On LyondellBasell’s (LYB) Q3 call, management said the Middle East conflict is only now showing up in the cost of petrochemical feedstocks. “We didn’t see that spike in price at the onset of the conflict, but we’re seeing it now,” said Kim Foley, EVP of Global Olefins and Polyolefins, speaking about feedstock prices. She noted U.S. ethane prices rose 14% from Q2 to Q3 and were near 30 c/gal at the time of the call, Friday October 30, which is 24% above the Q3 average. She pointed to fewer cracker turnarounds, steady exports as more ethane carriers came online, stronger demand from China and new Gulf Coast cracker capacity starting up “shortly.”, referring to the Golden Triangle cracker, a JV between CP Chem and QatarEnergy. Butane rose more than 7%, which Foley tied to “LPG supply that’s not getting out through the Strait of Hormuz” and to more butane being blended into gasoline. All topics we covered extensively in our NGL Voyager report. The company expects ethylene margins to tighten in the near term.
Management described U.S. polyethylene demand as unusually firm for this time of year. Foley said LYB’s September polyethylene sales were up 12% from a year earlier, its strongest month ever, and that October “might meet or beat September.” Management also noted China has gone back to importing polyethylene after exporting it in Q2. With higher feedstock and freight costs, Foley said “other regions of the world just can’t meet export demand right now.” LYB and other producers have announced price increases of 5 c/lb for both October and November.
LYB also agreed to sell the site of its former Houston refinery, which shut down in 2025, to Valero for $320.5 million, see our blog Still Not Dead for more details. More important for the long-term market was a comment about LYB’s technology business, which licenses the process technology and sells the catalysts used to build polyethylene and polypropylene plants around the world. CEO Peter Vanacker mentioned demand for new licenses has weakened over the past three years, which “indicates a dramatic slowdown of new capacity additions by the end of the decade.” For the nearer term, Foley noted that China has “quite a bit of capacity as we all know, coming online in ‘27, ‘28.”
