LyondellBasell more cautious on US PE export window

04 December 2009 18:30  [Source: ICIS news]

HOUSTON (ICIS news)--The US polyethylene (PE) export window to Asia has remained open but producers are more cautious because of a spike in feedstock ethane costs, executives with LyondellBasell said on Friday.

“The ethane prices have jumped considerably,” chief executive Jim Gallogly said on the company’s monthly conference call. “While it’s still the favoured cracker in the US, that differential has narrowed.

“But we still have very strong Asian pricing, and the window still seems open. We’re just a little more cautious than we were in the prior couple months.”

October polymers earnings before interest, tax, depreciation and amortisation and restructuring costs (EBITDAR) were $110m (€72.6m), up from $100m in September and $109m in August primarily on strength in US PE exports, the company said.

While PE in the Middle East has gradually begun to come onstream, so far that has not had a significant impact on US PE producers as a result of Asia’s ability to import from multiple sources, Lyondell said.

Asia has been a lot stronger than anyone predicted,” Gallogly said. “We’ve been able to move a lot of product in that direction.”

Additionally, US polypropylene (PP) margins improved based on lower feedstock propylene costs, Lyondell said.

Within chemicals, EBITDAR improved to $108m in October from $106m in September. European olefins were pressured by increased naphtha costs lowering margins, but intermediate chemicals such as propylene oxide (PO) were strong in the US, Lyondell said.

Chemicals results are expected to decline slightly in the coming months based on seasonal trends, the company said.

Meanwhile, Lyondell’s refining segment continues to lag, posting EBITDAR of $6m in October, down from $7m in September.

Overall, Lyondell’s year-to-date EBITDAR was $1.94bn through October, ahead of a projected $1.75bn and putting the company well in front of its budget plan, executives said.

($1 = €0.66)

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For more on LyondellBasell visit ICIS company intelligence
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By: Ben DuBose
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