Technical Support Document for the 2008 Critical Use Exemption to the
Phaseout of Methyl Bromide

Prepared by ICF International for the U.S. Environmental Protection
Agency

July 12, 2007 

CONTENTS

Analysis of a Major U.S. Methyl Bromide Supply Disruption: The Potential
Role of Imports

Statistical Projection of Future U.S. Pre-Phaseout Methyl Bromide
Inventory

Appendix A: Projection of Article 5 Methyl Bromide Consumption Through
2008

I. Analysis of a Major U.S. Methyl Bromide Supply Disruption: 

The Potential Role of Imports

Introduction

Since 2004, U.S. methyl bromide producers’ estimate of the time needed
to re-establish methyl bromide production in the United States following
a major domestic supply disruption has changed, prompting a reassessment
of the inventory needed to mitigate potential supply shortages following
such an event.  In the event of a loss of domestic methyl bromide
production capacity, the supply shortfall of methyl bromide for domestic
consumption is estimated based on the amount of methyl bromide needed in
excess of the amount that can be expected to be imported from foreign
producers to satisfy domestic demand over the period required to restore
domestic production capacity.  The quantity of methyl bromide authorized
by the Parties to the Montreal Protocol for critical uses in the United
States in 2008 (and the amount on which the projected 2008 methyl
bromide demand is based) is 5,355,946 kg (or 5,356 MT).  To meet demand
not expected to be satisfied by imports during the time required to
re-establish domestic production would require domestic methyl bromide
inventories of approximately 11 - 51% of the annual 2008 demand or
between 581 and 2,731 MT.  This document explains the process by which
this inventory calculation was reached.

This analysis assumes that the methyl bromide supply (i.e., the lost
domestic production capacity) will be re-established   However, it is
important to note that in the event of a major loss of domestic
production, whether U.S. methyl bromide production companies decide to
re-establish methyl bromide production capacity or to reconfigure their
facility to produce methyl bromide would be an individual company
business decision.  For example, if the methyl bromide shortfall is
such that the price of methyl bromide increases and some users choose to
switch to alternatives, the demand for methyl bromide may decrease. 
Under these circumstances, producers may choose to continue to purchase
and transship methyl bromide from foreign suppliers, to not re-establish
methyl bromide production capacity, and to instead re-direct production
lines to manufacture other, potentially higher-value chemicals.  In
brief, the market response to a methyl bromide plant failure and the
subsequent response of domestic and foreign methyl bromide manufacturers
could follow a number of different scenarios.  Additionally, chemical
manufacturers that are not currently producing methyl bromide would face
geographical limitations to producing methyl bromide, since they would
need to be located in the vicinity of a source of elemental bromine,
found principally in underground brine deposits in Arkansas and
Michigan.  Quantitative analyses of these alternative scenarios are not
provided in this report.

The potential for importing methyl bromide following a major domestic
supply disruption depends on three key parameters: (1) the estimated
total foreign production capacity for methyl bromide; (2) the amount of
the foreign-produced methyl bromide that would be available to U.S.
customers considering worldwide demand; and (3) the availability and
capacity of specialized shipping containers needed to import methyl
bromide taking into consideration the logistics of shipping methyl
bromide from foreign suppliers to the U.S.

Foreign Production Capacity and Worldwide Demand

The amount of methyl bromide that can be imported into the United States
depends on foreign production capacity and existing claims on that
capacity (i.e., existing contracts between foreign manufacturers of
methyl bromide and foreign consumers).  As of 2006, Israel, Japan, and
China were the only countries other than the United States that were
still producing methyl bromide.  The calculation of methyl bromide
production capacity in China, Israel, and Japan is based on consumption
data reported to UNEP, interviews with industry representatives, and
publicly available information.

Worldwide Demand

Calculated worldwide demand for methyl bromide in 2008 is presented in  
REF _Ref167276294 \h  Table 1  based on U.S. and foreign critical use,
QPS, and feedstock demand.  Demand for critical use for both U.S. and
non-Article 5 foreign users is assumed to be the amount authorized for
critical uses in 2008 at the 18th Meeting of the Parties.  The 2008
consumption of methyl bromide for controlled uses by Article 5 countries
was calculated based on data reported to UNEP for years 1991-2005.  A
steady rate of decline in demand since 2002 (approximately 1,000 MT per
year) was projected out to 2008 to estimate future Article 5 consumption
(see Annex A).  U.S. and foreign demand for QPS and feedstock methyl
bromide, which are assumed to be relatively constant over time, are
based on UNEP (2006).  Total worldwide consumption of methyl bromide in
2008 is based on 2008 critical use allocations and data reported by UNEP
(2006), and is projected to be approximately 30,710 MT (including U.S.
consumption).

