Market upheaval from high energy costs and the economic slowdown have hit LyondellBasell (LYB; Houston, Texas, USA; www.lyondellbasell.com) as hard as other resin suppliers, with the company announcing Q3 2022 net income of USD 572 mn (EUR 574 mn), which was less than a third of the mark set in the year-earlier period. EBITDA was down 59% to USD 1.11 bn, the company said, and sales fell 3.5% to USD 12.2 bn.

To battle the declines, the company said it will institute a “value enhancement” programme and run plants at operating rates of 60%-75% in the final quarter of the year.

CEO Peter Vanacker naturally highlighted his company’s “strong balance sheet”, which has enabled further capital injections for shareholders. Indeed, LyondellBasell said it has returned more than USD 550 mn to investors in the form of dividends and share repurchases, but the fact that the US group has not been able to easily cope with the present market situation was demonstrated with plans for restructuring measures: the company’s value enhancement programme seeks to create USD 750 mn in recurring annual EBITDA improvement by the end of 2025.

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Business in the combined sales region of Europe/Asia was especially bad. Olefin activities suffered margin losses caused by high energy costs, production stoppages, weak demand, and negative currency effects due to the weak euro.

For polyolefins, it has proved impossible to retain the high margin level of the previous year because of poor demand in Europe and the zero-Covid strategy in China have reduced turnover. As a result, EBITDA for operations for olefins and polyolefins in Europe, Asia, and internationally slipped into the red, falling to USD -83 mn versus USD 474 mn last year.

Activities in the Americas also suffered a significant reduction in margins through higher costs and declining selling prices, although increased polyolefin sales cushioned the fall somewhat. EBITDA for the olefins and polyolefins operations in the Americas dropped 64% to USD 559 mn.

At the significantly smaller compounding division, Advanced Polymer Solutions, EBITDA fell 45% to USD 66 mn due to the unfavourable combination of increased costs and lower selling prices. In contrast, the company’s intermediates and derivatives unit segment, with its styrene, acetyl, ethylene oxide, ethylene glycol, and propylene oxide activities, managed to boost EBITDA by 3% to USD 360 mn, while the refinery business more than doubled its EBITDA to USD 106 mn despite exceptional charges.

Because of the unfavourable market conditions, LyondellBasell said it decided to postpone the restart of its cracker in Berre, France, which went offline in August after a fire, until the first quarter of 2023 (see Plasteurope.com of 29.09.2022). Other production units in Europe are also running well below capacity because of the high energy costs and the seasonally weak demand. Consequently, plants connected with activities in the Americas and for intermediates are expected to only operate at 75% of capacity in Q4, and only at 60% in Europe and Asia, the company said.