LyondellBasell Industries N.V.NYSE
LyondellBasell: Excess Margins Will Soon Lead To Excess Supply
Fri, Oct. 21, 8:20 PM
- Saudi Aramco has bid $1.5B for LyondellBasell's (NYSE:LYB) refinery in Houston, one of at least three bidders for the plant including Valero Energy (NYSE:VLO) and Suncor Energy (NYSE:SU), Reuters reports.
- LYB has not stated publicly what it considers an appropriate value for the plant, but Reuters says a source familiar with negotiations believes a sale ultimately could fetch $2B.
- The cost of renewable fuel credits may affect the price of the plant, because LYB will need to spend ~$200M this year on the credits, which could cap the price bidders are willing to pay, says a Tudor Pickering analyst.
Tue, Oct. 18, 8:27 AM
- BASF (OTCQX:BASFY) faces a prolonged shutdown of production units at its chemical plant complex and headquarters in Ludwigshafen, Germany, where yesterday's explosion and fire killed two employees and injured dozens.
- BASF says two steam crackers at the plant remain halted and another 20 facilities are either stopped or only partially working.
- Analysts say some production units could be down for months as investigations by the company and government agencies take place, possibly tightening European ethylene markets in 2017, which could benefit Dow Chemical (NYSE:DOW) and LyondellBasell Industries (NYSE:LYB).
- Baader Bank analyst Markus Mayer says the closing of the two steam crackers mostly will impact BASF's basic chemicals division, which makes up ~21% of sales and 30% of EBITDA; he analyst estimates that 6% of annual earnings could be directly impacted by the fire, with as much as 3% of EBITDA at risk because the shutdown may last more than a quarter.
Fri, Oct. 14, 2:52 PM
- LyondellBasell (LYB +0.3%) is initiated with a Buy rating and a $95 price target at Tudor Pickering, which considers it a compelling value play in the chemicals sector with peer-leading holder capital returns, balance sheet security and appealing growth projects.
- LYB’s appealing propylene oxide exposure, unique yield flexibility and higher margin polyolefin products should provide some earnings insulation, the firm says.
- Tudor also initiates Westlake Chemical (WLK -1.2%) and Westlake Chemical Partners (WLKP -0.3%) with Hold ratings and respective $53 and $23 price targets; the firm says WLK has “mouth watering" growth outlook although it is not a bargain, while IRS rules for MLPs pose a risk for WLKP.
Tue, Sep. 13, 10:39 AM
- Saudi Arabia is seeking to strengthen its U.S. market position by buying LyondellBasell's (LYB -1.9%) big oil refinery in the Houston Ship Channel, but negotiations take place as Congress is moving to allow families of victims of the 9-11 attacks to sue Saudi Arabia for supposed ties between government officials and the terrorists, NY Times reports.
- Saudi Aramco is believed to be the top contender for the refinery, with competition from Valero (VLO -0.9%), Suncor (SU -2.4%) and Cenovus (CVE -4.7%).
- The possible purchase comes as Saudi Aramco and Royal Dutch Shell are disbanding their Gulf of Mexico partnership, with the Saudis poised to gain control over the Port Arthur, Tex., refinery as well as some gasoline stations and storage facilities, while Shell will take over two smaller refineries in Louisiana that were jointly owned; Middle East oil experts say the loss of the two refineries would make the acquisition of the LYB refinery all the more vital in maintaining the Saudi's dominant market position along the Gulf coast.
Fri, Sep. 9, 11:57 AM
- LyondellBasell (LYB -1.4%) announces plans to build a $700M plastics plant at its complex in La Porte, Tex., as part of a $4B expansion in Texas.
- LYB says the plant will be the first commercial plant to employ its new Hyperzone PE technology, and will have an annual capacity of 1.1B lbs.of polyethylene, a high-density resin used to make stronger and lighter plastics.
- Construction is scheduled to begin in early 2017, with start-up planned for 2019.
Tue, Sep. 6, 7:58 AM
- Saudi Aramco and its U.S. refining joint venture Motiva Enterprises are the front-runners to buy LyondellBasell's (NYSE:LYB) Houston refinery, with an announcement expected later this week, Reuters reports.
- The Aramco-Motiva group and Suncor Energy (NYSE:SU) exchanging proposals with LYB in the past few days, with Aramco-Motiva emerging as the leading contender over the weekend, according to the report.
- The 263K bbl/day refinery has been valued at ~$1.5B based on an average price of $5K-$6K per barrel of refining capacity in recent sales of U.S. refineries.
- Separately, the refinery was restoring production after a Thursday power outage, the latest in a string of fires, shutdowns and power outages that have cut the plant's production throughout the year.
Thu, Aug. 25, 4:40 PM
- LyondellBasell (NYSE:LYB) has retained Bank of America Merrill Lynch to help with the potential sale of its 263K bbl/day refinery in Houston, Reuters reports.
