LyondellBasell Industries N.V. LYB and Liaoning Bora Enterprise Group (“Bora”) announced the start-up of their new joint venture (JV) polyolefin complex in the Liaoning province, China. The 50:50 JV was first announced in September 2019. It will operate under the name Bora LyondellBasell Petrochemical Co. Ltd. (or BLYB).
Per LyondellBasell, polyolefins in China is back in demand post the pandemic-related economic slowdown witnessed earlier this year. The company believes that the long-term growth trends are positive for this project.
Both parties are planning a medium-to-long term collaboration on additional petrochemical projects, which could be deployed over the next 10 years in multiple phases.
Notably, the BLYB complex is one of the most advanced polyolefins production facilities across the globe. It includes a 1.1 million metric ton per year flexible naphtha/LPG cracker along with related polypropylene production capacity of 600,000 metric tons per year and polyethylene capacity of 800,000 metric tons per year.
The complex uses LyondellBasell’s industry-leading Spheripol and Spherizone polypropylene technologies along with its Hostalen ACP polyethylene technology. Further, the materials produced from this facility will be sold for use within China.
Shares of LyondellBasell have lost 8.5% in the past year against the industry’s 5.2% rise.
In second-quarter earnings call, LyondellBasell stated that demand for its products is improving with increased economic activity. In response to increased demand, the company raised operating rates and prices for North American polyethylene exports to Asia.
The company expects Refining and Oxyfuels & Related Products businesses demand to improve with increased mobility and reductions in fuel inventories. Also, the Advanced Polymer Solutions unit is gaining from rebounding demand for its plastics used in automotive manufacturing.
Zacks Rank & Key Picks
LyondellBasell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space include Kinross Gold Corporation KGC, Eldorado Gold Corporation EGO and Yamana Gold Inc. AUY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Kinross has an expected earnings growth rate of 100% for 2020. The company’s shares have surged 76.7% in the past year.
Eldorado Gold has an expected earnings growth rate of 2,325% for 2020. Its shares have returned 20.5% in the past year.
Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have soared 68.6% in the past year.
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