Lyondell Basell 3Q16 Earnings Call Notes

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LyondellBasell Industries NV (LYB) Q3 2016 Results
Bhavesh Vaghjibhai Patel

Less scheduled maintenance in 2017 than 2016

“Turning to slide 14, I’d like to outline how LyondellBasell’s heavy maintenance schedule for 2016 compares to our relatively light plans for 2017. We typically have turnarounds at only two crackers in a given year. However, during 2016, we had four major cracker turnarounds and significant derivative turnaround activity. We also expanded the capacity of our Corpus Christi cracker by 800 million pounds. With this hard work completed during 2016, we have no cracker turnarounds scheduled during 2017.”

Continue to see strong demand growth

“The large population’s GDP growth and consumption trends seen in China, India and other emerging economies will continue to drive these markets towards higher consumption. We believe that polyethylene and polypropylene can maintain the 4% to 5% demand growth that we have seen for these products over the past 25 years.”

World demand has outpaced capacity additions

” world demand has outpaced capacity additions by an amount equivalent to three crackers, primarily due to growing demand in China. As a result, global markets have tightened. Even with the eight cracker equivalents forecast to come online in the United States by 2021, the forecast is relatively balanced over the next five years.”

Our sense is that Asia demand is growing

“Okay. Well, I think we’ll have to kind of see how demand develops and how oil prices develop, and so on. But certainly, Asian demand is growing to the extent that new capacity likely will be exported. So our sense is that, certainly through the first half of the year there’s not a lot of new capacity, more of the new capacity which is in the second half of next year. So we’ll just have to see how that develops. But our sense is that Asian demand is growing at a pace where that production will be needed overseas.”

Douglas J. Pike – LyondellBasell Industries NV

Ethylene prices more regional, polyethylene more global

Exactly. And, P.J., if you remember that the ethylene prices are much more regional, while polyethylene prices are more global in terms of how they are set. So spot price movements and the spot market is very thin in ethylene, so that has some influence.