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Ethane advantage lifts LyondellBasell’s first-quarter polyolefins business

Polyolefin giant LyondellBasell (Rotterdam, Netherlands) saw its first-quarter 2011 EBITDA shoot up 84% over the previous quarter and 119% from the year-ago quarter, citing expanded margins. The company booked net income of $660 million off sales of $12.3 billion, which were up 15% from the previous quarter. 

(Rotterdam, Netherlands) saw its first-quarter 2011 EBITDA shoot up 84% over the previous quarter and 119% from the year-ago quarter, citing expanded margins. The company booked net income of $660 million off sales of $12.3 billion, which were up 15% from the previous quarter. 

Although company said business was up across all its segments, it noted that improvements in its global Olefins & Polyolefins and Refining & Oxyfuels units were
"most notable",  saying that both businesses increased margins in spite of significant crude oil price increases during the quarter.

Jim Gallogly, LyondellBasell CEO, said that U.S. olefins operations continued work to optimize plant operations and "take advantage of low-cost ethane", with natural gas prices falling in the states as supplies increase, while its European olefins unit experienced a recovery from fourth-quarter margins the company called "depressed".

In the U.S., the average ethylene sales price increased approximately 2 cents/lb pound while the average cost of production  fell by 3 cents/lb, improving olefins' profitability by roughly $70 million.

Polyethylene (PE) results improved by $30 million compared to fourth quarter 2010 on higher sales volumes, while first-quarter polypropylene (PP) profits rose by $10 million. The company reported that in terms of demand, total polyolefins sales volume was approximately equal to the fourth-quarter.

Olefins results improved by $100 million over the fourth quarter for the company's Olefins & Polyolefins-Europe, Asia, International segment, rising on increased volumes and significantly improved margins. PE and PP results were roughly equal to the prior period while PP compounding profits increased approximately $10 million from fourth quarter 2010 as a result of increased volumes.

The company noted that an $82 million dividend received from LyondellBasell's Saudi Ethylene and Polyethylene Co. joint venture accounted for the majority of the $96 million of dividends received from joint ventures during the first quarter 2010.  

Exploiting ethane advantage

LyondellBasell completed work in 2010 to increase its natural gas liquids (NGL) flexibility, resulting in the ability to run more ethane, which has become an advantaged feedstock in terms of cost. Over the course of last year, the company completed four maintenance turnarounds and set production volume records at more than 60% of its sites. The company forecast a continued advantaged position for U.S. ethane in its 2010 annual report. The company planned a "major" turnaround at the fluid catalytic cracking unit at its Houston refinery in the first quarter, with a second quarter turnaround of its Channelview olefins plant also planned. 

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