Reports related to this article:
Project(s): View 5 related projects in PECWeb
Plant(s): View 3 related plants in PECWeb
Released May 04, 2021 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--Persistently high demand, coupled with low inventories, has been driving higher margins for LyondellBasell Industries NV (NYSE:LYB) (Houston, Texas) so far this year. But the chemical producer and petroleum refiner is warning customers that the North American chemicals market will remain tight through the end of the year, as demand is rapidly outpacing supply--a problem that is only likely to worsen in the second half of the year. The company is delaying most major second-quarter maintenance projects as its competitors tackle turnarounds deferred from 2020. Industrial Info is tracking $6.4 billion in active projects worldwide from LyondellBasell, including $4.8 billion worth in the U.S.
Click on the image at right for a graph detailing LyondellBasell's active U.S.-based projects, by industry sector.
"With customer demand exceeding production, the full extent of our customers' backlogs, deferred consumption and unmet demand are unknown," said Bhavesh Patel, the chief executive officer of LyondellBasell, in a recent earnings-related conference call, citing February's Winter Storm Uri as a major factor in the decline of polyethylene exports. The massive storm forced temporary closures at petrochemical facilities along the U.S. Gulf Coast, especially in Texas, eradicating weeks of production and further depleting already-low inventories.
"It will likely require quite some time before the North American polyethylene industry can fulfill backlogs, satisfy domestic demand, and return to last year's pace of selling 40% of production into the export market to serve global demand," Patel added.
Patel cautioned that even if these goals are met, the scenario "does not factor in an additional wave of demand that is likely to arise in the second half of this year from restocking and increased activity in the travel, leisure and hospitality sectors, as vaccines provide for increased mobility."
Nonetheless, LyondellBasell says it is on track for roughly $2 billion in capital expenditures during 2021, a number first announced at the end of January. The bulk of the total is attributed to its propylene oxide and tertiary butyl alcohol (PO/TBA) unit addition in Channelview, Texas, construction of which slowed significantly following last year's COVID-19 outbreak, but picked up in the fourth quarter. The unit is designed to produce 1 billion pounds per year of PO and 2.2 billion pounds per year of TBA. Subscribers to Industrial Info's Chemical Processing Project Database can learn more with our project report.
The Channelview PO/TBA addition might be the last project of its size that LyondellBasell sees in the near future. Executives recently said the company does not have plans to start a new, large organic project in the next 12 to 24 months. LyondellBasell is planning to put more emphasis on debt reduction, and is taking advantage of its competitors' run-up in maintenance-related projects (many of which had been delayed amid the pandemic) by delaying most of its own in the current quarter.
"Due to extremely strong demand for propylene oxide, we have shifted a turnaround at one of our PO/TBA units in Bayport, Texas, from the second quarter to the third quarter of this year, and reduced the scope and associated downtime for the maintenance," said Michael McMurray, the chief financial officer of LyondellBasell, in the conference call. He later added: "In total, the impact associated with all of LyondellBasell's 2021 planned maintenance downtime should decreased by $30 million relative to our original guidance to approximately $140 million for the year."
Subscribers to Industrial Info's Chemical Processing Project Database can click here for a list of global maintenance projects from LyondellBasell that are set to kick off in the third and fourth quarters.
LyondellBasell is continuing with a $500 million oxyfuels unit addition at its PO/TBA complex in Bayport, which is designed to produce methyl-tertiary-butyl-ether (MTBE) and ethyl-tertiary-butyl-ether (ETBE) to support PO/TBA production. The project kicked off in fourth-quarter 2018 and is set to wrap up later this year. Subscribers to Industrial Info's Chemical Processing Project Database can learn more with our project report.
The company's 263,776-BBL/d refinery in Houston, Texas, was another facility to see its maintenance delayed. The Houston refinery reduced its operations to about 57% of capacity for a month following February's Winter Storm Uri, which was one of many factors that resulted in a $110 million loss in LyondellBasell's refining business during the first quarter. McMurray says it is now running at nearly full production.
LyondellBasell is considering several proposed unit upgrades at its Houston refinery, including the replacement of several drums on its 57,000-BBL/d delayed coker, modifications to its 49,000-BBL/d heavy gas oil hydrotreater, and modifications to its 90,000-BBL/d fluid catalytic cracker unit (FCCU). Subscribers to Industrial Info's Petroleum Refining Project Database can read detailed project reports for the coker, hydrotreater and FCCU.