Table   SEQ Table \* ARABIC  1 . Estimated Total Worldwide Methyl
Bromide Demand in 2008, in Metric Tons

Methyl Bromide Use	Annual Methyl Bromide Demand (MT)

U.S. Consumption of Critical Use Methyl Bromide a	5,356

Non-Article 5 Foreign Consumption of Critical Use Methyl Bromide a	528

Article 5 Consumption of Critical Use Methyl Bromide b	6,000

Worldwide Consumption of QPS Methyl Bromide C	13,815

Worldwide Consumption of Feedstock Methyl Bromide C	5,014

TOTAL	30,713

a Critical Use methyl bromide, as authorized for critical use in 2008 at
the 18th Meeting of the Parties. Available at:   HYPERLINK
"http://ozone.unep.org/Meeting_Documents/mop/18mop/MOP-18-10E.pdf" 
http://ozone.unep.org/Meeting_Documents/mop/18mop/MOP-18-10E.pdf .

b Demand in 2008 for Article 5 consumption of critical use methyl
bromide was estimated based on historical trends in data reported to
UNEP.  See Annex A for calculation detail.  Source: UNEP. 2006. 2006
Report of the Methyl Bromide Technical Options Committee: 2006
Assessment.  Available at:   HYPERLINK
"http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml"
 http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml
.

C Demand in 2008 for QPS and feedstock methyl bromide was assumed to be
equal to reported consumption for these applications in 2005.  Source:
UNEP. 2006. 2006 Report of the Methyl Bromide Technical Options
Committee: 2006 Assessment.  Available at:   HYPERLINK
"http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml"
 http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml
.

Foreign methyl bromide production capacity is estimated to be greater
than total worldwide consumption of methyl bromide in 2008, based on
2008 critical use allocations, data reported by UNEP (2006), and
interviews with industry representatives.  Therefore, foreign production
should be adequate for meeting U.S. critical use needs, as well as the
rest of demand worldwide, if U.S. methyl bromide production is shut
down. The foreign production capacity estimate is not provided in this
public document because that information could be used to estimate
information about the production capacity of individual companies.

Availability and Capacity of Specialized Shipping Containers and
Shipping Logistics

Imports and exports of methyl bromide require specialized shipping
containers, or isotanks, of which there are a limited number.  Because
manufacturing new methyl bromide isotanks is a slow process, it may be
difficult or impossible to quickly manufacture significant numbers of
new isotanks in response to a production failure.  As a result, in the
event of a domestic supply disruption, the United States would have to
depend on the existing capacity of isotanks to import methyl bromide for
U.S. customers and transship methyl bromide for foreign customers from
foreign manufacturers.

While methyl bromide imports have the potential to offset all of the
methyl bromide needed for domestic critical use (and formerly obtained
from domestic production) for the estimated period, some short-term
supply deficit would be experienced in the U.S during the timeframe
required to complete the first import shipment if adequate domestic
inventories are not available.   

The timeframe for future shipments of methyl bromide to the United
States is also a crucial element in the analysis of importing methyl
bromide to the United States following a major U.S. production failure. 
The shipping timeframe determines not only how long it will take for the
first shipment of methyl bromide to arrive, but also the number of
roundtrips (or “turns”) the isotanks can make in a given timeframe,
thereby impacting both the speed at which methyl bromide can reach the
United States and the total quantity of methyl bromide that can be
imported before U.S. methyl bromide production is resumed. Based on
information provided by industry representatives, it is estimated that
it would take 15 weeks for the first shipment of methyl bromide to reach
the United States following a domestic production failure.  

