MOSCOW (MRC) -- Bob Patel, LyondellBasell's CEO, says polyolefins demand in China is recovering rapidly from the economic chaos created by the coronavirus disease 2019 (COVID-19) pandemic, reported Chemweek.
He is optimistic that both the US and European markets will return at a similar pace, and that the company's capacity utilization could near previous levels by the end of 2020.
"Demand is improving very well in China," Patel said during a webcast this morning with Lyn Tattum, vice president/events at IHS Markit and publisher of Chemical Week. "I read recently that oil consumption in China is back to almost 90% of the pre-pandemic level, and we see that in the demand for our products."
All of LyondellBasell's compounding plants in China are online and ramping up to full production rates, he noted. "So my hope is that the pace of recovery in China is something we can look forward to in Europe and the US as we follow the path China took, plus or minus."
Operating rates at the company's production units are "starting to move up slowly," says Patel. "I would expect that in the second quarter we could average 80% or so in US, and 85-90% in Europe on our cracker and polymer operating rates. I don't think we get back to full operating rates until later this year or perhaps even into Q1. Frankly, if we can retrace back to 90% of where we were before, I think that would be a very good recovery in 2020, and I think that's very possible."
The pandemic, which took grip outside China late in the first quarter, crippled large swaths of the economy, with divergent effects across LyondellBasell's business. Demand into packaging and medical applications, which account for about half of the company's revenue, has been resilient.
"Because of the lockdowns, people are doing more grocery shopping, so packaging has done quite well," says Patel. "And of course for medical applications, like the face masks and the disposable protective gear that healthcare workers wear, that comes from polyethylene and polypropylene, so those have done well."
The company's fuel business, which accounts for about a quarter of revenue, was hit hard. "That business really struggled in April and May with the lockdowns, but we can see that improving already as the miles driven is going up," says Patel.
Demand into automotive and durables, which contribute about a quarter of LyondellBasell's revenue, is lagging. "My guess is that auto and durables will follow, but a little bit later," he states.
Patel says all of LyondellBasell's manufacturing sites have remained online throughout the pandemic, and its Houston, Texas, headquarters staff has begun a phased return to the office. Of the company's roughly 19,000 employees, only 50 were diagnosed with COVID-19, and none of the cases was serious.
As MRC reported earlier, global petrochemical producer LyondellBasell has reduced rates across its system to accommodate lower demand wrought by shutdowns around the globe to stem the spread of the coronavirus pandemic, said the company's CEO Bob Patel. LyondellBasell's overall global petrochemical and refining assets were expected to operate at 60% to 80% of nameplate capacity through the second quarter, Patel said during the company's first-quarter earnings call. European crackers were seen running at 80% to 85%, while US crackers were expected to run at about 75%, he said.
We also remind that to further aid in the fight against the COVID-19 pandemic, LyondellBasell (LBI) donated a key ingredient to Huntsman Corporation to produce hand sanitizer for US first responders.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
LyondellBasell is one of the largest plastics, chemicals and refining companies in the world. Driven by its 13,000 employees around the globe, LyondellBasell produces materials and products that are key to advancing solutions to modern challenges like enhancing food safety through lightweight and flexible packaging, protecting the purity of water supplies through stronger and more versatile pipes, and improving the safety, comfort and fuel efficiency of many of the cars and trucks on the road. LyondellBasell sells products into approximately 100 countries and is the world's largest licensor of polyolefin technologies.