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LyondellBasell (LYB) to Develop New Electric Furnace Technology

LyondellBasell Industries N.V. LYB announced a memorandum of understanding (MOU) with Technip Energies and Chevron Phillips Chemical to potentially design, build, and operate a demonstration unit based on Technip Energies' electric steam cracking furnace technology (eFurnace by T.EN). Later this year, a collaborative development agreement is expected to be signed.

This innovative eFurnace technology is expected to enable LyondellBasell to use renewable electricity as a heat source for the olefins cracking process in the future, significantly lowering its olefins production process' greenhouse gas footprint and assisting the company in meeting its ambitious climate targets.

The construction of the demonstration unit, which would be the first for LyondellBasell, is an important step in the development of eFurnace technology and a necessary prerequisite for the potential future construction of a full-scale unit. It will allow the company to test the technology and demonstrate that continuous olefin production using electricity as a heat source is feasible.

Due to its operational excellence, feedstock flexibility, and electric grid infrastructure, proximity to the other MOU participants, and access to knowledge at the company's Houston Technology Center, the LyondellBasell Channelview facility provides an ideal setting for the demonstration unit. The three parties intend to form a cooperative development team to help with project implementation.

Shares of LYB have lost 20.1% over the past year compared with the 10.3% decline of its industry.

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The company, on its first-quarter call, said that it anticipates a slight increase in global demand driven by usual seasonal trends. The demand for transportation fuels is expected to increase over the summer, supporting oxyfuels and refining margins. Delays at the beginning of industry-wide capacity expansions for polyethylene in North America are likely to lower new market supply and support polyethylene margins.  

In order to keep pace with the market expectation, LyondellBasell estimates operating Intermediates & Derivatives assets at 80% and modestly raises global olefins and polyolefins operating rates to 85%. The company will continue to monitor the impact of shifting global monetary policies and strengthening economic conditions in China on petrochemical markets in the second half of 2023.

LyondellBasell Industries N.V. Price and Consensus

LyondellBasell Industries N.V. price-consensus-chart | LyondellBasell Industries N.V. Quote

Zacks Rank & Key Picks

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

Better-ranked stocks to consider in the basic materials space include Koppers Holdings Inc. KOP, Gold Fields Limited GFI and Linde plc LIN, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Koppers’ current-year earnings is currently pegged at $4.40, implying year-over-year growth of 6.3%. It has a trailing four-quarter earnings surprise of 13.64%, on average. KOP has gained 9.4% in a year.

The Zacks Consensus Estimate for Gold Fields’ current-year earnings has been revised 23.5% upward in the past 60 days. The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, indicating year-over-year growth of 8.3%. The company’s shares have gained 64% in the past year.

The Zacks Consensus Estimate for Linde’s current-year earnings has been revised 3.8% upward in the past 60 days. LIN beat the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. The company’s shares have gained 8.2% in the past year.

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