Conclusion: Estimate of Supply Shortfall

With sufficient foreign production capacity to meet U.S. and worldwide
critical use needs, the limiting factor in the event of a major loss of
domestic production capacity becomes the shipping container capacity
available to import the foreign methyl bromide into the United States
and the logistics of such shipments.  Assuming that U.S. critical users
will require the 5,356 MT authorized for critical uses in 2008, the
available shipping containers and estimated shipping capacity would be
adequate to fulfill U.S. critical use methyl bromide demand; however,
ramping-up foreign production and adjusting shipping routes to
transition the United States from a major exporter to a major importer
would take time. Therefore, the United States would be without newly
produced or imported methyl bromide for a certain time
period—estimated to be 15 weeks—after a domestic production failure
(based on information from industry representatives).  Meeting demand
during this time period would require domestic methyl bromide
inventories of approximately 11 - 51% of the annual 2008 demand or
between 581 and 2,731 MT.  These inventory estimates represent the range
of critical use demand over the time period preceding the first shipment
of imports, depending on the season at which the major loss of domestic
production capacity occurred.  The season at which the domestic supply
disruption occurs will affect the inventory needed because the rate of
methyl bromide use is not constant throughout the year.

The supply shortfall range of 581 MT to 2,731 MT is calculated based on
average seasonal production of critical use methyl bromide in the United
States in 2005 and 2006.  Quarterly production data for 2005 and 2006
show consistent patterns in the level of production throughout the year;
these are likely the result of normal variation in methyl bromide demand
at different times of year.  For example, methyl bromide used for
pre-plant applications would be in the highest demand immediately prior
to the growing season.  The supply shortfall range is estimated by first
calculating the average percentages of annual production produced weekly
in each of the four quarters in 2005 and 2006, and then multiplying the
maximum and minimum weekly percentages by the 15 week shortfall period
and total 2008 critical use methyl bromide demand (5,356 MT).  The
resulting upper and lower bounds reflect seasonal differences in the
level of production and critical use demand.  For example, if a domestic
production failure event occurred when the most methyl bromide is
typically produced, an inventory of 2,731 MT of methyl bromide would be
needed to satisfy demand for the 15 weeks before imports began to
arrive.  If a major production failure occurred at the time of lowest
methyl bromide production, only 581 MT would be needed.

Limitations

There are several limitations associated with the estimate that 581 MT
to 2,731 MT of inventory would be adequate to meet a supply shortfall
resulting from a sudden domestic supply failure.  First, it should be
noted that the pre-2005 inventory is held by multiple companies, and the
sale of that inventory is governed by market forces.  Hence, in the
event of a production failure, the stockpile could be purchased by any
user (i.e., critical use/non-critical use, QPS, feedstock, or foreign
users).  Most likely, the stockpile would go to the user willing to pay
the highest price in time of short-term global shortage.  Second, there
may also be existing contract agreements that must be honored.  As a
result, there is no guarantee that the existing pre-2005 inventory of
methyl bromide will flow towards U.S. critical uses in the case of a
production failure.  Third, it is not clear that a contingency plan
exists amongst the various methyl bromide producers as to how to respond
to a major supply disruption.  Thus, the reallocation of shipping
containers to import methyl bromide into the United States may not occur
smoothly over the first weeks or months while the various manufacturers,
shippers, and customers sort out their arrangements.  Finally,
characteristics such as the purity of the pre-2005 inventory of methyl
bromide could affect users’ ability to use this inventory to meet
their needs for methyl bromide; however, these characteristics are not
known.  For example, some of the methyl bromide held in inventory may be
intended for pre-plant uses may be pre-mixed with chloropicrin in
compressed gas cylinders and therefore could not be used for
post-harvest fumigation.  

II. Statistical Projection of Future U.S. Pre-Phaseout Methyl Bromide
Inventory

This brief report presents the results of an analysis to project the
pre-2005 methyl bromide inventory that will remain on January 1, 2008. 
The data for this analysis was provided by EPA on June 6, 2007.  In
accordance with a notice published on August 25, 2004 (69 FR 52403),
entitled “Request for Information on Existing and Available Stocks of
Methyl Bromide,” data on methyl bromide inventory existing on January
1, 2004, were collected from all entities that held inventories of
methyl bromide for sale or for transfer.  Data on methyl bromide
inventory held as of January 1, 2005, were collected from all methyl
bromide producers, importers, exporters, distributors, and applicators,
pursuant to a Section 114 request dated April 15, 2005.  Inventory data
for January 1st of 2006 and 2007 for all methyl bromide producers,
importers, distributors, and applicators were collected pursuant to a
rule published on December 13, 2005 (70 FR 73604) that amended methyl
bromide reporting requirements at 40 CFR 82.13 in a manner that enables
EPA to calculate the aggregate inventory for each calendar year.

