumes in 2003 by the market price.
For the formaldehyde-dependent fabrication plants, we applied the share of
formaldehyde for each of these industries to the output as reported by the U.S.
Census Bureau. Then, using database County Business Patterns that the
Census Bureau publishes, we are able to derive the number of employees by
location. The same formaldehyde shares were applied to each industry sector.
A similar approach was used to derive Canadian contributions.

Employment and Wages


Having identified the formaldehyde processing plants in the database, we estimated direct
employment for each separately identified manufacturing site. This information was checked
against other data sources such as the trade press, Department of Commerce, Census of
Manufacturers, and industry reports. For formaldehyde derivative fabrication plants, Global
Insight used industry data sources by type of fabrication plant and by the estimated volume of
output. Global Insight estimated the employment of these fabrication plants by type and size
on a zip code-by-zip code (for the U.S.) and province-by-province (for Canada) basis, using
information from the U.S. Census Bureau and Statistics of Canada.
Global Insight used data from the Bureau of Labor Statistics Employment and Earnings,
which reports average hourly earnings by industry sector, to estimate direct wages. We
assumed a 40-hour workweek for each employee and estimated wages for the sector to be the
product of the hourly earnings, 2,080 hours (i.e. 40 hours for 52 weeks), and number of
employees. As a final step, we then parsed out the employment and wage data down to the
zip code level, using each zip codes share of each industry sector as weights. A similar
approach was used for Canada at the province level.
Gross Domestic Fixed Investment
Global Insight estimated gross domestic fixed investment for the formaldehyde industry using
data from the Bureau of Economic Analysis, which reports on the stock of capital by industry
by type of capital.
Estimate Indirect Impacts
In order to measure the indirect contribution of the industry to the economy, we used Global
Insights Industrial Analysis Service model, which uses a modified input/output analysis of

Economic Contributions and Benefits Methodologies

109

demand by industry, to determine repercussions of direct impact on industrial output and


employment by sector. This model depicts the flow of material from the industries producing
commodities to the industries and final consumers using them. It is a fully comprehensive
and inclusive representation of the U.S. economy.
Inspecting the data in the model shows the economys complexity. All individual industries
depend on several other industries for the materials they use in their production processes.
Consequently, the inter-industry commodity flows weave an extensive and intricate web of
mutual interdependence among the producing sectors. An industry may not only use its own
and other industries output directly in its production processes, but it may also find that it
indirectly depends on its own product because some of its suppliers use this product. For
example, the petroleum refining industry consumes some of its own products directly in the
form of fuel burned for energy to run its refineries. It also consumes its own products
indirectly as it uses raw materials and supplies that involve refinery-produced fuels or
feedstocks in their production.
These models can be used in two quite different types of analyses of the economic
contribution of the formaldehyde industry. The first may be imagined as a downstream
perspective. From this perspective, the inter-industry transactions data provide insights into
the extent to which formaldehyde cascade through the economy. As described earlier, they
may be used directly or indirectly. Moreover, the production streams are not in just one
direction; some of the downstream products may be channeled back upstream to support
earlier industry production. The contribution of formaldehyde from this perspective consists
of the employment and wages that are generated in the industries that use formaldehyde
directly or indirectly.
The second type of analysis is from the upstream perspective. In this perspective, we
examine the incomes and employment data that are generated in the production of
formaldehyde and derivatives themselvesthat is: what commodities and other inputs do
formaldehyde producers use both directly and indirectly in their production processes? By
examining the data from both perspectives, we can better assess the importance of the
formaldehyde industry.
To initiate the analysis, Global Insight converted the components of Gross Domestic Product
(consumption, investment, government spending, and net trade) from the macroeconomic
model into estimated industrial deliveries to final demand. Second, standard input/output
techniques were used to derive estimates of the industrial output required to produce this bill
of goods for final use. Finally, we applied statistical equations that measure the impacts on
industrial output and employment. The assumed changes in exports and imports produce an
aggregate change in output and employment. This change is later used as a yardstick for
evaluating the macroeconomic impact.
For this research, Global Insight needed to establish the distinct linkages of the formaldehyde
industry to the rest of the economy. To accomplish this objective, we re-structured the
standard inter-industry model to disaggregate the formaldehyde industry from the rest of the
chemical industry. This task was undertaken in the input/output block, as well as the
stochastic block of the model. Purchases by type and sales by end-use market data were

