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LyondellBasell's Polypropylene Technology Picked by Shandong

Zacks Equity Research

LyondellBasell Industries N.V. LYB recently announced that Shandong Chambroad Sinopoly New Materials Co., Ltd. has picked its leading polypropylene technology for the latter’s new global facility. It includes a 400 KTA polypropylene plant using LyondellBasell’s Spheripol technology and a 200 KTA polypropylene plant using its Spherizone technology. The facility will be constructed in Binzhou City, Shandong Province, China.

Per LyondellBasell, its polypropylene technology is the most widely-used process globally. The company’s customers appreciate the Spheripol process’ simplicity and strength. This apart, the Spherizone technology enables to produce outstanding polymer grades on a benchmark cost basis.

Spheripol has more than 25 million tons of licensed capacity. The fifth generation Spheripol technology includes process improvements that further boosts operational efficiency. The Spherizone multi-zone circulating reactor (MZCR) offers a unique and innovative platform to manufacture polypropylene products, with advanced architecture and product properties, which has led to more than 15 Spherizone plants licensed in Asia. Both plants will begin operations using LyondellBasell’s Avant ZN catalyst.

Moreover, the new licensees will be eligible to use the company’s Technical Service program, and benefit from its in-house expertise of continuous production improvement, sustainable product development and catalyst know-how.

Per Shandong Chambroad, LyondellBasell’s polypropylene will help the company deliver cost-effective recognized bulk polymers through the Spheripol technology. Also, the Spherizone technology will aid in supplying differentiated high-margin polymer products.

Notably, the Spheripol technology had earlier been chosen by Sonatrach Total Entreprise Polymeres Spa (“STEP”), which is a joint venture (JV) between Sonatrach and TOTAL S.A.

In addition to the Spheripol and Spherizone technologies, LyondellBasell’s portfolio of licensed polyolefin processes and catalysts include Hostalen, Lupotech, Spherilene, Metocene PP and Avant.

LyondellBasell’s shares have declined around 2.5% in the past three months compared with the roughly 8.4% fall recorded by the industry.

 

The company’s buyout of A. Schulman will generate significant cost synergies. The integration is progressing well, and at the end of second-quarter 2019, the company captured cost synergies at an annual rate of around $100 million.

In addition, LyondellBasell’s HDPE project is expected to boost its capacity and drive bottom-line growth. The facility will have an annual capacity of 1.1 billion pounds. The company is also constructing a world scale plant on the U.S. Gulf Coast for the production of propylene oxide (PO) and tertiary butyl alcohol (TBA). The plant will have annual capacity of 1 billion pounds of PO, and 2.2 billion pounds of TBA and its derivatives.

LyondellBasell Industries N.V. Price and Consensus

LyondellBasell Industries N.V. Price and Consensus

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

 

Zacks Rank & Key Picks

At present, LyondellBasell carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, AngloGold Ashanti Limited AU) and Alamos Gold Inc AGI, each sporting a Zacks Rank #1 (Strong Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an estimated earnings growth rate of 170% for the current year. The company’s shares have rallied nearly 65% in a year’s time.

AngloGold has a projected earnings growth rate of 154.7% for 2019. Its shares have surged around 117.7% over the past year.

Alamos Gold has an estimated earnings growth rate of a whopping 340% for the ongoing year. The company’s shares have appreciated 21.8% in a year’s time.

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