OMV AG (Vienna) has raised its full-year margins forecast for olefins, polyethylene (PE), and overall polyolefin sales volumes after seeing better-than-expected performance in the first half of 2025, despite anticipating continued pressure on the European chemical markets, as per Chemweek.
OMV sees its PE margin for the year now coming in “significantly above” its previous forecast of €400 per metric ton stated in guidance issued in April, and also expects higher ethylene and propylene margins that it previously projected earlier this year.
The ongoing process of olefins capacity rationalization in Europe is likely to add support to surviving producers, according to OMV’s CEO Alfred Stern, with up to 4 million metric tons per year of production capacity to potentially close by the end of this year, he said July 31 during the company’s second-quarter earnings call.
OMV is “basically left with assets that are very strongly positioned on the European cash cost curves” because the company has made its steam crackers in Europe more flexible in terms of feedstocks they can use, he said.
In prepared remarks ahead of the call with analysts, Stern said that several of the company’s European indicator margins had been “stronger than expected” in the first six months of this year. “Although demand remained subdued, margins benefited from lower feedstock costs and capacity closures at European crackers,” he said.
However, OMV remains cautious for the second half of the year, as demand is “not expected to show significant improvement and the potential impact of tariff implementation on the market remains uncertain.”
Despite these potential market headwinds, Stern said OMV had increased its full-year outlook for European olefin indicator margins from its previously assumed value of about €520 per metric ton for ethylene to “above” that figure, and to “above” €385 per metric ton for propylene from its previous estimate for around that level.
For polyolefins, OMV now expects its PE indicator margin to be “significantly above” €400 per metric ton, up from “above” that level. However, it has downgraded its forecast for its polypropylene (PP) indicator margin to be “around” €400 per metric ton, having been expected to be “above” that figure previously.
OMV has also ramped up its expectations for polyolefin sales volumes and now anticipates full-year volumes of around 4.3 million metric tons (MMt), up from around 4.1 MMt previously and above the 2024 level of 3.9 MMt. OMV’s second-quarter polyolefin sales volumes including JVs increased by 5% year over year, to 1.61 MMt, driven by higher volumes at its petrochemicals JV Borealis AG (Vienna).
The JV with Abu Dhabi National Oil Co. (Adnoc) was able to grow sales volumes “significantly” in the first half of this year. OMV expects this positive trend to continue, Stern said, with the company increasing its full-year outlook for Borealis sales volumes by 200,000 metric tons.
Borealis is currently in the process of being merged with OMV’s other petchems JV with Adnoc, Borouge PLC, with the transaction still on course to be completed in the first quarter of 2026. The newly merged entity will be named Borouge Group International and is also planned to include the acquisition of Canada’s Nova Chemicals, which OMV and Adnoc say will make it the world’s fourth largest polyolefins producer.
Stern said the merger is “exactly what needs to happen” to drive consolidation and efficiency in the beleaguered European petrochemicals segment. “We’re in a good position to move from the regional league to the global champions league,” he said.
OMV expects its steam cracker utilization rate in Europe to be around 90% for the full year 2025, up from 84% in 2024, while its organic capital expenditure for chemicals is anticipated to be slightly lower than last year, at €900 million, according to the company.
Discussing the second quarter, Stern said European olefin indicator margins increased, due primarily to lower feedstock costs. This was further supported by both “planned and unplanned outages, as well as the permanent closure of European crackers,” he said.
While the company’s European PE indicator margin improved to €492 per metric ton, supported by lower feedstock costs, the PP indicator margin declined to €377 per metric ton.
“The overall economic environment remained challenging. Additionally, increased competition from lower-priced imports, particularly for commodity grades, continues to exert pressure,” he said. Specialty polymer grades, which are less exposed to imports, “have also faced soft demand and a difficult export environment, [but] they have shown some resilience compared to commodity segments,” he added.
OMV’s European ethylene indicator margin increased by 15% year over year to €589 per metric ton in the quarter, while its propylene indicator margin rose by 18% to €467 per metric ton. “This was mainly a result of lower feedstock costs, as naphtha prices declined, but was also supported by planned and unplanned outages, as well as permanent closures of European crackers,” it said. The margins were in line with the company’s guidance issued earlier in July.
The company’s clean operating profit for chemicals rose to €200 million in the second quarter, up 76% compared to the prior-year quarter and also substantially higher than in the first quarter’s €126 million. The higher olefin and PE margins contributed a positive effect of €75 million to the improvement performance, Stern said. This was partially countered by lower feedstock prices, which had a negative inventory effect of €57 million compared to the previous year, he said.
The contribution of Borealis, excluding JVs, increased by €72 million year over year, almost doubling to €134 million. OMV said this was supported by a stop on depreciation, due to its classification as being held for sale. The contribution of Borealis JVs declined slightly to €41 million.
Due to an accounting effect of the reclassification, only the Borouge contribution is now included in OMV’s results, it said. Borouge’s earnings declined year over year due to lower sales volumes, which were impacted by a planned turnaround at Borouge 3 and sluggish demand in Asia, it said.
OMV’s base chemicals result was affected by a significantly lower light feedstock advantage, more negative inventory effects, and weaker realized margins for products including benzene, it said. The company’s European cracker utilization rate in the second quarter was stable at 82%, it said.
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