Lyondell Basell 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“Our raw material mix also established a new record as 90% of our ethylene was produced from NGLs. Approximately 70% of the production was from ethane, while propane accounted for 14%. The balance was butane, which became a very competitive feedstock.”

“our Olefins plant operating rates averaged greater than 90%, and our ethylene volumes increased by approximately 9%. These rates were differential to the industry as we were able to take advantage of scheduled and unscheduled downtime at competitors’ facilities.”

“our feedstock mix benefited from processing the substantial percentage of liquefied petroleum gas, or LPG. Approximately 37% of our European ethylene production was sourced from propane and butane at production costs less than naphtha costs. Versus naphtha cracking, we estimate this benefited results by approximately $45 million. It is common for us to process LPGs during the summer months, but the volume and benefit received exceeded historic levels.”

“While second quarter results were strong, this was partially related to industry pricing conventions and significant industry maintenance. Underlying economic fundamentals within Europe remain weak. We should not assume that the relatively strong first half performance will continue into the third quarter. Within this environment, we continue to focus on costs and efficient management of our feed mix.”

” As you know, my longer-term view is that propane will trade more in line with crude oil type metrics on heating value basis, given that you can put it on a boat and transport it. And so I’ve not been as enthusiastic about PDH units as some of our competitors.”

“I’m hoping that our Congress is seeing that the market is so distorted that the ability to blend that extra ethanol into the system doesn’t exist, and it’s hurting consumers at the pump. There’s a good reason to fix it now and save everybody a bit of money and stop this market distortion. It’s also forcing refineries to move product overseas, which is — in a peak driving season with gasoline prices going up, isn’t the right thing for our country. So I’m hoping people pay attention, make some adjustments and we see less of it.”

“Remember, that as we reduce headcount and all, it takes a year or 2 for that to show up because of severance programs in Europe and how that operates versus the United States. So the payouts are a little longer.”

” If we could get a realistic target for ethanol in the blend, refiners would still blend it. There’d still be business conducted, but it’s all artificial at this point in time. And it’s driving up the price for the consumer, and there’s really no point in that…I mentioned there’s too much exporting going on. That’s being driven by misguided regulation.”

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