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LyondellBasell Starts Construction of New Plant at La Porte

Zacks

LyondellBasell LYB said that it has started the construction of its first commercial Hyperzone polyethylene (“PE”) plant at its La Porte, TX, manufacturing complex. The new plant is part of the chemical maker’s plan for $3-5 billion of investments along the U.S. Gulf Coast.

The facility, which will have an annual capacity of 1.1 billion pounds (500,000 metric tons), will be the first commercial plant to employ the company’s new proprietary Hyperzone PE technology that offers enhanced material performance. The technology will have the capability to make a vast range of high-performance multi-modal High Density Polyethylene (“HDPE”) products.

Start-up of the new plant has been planned for 2019. The project is expected to create as much as 1,000 jobs at the peak of construction. The products made at the plant will serve markets across the globe.

The company selected the La Porte complex to build the new plant due to its proximity to price-advantaged U.S. feedstocks and the transportation infrastructure required to ship products to global markets. The complex that spans roughly 550 acres is among the company’s biggest manufacturing facilities.

Once the new plant comes onstream, the La Porte complex will more than double its annual PE capacity to 2 billion pounds (900,000 metric tons). Including capacity of its joint venture facilities, LyondellBasell currently produces 7 billion pounds (3 million metric tons) of HDPE per year.

LyondellBasell underperformed the Zacks categorized Chemicals-Diversified industry over a year. The company's shares lost 1.7% during the period while the industry saw a gain of 17.5%.


The company saw lower profits in first-quarter 2017, hurt by charges related to repayment of debt. Revenues rose year over year on gains in most segments. Adjusted earnings missed the Zacks Consensus Estimate while sales beat. The company said that global olefin and polyolefin industry conditions remain favorable moving into the second quarter.

LyondellBasell should gain from its ethylene and polyethylene expansion moves. The company is executing its expansion projects to leverage the U.S. natural gas liquids (NGLs) advantage. LyondellBasell, in Jan 2017, completed the 800 million pounds per year ethylene expansion project at its Corpus Christi, TX facility, marking the completion of its multi-year plan to boost annual ethylene capacity in the U.S. by 2 billion pounds.

LyondellBasell is also advancing plans to build a world-scale plant on the U.S. Gulf Coast for producing propylene oxide (“PO”) and tertiary butyl alcohol (“TBA”), leveraging the shale gas boom in the region. The company expects to make a final PO/TBA investment decision in the second half of 2017.

LyondellBasell is a Zacks Rank #3 (Hold) stock.

LyondellBasell Industries NV Price and Consensus


LyondellBasell Industries NV Price and Consensus | LyondellBasell Industries NV Quote

Stocks to Consider

Better-ranked companies in the chemical space include The Chemours Company CC, Kronos Worldwide, Inc. KRO and Methanex Corporation MEOH, all holding a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected long-term growth of 15.5%.

Kronos has an expected long-term growth of 5%.

Methanex has an expected long-term growth of 15%.

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