Economic Contributions and Benefits Methodologies

110

developed and employed to re-direct the flows of sales to the corresponding end users and
reconfigure the formaldehyde purchases by the corresponding industries. The result was an
expanded input/output block that addresses the relative importance and contribution of the
formaldehyde industry separately from the chemical product industry. Thus, Global Insight
built a tailored inter-industry model linked to a model of the U.S. economy in order to address
the impact of the formaldehyde industry on all other industries and to derive indirect impacts
on output and employment.
Estimate Expenditure-Induced Impacts
The macroeconomic model was simulated with employment assumptions to drive direct and
indirect impacts on the U.S. economy. Once the macroeconomic scenario was consistent with
the industry model employment results, trade assumptions were introduced along with the
complete income flow to final demand.
Consumer Benefits
As discussed in Chapter 2, the economic benefits provided by formaldehyde-based products
in the economy are simply the total net dollar value of the savings that consumers enjoy by
using them instead of substitutes. Viewed from another perspective, consumer savings are the
increased costs that consumers would have to bear if they lost access to the formaldehydebased products they now enjoy. The benefits arise from the properties of formaldehyde that
allow products to be manufactured at lower costs than possible with alternative materials and
provide greater utility to consumers in the forms of extended use, improved performance, and
more desirable aesthetics.
Estimating the costs of perfect substitution of an alternative material for a formaldehydebased product is simple, conceptually: we calculate the price difference between products and
multiply by the aggregate sales volume. In the case of perfect substitution, the
formaldehyde-based and substitute products have identical attributes, including ease of
manufacturing and performance-in-service, so that the consumer notices only the difference in
the initial cost of the product.
This theoretical situation is approached most closely when a formaldehyde-based product is
replaced by an alternative product in an end-use or application where both materials currently
share the market. This is the case with many products fabricated from polyacetal and other
resins, for example. Because of the differences in physical propertiessuch as tensile or
impact strength, softening temperature, and densitythe formaldehyde-based product and its
substitute product may not have precisely the same dimensions or weight, but they will
function in approximately the same way and have the same usefulness to the consumer.
Differences in weight or volume between the formaldehyde-based product and its substitute
are estimated based on the materials properties and the design requirements of the items
being manufactured.
In general, resin substitution will require that the fabricator re-tool to mold or extrude the new
material. Periodic re-tooling is a normal feature in the thermoplastics parts manufacturing
industry and does not normally contribute to the net costs of substitution. In most cases,

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111

however, the substitute resins are not as easy to process as the formaldehyde-based ones they
might displace, which would force the component manufacturers to modify their equipment
and processing conditions to accommodate the new material properties. Significant changes
can have substantial effects on the cost of the parts being produced, since conversion costs per
part generally range from one half to twice the cost of the material being processed. Any
increases in capital-related charges and manufacturing costs that would result from such
changes would be added to the aforementioned materials cost differences.
The unit prices for formaldehyde-based materials and any potential substitute material depend
on the specific grades of material under consideration, which varies over the business cycle in
response to the supply-demand balance for the materials, the cost of energy, and the relative
costs of alternate materials. It is beyond the scope of this project to estimate the appropriate
average price levels over the business cycle for all grades of formaldehyde-based materials
and for all of their possible substitutes. Instead, two prices have been estimated and are used
in this analysis: the average prevailing price for the formaldehyde and their substitutes in
2003; and the reinvestment prices necessary to justify new investment in the alternate
materials that would be in short supply if they were, in fact, used as substitutes for
formaldehyde-based materials.
The latter case may arise, for example, when the amount of a substitute material required to
displace a formaldehyde-based product would exceed about 20% of the current effective
manufacturing capacity for that material in the U.S. Under these circumstances, the producers
of the substitute material would demand a price that was high enough to provide them with an
acceptable return on the investments in new plant and equipment necessary to produce it. In
general, prices for the relevant materials in 2003 were below reinvestment levels, and
substantial capacity additions would be required for some of the substitutes. In these cases,
we estimated the amount of new capital required and the reinvestment price in calculating the
net costs of direct or perfect substitutions.
The increases in the price of materials necessary to obtain reinvestment-level returns for the
substitutes would be passed on to all of the consumers of these materials, not solely to the
consumers that would use them as substitutes for formaldehyde. Thus, access to
formaldehyde provides derivative benefits to consumers in that it permits them to avoid
higher prices for a very large range of products that are produced and consumed in other
sectors of the economy. We have also calculated the magnitude of these derivative benefits.
Estimating the costs of perfect substitution using this approach is an example of a bottomsup method, which identifies and dollarizes all elements of cost and sums up the total to
produce the final estimate. This quantitative estimating technique is valid as long as reliable
estimates of the individual elements or components of cost can be developed.
In many cases, it is not possible to identify a perfect, drop-in substitute for a formaldehydebased product in a particular end use or application. This occurs most often in situations
where the formaldehyde-based product currently commands an overwhelming share of the
market, particularly if it has done so for many years. This is the case, for example, with urea
formaldehyde resins used in particleboard manufacturing and MDI used in rigid polyurethane

