LyondellBasell expects utilization of its olefins and polyolefins plants in the US to increase by 5 percentage points in the second quarter to 85pc of capacity as crackers return from maintenance and an unplanned outage, the company said today.
The company expected its first-quarter utilization rate of 80pc because of a planned turnaround in Channelview, Texas, but the rate was still 10 points lower than the first quarter last year.
Maintenance teams in Channelview are concluding a 60-day turnaround at the company's largest US olefins producing facility that began in February. That turnaround involved work on one of its two 930,000 metric tonne (t)/yr crackers, its 473,000t/yr Flex-1 metathesis unit, and its C4 processing unit.
Another key factor increasing second-quarter operating rates is the restart of the LyondellBasell's 1.54mn t/yr joint venture cracker with Sasol in Lake Charles, Louisiana. This is the company's largest US cracker, which had an unplanned shutdown in the first quarter. Also in the first quarter, a winter storm in January took other olefins-producing assets offline. The second quarter historically is absent of weather events like freezes and hurricanes that can curtail cracker operations.
This second-quarter's 5 percentage point increase in operating rates comes against the backdrop of major uncertainty surrounding both US ethane and polyethylene (PE) exports to China. Beijing announced 34pc retaliatory tariffs on US goods on 4 April, then raised these to 125pc on 11 April in response to tariffs imposed by the US on Chinese manufactured goods. The sky-high rates apply to key petrochemical feedstocks LPG and ethane, as well as imports of US polyethylene.
If US ethane is not exempted from China's tariff, LyondellBasell said its ethane-based production in the US would likely benefit from lower ethane feedstock costs.
US ethane and certain grades of PE may be on a list of 130 products that China plans to exempt from its across-the-board tariffs on US goods, LyondellBasell said, citing "rumors" that it has also heard from its Asian customers.
The uncertainty around trade caused LyondellBasell to reduce its planned capital expenditure for this year to $1.9bn, down from $2.2bn. But the company is neither cancelling nor delaying plans for its new $800mn Flex-2 metathesis unit in Channelview, Texas, which was announced at the beginning of March. Construction for that unit will begin in late 2025, and operations are scheduled to begin in late 2028. It will have a capacity of 400,000 t/yr of propylene and is expected to add $150mn/yr to earnings. In LyondellBasell's view, ethylene-to-propylene conversion technology has greater reliability and lower capital and carbon intensity than the major competing technology, propane dehydrogenation (PDH). Overall, the company views reducing its net long position in ethylene and its net short position in propylene as essential.
The company during the first quarter closed its Houston refinery, which produced 164,000 t/yr of propylene.
