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LyondellBasell (LYB) Boosts Hostalen ACP License in China

Zacks Equity Research

LyondellBasell Industries N.V. LYB recently announced that its Hostalen Advanced Cascade Process (“ACP”) technology was selected by Lianyungang Petrochemical Co., Ltd for building a 400KT per annum high density polyethylene (HDPE) plant at Lianyungang, Jiangsu Province, China. Lianyungang Petrochemical is a company owned by Zhejiang Satellite.

With this contract, LyondellBasell has licensed more than 1 million tons of Hostalen ACP capacity this year. The move highlights the importance of this process technology for the production of high-performance multimodal HDPE products. The process technology produces high-performance, multi-modal HDPE resins, which has industry-leading stiffness balance, high stress cracking resistance and processing advantages, blow molding, impact resistance as well as pipe applications.

Moreover, the company’s low-pressure slurry process in petrochemical complex will enable Zhejiang Satellite to produce high-quality products economically and reliably.

The Hostalen ACP line marks its 10th project licensed in China. With this license, the total design and operating capacity of Hostalen ACP line in the country is likely to exceed 3.4 million tons per annum.

Shares of LyondellBasell have lost around 17.1% in the past year compared with the industry’s 14% decline.

LyondellBasell witnessed normalization of markets with higher polymer demand and modest improvements in the discount for Maya crude oil during the first few weeks of 2019. The company expects growth to accelerate in 2019, courtesy of the planned startup of the Hyperzone polyethylene facility and construction of the new PO/TBA plant.

Per the company, global polyethylene capacity additions are likely to be moderate in 2019 and 2020. This is expected to provide support for high industry operating rates and ethylene chain profitability.

Zacks Rank & Key Picks

LyondellBasell currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space are Kirkland Lake Gold Ltd. KL, Ingevity Corporation NGVT and Materion Corporation MTRN, all currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland has an expected earnings growth rate of 8.8% for 2019. The company’s shares have surged 120.3% in the past year.

Ingevity has an expected earnings growth rate of 17.9% for the current year. The company’s shares have rallied 42.7% in a year’s time.

Materion has an expected earnings growth rate of 12.6% for 2019. Its shares have gained 10.8% in a year’s time.

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