LyondellBasell's first-quarter numbers generally bested the last pre-pandemic quarter: total sales and other operating revenue were reported to be $9.08 billion, a 21.2% increase from first-quarter 2020, while net income stood at $1.07 billion, compared with just $144 million in the same period last year.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Click on the image at right for a graph detailing LyondellBasell's active U.S.-based projects, by industry sector."With customer demand exceeding production, the full extent of our customers' backlogs, deferred consumption and unmet demand are unknown," said Bhavesh Patel, the chief executive officer of LyondellBasell, in a recent earnings-related conference call, citing February's Winter Storm Uri as a major factor in the decline of polyethylene exports. The massive storm forced temporary closures at petrochemical facilities along the U.S. Gulf Coast, especially in Texas, eradicating weeks of production and further depleting already-low inventories.
"It will likely require quite some time before the North American polyethylene industry can fulfill backlogs, satisfy domestic demand, and return to last year's pace of selling 40% of production into the export market to serve global demand," Patel added.
Patel cautioned that even if these goals are met, the scenario "does not factor in an additional wave of demand that is likely to arise in the second half of this year from restocking and increased activity in the travel, leisure and hospitality sectors, as vaccines provide for increased mobility."
Nonetheless, LyondellBasell says it is on track for roughly $2 billion in capital expenditures during 2021, a number first announced at the end of January. The bulk of the total is attributed to its propylene oxide and tertiary butyl alcohol (PO/TBA) unit addition in Channelview, Texas, construction of which slowed significantly following last year's COVID-19 outbreak, but picked up in the fourth quarter. The unit is designed to produce 1 billion pounds per year of PO and 2.2 billion pounds per year of TBA. Subscribers to Industrial Info's Chemical Processing Project Database can learn more with our project report.
The Channelview PO/TBA addition might be the last project of its size that LyondellBasell sees in the near future. Executives recently said the company does not have plans to start a new, large organic project in the next 12 to 24 months. LyondellBasell is planning to put more emphasis on debt reduction, and is taking advantage of its competitors' run-up in maintenance-related projects (many of which had been delayed amid the pandemic) by delaying most of its own in the current quarter.
"Due to extremely strong demand for propylene oxide, we have shifted a turnaround at one of our PO/TBA units in Bayport, Texas, from the second quarter to the third quarter of this year, and reduced the scope and associated downtime for the maintenance," said Michael McMurray, the chief financial officer of LyondellBasell, in the conference call. He later added: "In total, the impact associated with all of LyondellBasell's 2021 planned maintenance downtime should decreased by $30 million relative to our original guidance to approximately $140 million for the year."
Subscribers to Industrial Info's Chemical Processing Project Database can click here for a list of global maintenance projects from LyondellBasell that are set to kick off in the third and fourth quarters.
LyondellBasell is continuing with a $500 million oxyfuels unit addition at its PO/TBA complex in Bayport, which is designed to produce methyl-tertiary-butyl-ether (MTBE) and ethyl-tertiary-butyl-ether (ETBE) to support PO/TBA production. The project kicked off in fourth-quarter 2018 and is set to wrap up later this year. Subscribers to Industrial Info's Chemical Processing Project Database can learn more with our project report.
The company's 263,776-BBL/d refinery in Houston, Texas, was another facility to see its maintenance delayed. The Houston refinery reduced its operations to about 57% of capacity for a month following February's Winter Storm Uri, which was one of many factors that resulted in a $110 million loss in LyondellBasell's refining business during the first quarter. McMurray says it is now running at nearly full production.
LyondellBasell is considering several proposed unit upgrades at its Houston refinery, including the replacement of several drums on its 57,000-BBL/d delayed coker, modifications to its 49,000-BBL/d heavy gas oil hydrotreater, and modifications to its 90,000-BBL/d fluid catalytic cracker unit (FCCU). Subscribers to Industrial Info's Petroleum Refining Project Database can read detailed project reports for the coker, hydrotreater and FCCU.
LyondellBasell's first-quarter numbers generally bested the last pre-pandemic quarter: total sales and other operating revenue were reported to be $9.08 billion, a 21.2% increase from first-quarter 2020, while net income stood at $1.07 billion, compared with just $144 million in the same period last year.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
