LyondellBasell Industries N.V. LYB and Neste — the world’s biggest producer of renewable diesel from waste and residues — have recently announced the first parallel production of bio-based low-density polyethylene and bio-based polypropylene from renewable materials at a commercial scale.
The joint project utilizes Neste's renewable hydrocarbons, which are derived from sustainable bio-based raw materials like waste and residue oils. The project successfully produced several thousand tons of bio-based plastics. These plastics are approved for the production of food packaging. Moreover, the products are marketed under the new family of LyondellBasell’s circular economy brands, Circulen and Circulen Plus.
LyondellBasell’s collaboration with Neste highlights a major milestone in the commercialization of the latter’s renewable polymers and chemicals business.
Notably, LyondellBasell's cracker flexibility enabled it to add a new renewable feedstock at its Wesseling, Germany site. The feedstock was directly converted into bio-based polypropylene and bio-based polyethylene. Also, the polymer products contained more than 30% renewable content.
Shares of LyondellBasell have lost around 19.7% in the past year compared with the industry’s 34% decline.
In April, LyondellBasell stated that strong market sentiment is driving margins in the Olefins & Polyolefins - EAI segment. Moreover, LyondellBasell is seeing volume improvement in the Olefins & Polyolefins – Americas unit. The company is also witnessing an improvement in the refining market with higher gasoline spreads and wider discounts for heavy sour crude oil.
The company noted that it will advance its growth strategy and boost earnings with a strong pipeline of licensing revenues for 2019 as well as the start-up of its world-scale HDPE plant in the third quarter.
Zacks Rank & Key Picks
LyondellBasell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Materion Corporation MTRN, Flexible Solutions International Inc FSI and AngloGold Ashanti Limited AU. These stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Materion has an expected earnings growth rate of 27.3% for 2019. The company’s shares have gained 25% in the past year.
Flexible Solutions has a projected earnings growth rate of 342.9% for the current year. The company’s shares have surged 133% in a year’s time.
AngloGold has an estimated earnings growth rate of 90.6% for the current year. Its shares have rallied 107.5% in the past year.
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