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foam applications. In these applications, substitution for formaldehyde-based products would


entail a loss of utility to the consumer, for example in decreased product quality or shorter
product life. In other instances, the substitute product may have attributes that are similar to
the formaldehyde-based product it would displace, but would be more difficult and costly to
manufacture, install, or use, or would have a reduced service life.
In these situations, the costs of materials substitution and increases in manufacturing costs are
calculated in the same way described above for direct substitution. It is also necessary,
however, to calculate the additional costs that would be borne by the consumer if the
substitute for the formaldehyde-based product lacked one or more of the attributes that the
consumer desired. The method used to estimate these costs depends on the nature of the
imperfection and the consumer response to it. For example, if the service life of the substitute
were half that of the displaced formaldehyde-based product, the consumer would be forced to
buy twice as many items over time. Subtler, difficult-to-quantify imperfections may be
present, however. For example, if a substitute binder for plywood is not as easily or rapidly
processed as the formaldehyde-based product it displaces, manufacturers may be forced to derate their production lines or invest in additional capacity to make the same volume of output.
This could necessitate design changes in a system that would increase its cost or complexity.
In other cases, a formaldehyde-based product may be selected because its properties provide
the optimal balance of attributes in a complex system. Substitution of an alternate material,
such as the use of casein (derived from milk) or soy-based adhesives in particleboard or
medium density fiberboard production instead of urea formaldehyde, could force the
manufacturer to redesign the system completely to re-optimize its performance. Even with a
redesigned system, the substitute material may not provide the product attributes desired by
the consumer, and the resulting loss of utility is a real cost. For example, casein adhesives
possess high dry strength and intermediate temperature resistance, but they have only
moderate moisture resistance and require longer cure times compared with urea
formaldehyde-based adhesives.
Under these circumstances, estimates are more subjective than in the case of direct
substitution because there is usually no good information on the loss of utility for an imperfect
substitute. Rational consumers do not normally want to buy a flawed product when a better
one is available, so there is little data on which to base the analysis. In these cases, a
combination of bottoms-up and top-down estimating methodologies has been used to
determine the approximate costs of imperfect substitution across the end use or application in
question.
The top down approach seeks to identify the cost of imperfect substitutions to consumers by
examining the state of the current market for the use or application in question. Estimates of
the current market share and the value of the sales in the market held by formaldehyde-based
products are used to establish the base case for what consumers are willing to pay to obtain
the attributes they desire. Then, we estimate the loss in utility for consumers in increasing
overall costs. These cost increases are treated as a loss in consumer benefits that must be
added to the materials and manufacturing cost differences described earlier.

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Assumptions Used for this Analysis

The major assumptions used for this analysis are summarized below.
The market for formaldehyde-based products, their costs, and substitute material costs are
based on 2003 data and conditions. In a few cases, data from 2003 were not available and
data from 2002 were used. All prices, costs, and values are in U.S. dollars.
For the economic benefits analysis, Global Insight postulates a new, steady-state
equilibrium for the formaldehyde substitutes. The effects of transient conditions are
discussed qualitatively where appropriate. For this analysis, we assume that the substitute
will be used at the level of economic activity prevailing in the base year, and that
consumption patterns would not be altered. That is, we ignore the drag on the economy that
would likely result from the replacement of formaldehyde with more costly substitutes.
Also, we assume that policies would be enacted that would prohibit the importation of lower
cost substitutes from abroad.
Only major uses of formaldehyde are evaluated in detail, representing about 84% of
formaldehyde consumption. Therefore, the scope of the contributions and benefits
estimated here is conservative because other uses account for about 16% of consumption.
The estimate of the steady-state product costs for substitute materials is based on a firstlevel analysis of the manufacturing costs and is not exhaustive. For example, although
new capital requirements for producing substitute materials are included, we have not
included estimates of capital requirements for infrastructure to support these facilities
(power plants, transportation systems).
Often we found that the substitutes for the formaldehyde-based products were older
products or technologies that had been displaced by more efficient or less costly
formaldehyde-based products. Wherever possible, we have chosen substitutes from among
products that are currently in use. The rationale for this approach is that these products are
already providing consumers with options that do not involve the use of formaldehyde.
They compete in markets and provide consumers with benefits in use that can be compared
with benefits derived from formaldehyde-based products. Where more than one product
might be substituted, we have used our best business judgment as to the substitute most
likely to be used. In most cases, this is based on our estimate of the lowest likely delivered
cost to the consumer that meets the required functionality.
All information for this report came from publicly available sources and contact with
experts in both the public and private sector and references to these sources are cited where
appropriate. Our estimate of costs and losses caused by substitution, and our design of
economic models of consumer behavior, are also based on our best business and
engineering judgment.

