Process economics for commodity chemicals .1. The effect of fluctuating costs on design and optimization

Commodity chemicals prices are subject to strong market fluctuations and therefore difficult to forecast with accuracy. This creates difficulties in design and optimization, as the common economic criteria used in formulating design objective functions can be very sensitive to variations in price data. Commodity chemical price data can be described with reasonable accuracy by probability distributions of price ratios. These ratios are time-invariant and arise from the fundamental structure of the petrochemical industry. A new economic criterion, the residual economic function, REF, is derived for commodity chemicals processes, on the basis of price ratio distributions instead of forecasts. Optimization of this new criterion is shown to be equivalent to optimization of both net present value and discounted cash flow rate of return. Unlike other criteria, REF does not depend on any unforeseeable parameters, due to the time-independent behavior of the cost ratios and the elimination of other economic assumptions in its derivation. REF can be used with any design or optimization method. The new economic criterion is compared with established methods through an example.