- Saudi Aramco, Valero Energy (NYSE:VLO), Cenovus Energy (NYSE:CVE) and Suncor Energy (NYSE:SU) are among the companies that have expressed interest, according to the report.
- LYB CEO Bob Patel said earlier this year that he expected the refinery eventually would go on sale, but he has not offered any time frame.
Thu, Aug. 11, 2:58 PM
- LyondellBasell (LYB +2.7%) reportedly has returned to normal operations at its 263K bbl/day Houston refinery after a power interruption on a unit cut production in half.
- Due to a quick restart of the sulfur recovery unit after losing power on Tuesday, the refinery's production reportedly is expected to return to full capacity within a few days.
- The refinery's production averaged just 73% of capacity during Q2 due to extensive repairs to a coking unit damaged in an April fire, and the refinery was not able to run at full production until the coker restarted on July 15.
Fri, Jul. 29, 2:12 PM
- LyondellBasell (LYB -4.5%) is lower after reporting weaker than expected Q2 earnings on 20% less revenues, as its product prices remained under pressure.
- Q2 revenues in olefins and polyolefins, the segment that produces products such as ethylene and represents a majority of LYB’s revenues, fell 18% Y/Y in the Americas and 11% in the rest of the world, while LYB's intermediates and derivatives segment declined 18% and refining unit revenues sank 39%.
- Separately, LYB unveils plans to build a high density polyethylene plant, with an annual capacity of 1.1B lbs., on the U.S. Gulf Coast; start-up is planned for 2019.
- The plant will use a new technology to make plastics that do not crack as easily; LYB does not reveal project costs or the exact location, but the goal is to finish the project by 2019.
Fri, Jul. 29, 7:03 AM
Thu, Jul. 28, 5:30 PM
Wed, Jul. 27, 5:34 PM
- A federal judge earlier today revived a lawsuit alleging that LyondellBasell's (NYSE:LYB) predecessor company intentionally cheated creditors out of $6.3B when it underwent a 2007 leveraged buyout, only to go bankrupt the following year.
- The judge said a bankruptcy judge erred in dismissing a bid by a trustee representing LYB's unsecured creditors to recover the money from shareholders.
- Litigation in the case persists even though Lyondell emerged from bankruptcy in 2010 and is now part of LyondellBasell Industries.
Fri, Jul. 22, 9:14 AM
Thu, Jun. 23, 12:31 PM
- LyondellBasell (LYB +0.2%) is downgraded to Neutral from Overweight with an $80 price target, cut from $100, at J.P. Morgan, which says cracks had formed in its former thesis that LYB should be able to sustain a free cash flow yield of ~10%/year for a longer period.
- "The possible outcome of these small cracks... is that the market may demand a higher free cash flow yield from LYB to discount future risks,” J.P. Morgan writes, estimating that LYB's free cash flow currently is ~8%, based on 2017 EPS estimates.
- The firm also believes that LYB's annual capex, which was forecast at $1.5B, now seems closer to $2B, as the company invests into increasing its propylene oxide and TBA capacity, which reduces LYB’s free cash flow generation by more than 1% annually.
Mon, Jun. 13, 3:43 PM
- LyondellBasell (LYB -1.4%) is downgraded to Market Perform from Outperform with an $87 price target, cut from $105, at Cowen, which says reflects a period of margin pressure which could last into 2018 as chemical pricing gets more challenging as a result of headwinds from higher costs, increasing capacity and slower demand growth.
- The firm also notes its underlying thesis that oil prices remain below $60/bbl through 2017 and into 2018; if oil prices were to rise above $60 and continue to slowly increase, the U.S. advantage in ethylene and ethylene chain costs re-expands as pressure on natural gas liquids prices is relieved, allowing for a stronger U.S. penetration of export markets and higher global ethylene prices.
- However, Barron's included a favorable profile this weekend of LYB, which noted that the stock had dropped 20% as rivals add capacity but cost efficiency could boost shares 20%.
Tue, May 17, 10:43 AM
- The Gulf Coast petrochemical boom and Chinese expansion are leading to an oversupply of the world’s two most common plastics, polyethylene and polypropylene, which will result in falling prices and profits as well as delays and cancellations of plans to build or expand petrochemical plants, according to a new report from the IHS research firm.
- Companies including Exxon Mobil (NYSE:XOM), Chevron Phillips (CVX, PSX), Dow Chemical (NYSE:DOW), BASF (OTCQX:BASFY) and LyondellBasell (NYSE:LYB) have multi-billion-dollar Gulf coast expansion projects underway, with many planned for completion in a year or so.
- Some companies already are placing planned projects on hold indefinitely; Ascend Performance materials said yesterday that it was delaying construction of a $1.2B propane dehydrogenation plant.