In order to estimate the future available methyl bromide inventory, a
simple linear fit was performed using SAS® (Statistical Analysis
System) software.  As shown in   REF _Ref169407747 \h  Table 2  below,
approximately 4,447 Metric Tons of methyl bromide are projected to be
held by companies in the United States as of January 1, 2008.  The
inventory on January 1, 2008 was estimated using only the four data
points (i.e., aggregated data about the amount of inventory held in the
U.S. on January 1st of 2004, 2005, 2006 and 2007) that are presented in 
 REF _Ref169338263 \h  Table 2 .

Table   SEQ Table \* ARABIC  2 .  Projected Linear Trend of Methyl
Bromide Inventory, in Metric Tons

Year	Reported	Projected





2004	16,422.35	16,156.32

2005	12,993.83	13,228.93

2006	9,973.65	10,301.53

2007	7,671.09	7,374.14

2008

4,446.74



Figure   SEQ Figure \* ARABIC  1 .  Projected Linear Trend of Methyl
Bromide Inventory

 

Appendix A: Projection of Article 5 methyl bromide consumption through
2008

Table A1 below shows the projection of Article 5 methyl bromide
consumption through 2008. Article 5 consumption in 2002 through 2005 is
from UNEP (2007).  The consumption values for 2006 through 2008 are
projected based on the 2002-2005 consumption trend.  The 2006 Assessment
of the Methyl Bromide Technical Options Committee supports this
projection method, stating that “extrapolation of consumption in
2002-2005 indicates that consumption of approximately 7,000 tonnes can
be expected in Article 5 countries in 2007 if recent trends continue.”


As shown in Table A1, consumption in 2008 is projected to be
approximately 6,000 MT.  This value is used to calculate the total
worldwide methyl bromide demand in 2008.

Table A1. Methyl Bromide Consumption in Article 5 Countries (MT)

2002 a 	2003 a 	2004 a 	2005 a	2006 (projected)	2007 (projected) b	2008
(projected)

12,707	11,820	10,495	9,372	8,000	7,000	6,000

a UNEP. 2007. Consumption Data from UNEP Ozone Secretariat Article 7
Reporting. Available at: http://ozone.unep.org/Data_Reporting/

b UNEP. 2006. 2006 Report of the Methyl Bromide Technical Options
Committee: 2006 Assessment.  Available at:   HYPERLINK
"http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml"
 http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml
.

 Elemental bromine is required for methyl bromide production. Seawater
does contain bromine salts, but at such low concentrations that it is
very energy intensive to use as a source for the production of methyl
bromide.

 France discontinued methyl bromide production as of 2006 and Romania in
2004.  Methyl bromide production in France and Romania was not included
in the calculation of foreign production capacity because it is assumed
that capacity for methyl bromide production no longer exists or could
not be restored in a reasonable time frame in those countries.  Romania
closed its methyl bromide production facilities in 2004, and the
Albemarle Port de Bouc facility in France has been reconfigured as of
2006 to produce fine chemicals and is no longer producing methyl
bromide. (Sources: UNEP. 2006. 2006 Report of the Methyl Bromide
Technical Options Committee: 2006 Assessment.  Available at:   HYPERLINK
"http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml"
 http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml
;  Scheraga, Dan. Chemical Market Reporter. “Elf strengthens bromine
production.” Mar 9, 1998;v253n10:36.)

 UNEP. 2006.  2006 Report of the Methyl Bromide Technical Options
Committee: 2006 Assessment.  Available at:   HYPERLINK
"http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml"
 http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml 

 UNEP. 2006.  2006 Report of the Methyl Bromide Technical Options
Committee: 2006 Assessment.  Available at:   HYPERLINK
"http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml"
 http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml 

 UNEP. 2006.  2006 Report of the Methyl Bromide Technical Options
Committee: 2006 Assessment.  Available at:   HYPERLINK
"http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml"
 http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml 

 The average of 2005 and 2006 quarterly production totals were used
because these are the only two full years after the CUE program began on
January 1, 2005.  Thus, these years are expected to be most
representative of the quarterly distribution of future production. 

 UNEP. 2007. Consumption Data from UNEP Ozone Secretariat Article 7
Reporting. Available at: http://ozone.unep.org/Data_Reporting/

 UNEP. 2006. 2006 Report of the Methyl Bromide Technical Options
Committee: 2006 Assessment.  Available at:   HYPERLINK
"http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml"
 http://ozone.unep.org/Assessment_Panels/TEAP/Reports/MBTOC/index.shtml
.  Page 35.

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