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APPENDIX I

AUTHORS OF THE REPORT

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Dr. Ronald M. Whitfield, Managing Director of Global Insight, was the Principal Investigator
for this research. He is a seasoned consultant who has conducted numerous assignments in the
chemicals and plastics industry. He has studied issues dealing with strategy development,
economic analysis, environmental policy, international trade, and competition. Dr. Whitfield has
testified before Congressional committees, regulatory commissions, Governors Task Forces,
public hearings, courts of law, and arbitration panels on various issues. He developed and
founded DRIs Chemical Service and later went on to establish the chemicals and plastics
practice at Charles River Associates. Dr. Whitfield was the Principal Investigator of two similar
studies that assessed the economic benefits of styrenics to the U.S. economy and the economic
benefits of chlorine chemistry to the North American economy. He holds a Ph.D. in Business and
Applied Economics from the University of Pennsylvania.
Frank Bohlken, Senior Consultant to Global Insight, provided the analysis of the economic
benefits of formaldehyde resins. Mr. Bohlken has over 10 years of chemical industry consulting
experience, working primarily in specialty chemicals and their applications. His work includes
market assessment, market entry advising, economic analysis, strategic planning, and mergers
and acquisitions support. Mr. Bohlken has extensive experience in formaldehyde resins, where
he has managed or participated in over 20 projects, including market analysis, feasibility studies,
business planning, and mergers and assessment support. Mr. Bohlken has a B.Sc. in
Chemistry/Biology, a Masters Degree in Resources Management (specializing in resource
economics), and post-graduate training in business management.
Dr. Francis C. Brown, Senior Consultant to Global Insight, served as a technical advisor for this
research. He has over 30 years of experience in staff positions and management consulting in the
chemical, manufacturing, and process industries. His areas of specialization include project
organization and management; technical feasibility studies dealing with market analysis,
economics, safety, and environmental control, and process development and optimization. He
also has extensive experience in chemical and extractive metallurgical process technology, and
materials development, and in the use of computer-aided techniques for process design,
evaluation, and synthesis. Dr. Brown completed his Ph.D. in Chemical Engineering and a Ph.D.
in Biochemical Engineering.
Rowena Low, Consultant to Global Insight, has six years of consulting experience. She has
worked extensively on industry studies, cluster analyses, and competitive analyses. She
contributed to a study that estimated the economic benefits of the styrenics industry to the U.S.
economy. Prior to consulting, she was an economist at the Development Bank of Singapore in
Singapore. Ms. Low holds a B.A. in Economics from Boston University and a Master of City
Planning from Massachusetts Institute of Technology.
The authors wish to acknowledge several other individuals who ably assisted in this research. We
are especially grateful for Janice Branco, Scott Fleming, Natasha Apollonova, and Geoff
Lubien of Global Insight, Inc. for the substantial work they did in executing portions of the
research. Mr. Mohsen Bonakdarpour of Global Insight created the tailored input-output models
for the formaldehyde industry and using these models to estimate economic contributions.

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APPENDIX II

PRODUCT TREE FOR THE FORMALDEHYDE INDUSTRY

117

Figure 21
Product Tree for Formaldehyde, 2003

Urea Formaldehyde Resins

27%

Phenolic Resins

20%

Polyacetal Resins

11%

Butanediol

9%

MDI

8%

Pentaerythritol

4%

Urea Formaldehyde
Concentrates

3%

Hexamethylenetetramine

2%

Melamine Resins

3%

Health Care

Miscellaneous

14%

Pyridine

Formaldehyde

Chelating Agents
Herbicides

Other

Note (1): The percentages represent estimated U.S. and Canadian formaldehyde consumption for each end
use.
Note (2): Totals may not add due to rounding.

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