LyondellBasell Industries N.V. LYB has recently announced that the Ulsan PP Co. Ltd.’s 400 kilotons per annum (KTA) polypropylene (PP) production facility has commenced operations. The facility, which is located in the southeastern port city of Ulsan, South Korea, is one of the largest of its type in Asia and will help cater to the rising demand for polypropylene in the continent.
Ulsan PP Co. Ltd. is a joint venture between PolyMirae Company Ltd., (which is a 50: 50 partnership between LyondellBasell and DL Chemical) and SK Advanced.
The production facility makes use of LyondellBasell’s fifth-generation Spheripol PP process technology. Per the conditions of the joint-venture agreement, PolyMirae will offtake and sell all the polypropylene produced by the facility to pan-Asian customers. The companies envisioned this pioneering facility in 2019.
LyondellBasell noted that even amid the pandemic, polypropylene has experienced robust demand in Asia. Now, on the back of the economic revival, this joint venture has an advantageous position to cater to greater demand in the region.
Shares of LyondellBasell have surged 63.6% in a year, higher than the industry’s growth of 55.7%.
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In the first quarter, the company’s earnings per share of $3.18 topped the Zacks Consensus Estimate of $2.65 and also marked a significant improvement from the year-ago quarter’s earnings per share of 42 cents. Revenues increased 21.2% year over year to $9,082 million but missed the Zacks Consensus Estimate of $9,328.5 million. The company witnessed strong consumer-driven demand, industry-supply constraints and recovery in the durable goods market.
LyondellBasell anticipates operating at nearly full capacity globally to meet the strong demand that is expected to continue, owing to low inventories and maintenance downtime across the industry. Strong North American integrated polyethylene margins are expected to continue as U.S. producers look to fulfill domestic order backlogs, rebuild inventories and serve export demand.
In the second half of 2021, it is expected that increased mobility will drive demand for gasoline and jet fuel, improving margins for its Refining and Oxyfuels & Related Products businesses. Moderating feedstock costs are also expected to increase second-quarter margins for the Advanced Polymer Solutions segment.
LyondellBasell Industries N.V. Price and Consensus
Zacks Rank & Key Picks
Currently, LyondellBasell carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space are Cabot Corporation CBT, Olin Corporation OLN and Tronox Holdings PLC TROX, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cabot has a projected earnings growth rate of 125.9% for the current year. The company’s shares have risen 69.9% in a year.
Olin has a projected earnings growth rate of 506.7% for the current year. The company’s shares have soared 277.9% in a year.
Tronox has a projected earnings growth rate of 242.9% for the current year. The company’s shares have jumped a whopping 214.7% in a year.
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