MOSCOW (MRC) -- LyondellBasell Industries posted third-quarter net income of USD114 million compared with USD965 million in the year-ago quarter. The combination of an impairment charge on its Houston refinery and an inventory valuation benefit overall reduced net income by USD313 million. Net sales of USD6.8 billion were down 23% year-on-year (YOY), said Chemweek.
Volumes recovered to prior-year levels, led by continued growth in polyethylene (PE), but pricing and margin was lower. Reported adjusted earnings of USD1.27/share were down 55% YOY but 17 cts/share above consensus estimates as reported by Zacks Investment Research.
"Demand for LyondellBasell products improved with increasing global economic activity,” said Bob Patel, LyondellBasell CEO. “Our year-over-year results reflect strong global volumes while margins are still recovering. Sequentially, third-quarter volumes and margins rebounded for most of our businesses. Strong demand for polyethylene in North America and Asia and hurricane-related production constraints on the U.S. Gulf Coast led to tight markets that drove USD420/ton of North American PE contract pricing improvement since June."
Volumes improved in the propylene oxide and derivatives business and advanced polymer solutions segment as automotive manufacturing and other durable goods markets recovered. Reduced demand for transportation fuels continued to pressure refining results, the company said.
LyondellBasell said markets continue to strengthen in the fourth quarter. “Recovery in global economies should continue to benefit the petrochemical industry,” Patel said. “Despite the backdrop of both the pandemic and a recession, we expect global polyethylene demand to grow for the full year. China continues to have a 40% polyethylene trade deficit which supports North American exports and tightens the U.S. domestic market.” The company expects continued strength in North American integrated polyethylene margins during the fourth quarter, perhaps with some seasonal moderation by the end of the year.” Our order books show increased demand from automotive manufacturing and other durable goods markets that should continue to propel further improvement for our Advanced Polymer Solutions segment," Patel said.
Olefins & polyolefins – Americas segment operating income was USD309 million, down 41% YOY. Olefins results decreased about USD135 million driven by decreases in margins partially offset by an increase in volumes. Ethylene margin decreased primarily due to lower co-product prices. Polyolefin results decreased approximately USD60 million due to lower margins as a result of reduced spreads, LyondellBasell said.
Olefins & polyolefins - Europe, Asia, international operating income was USD52 million, down 74% YOY. Olefins results decreased approximately USD115 million YOY due to lower margin driven by declining ethylene prices. Combined polyolefins results decreased about USD45 million primarily driven by a lower polypropylene price spread over propylene.
Intermediates & derivatives segment operating income of USD180 million was down 43% YOY. Propylene oxide & derivatives and intermediate chemicals results were relatively unchanged offset sharply lower oxyfuels results driven by weaker margins due to lower gasoline prices and higher feedstock prices. Compounding & solutions results were relatively unchanged with higher margins offset by lower volumes. Advanced polymers results decreased approximately USD15 million due to lower margins and volumes driven by reduced demand.
Refining segment posted a net loss of USD733 million reflecting a USD582 million impairment charge. The segment posted a loss of USD6 million in the year-ago quarter. Income was lower on weaker margins and volumes in response to lower demand for fuels. Technology segment net income was USD101 million, up 38% driven by higher licensing revenue.
Advanced polymer solutions operating income of USD116 million was up 73% YOY on favorable inventory benefits. Compared with the prior period, compounding & solutions results were relatively unchanged with higher margins offset by lower volumes. Advanced polymers results decreased approximately USD15 million due to lower margins and volumes driven by reduced demand.
As MRC informed earlier, LyondellBasell (Rotterdam, the Netherlands) announced that Duqm Refinery and Petrochemical Industries Company LLC (DRPIC) has selected LyondellBasell’s world-leading polypropylene (PP) and high-density polyethylene (HDPE) technologies for a new facility. The new plants will comprise of a PP plant that will utilize LyondellBasell’s Spheripol PP process technology to produce 280,000 metric tons per year (m.t./yr) of PP and a 480-m.t./yr HDPE plant which will utilize LyondellBasell’s Hostalen ACP process technology and will be built in Al Duqm, Oman.
Propylene is the main feedstock for the production of PP.
According to MRC's ScanPlast report, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
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.
MRC