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LyondellBasell (LYB) Boosts PP Compounding Production in China

LyondellBasell Industries N.V. LYB recently announced the start-up of an additional manufacturing line at its Advanced Polymer Solutions ("APS") business in Dalian, China, thereby strengthening its presence there. The new production line will manufacture a diverse range of high-performance, high-quality polypropylene compounds, primarily for the automobile industry. The new production facility, with an annual capacity of 20,000 tons, will double the site's present production capacity, thus increasing the company's ability to satisfy the rising market demand.

The global automobile industry is rapidly expanding and transforming, particularly in the new energy vehicle sector, and China has emerged as a major player in this market. With a renewed focus on value creation and speed to market, APS is well-positioned in this dynamic industry, bolstered by a comprehensive portfolio and innovative products.

The start-up of the new production line marks another milestone in the company's ongoing commitment to the China market. LYB will continue to provide best-in-class products and services to its customers while promoting circularity through collaborations and the Circulen portfolio.

The new manufacturing line, which represents Dalian's progress toward increased capacity and automated operation, will also contribute to long-term scaled development. Established in 2015, the Dalian site can produce 80,000 tons of PP compounded products at full capacity using four production lines, and supply end applications such as bumpers, instrument panels, interior trims, under-the-hood applications, structural parts and body panels to the automotive industry. APS now has five sites in China, thereby offering a portfolio of PP compounding, tailored polymers and masterbatch products.

Shares of LyondellBasell gained 1.8% over the past year against its industry’s 6.2% decline.

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For the second quarter, the company anticipates seasonal demand to increase across most businesses. LYB's North American and Middle Eastern production will continue to benefit from low natural gas and NGL costs compared with higher oil-based costs in other regions.

As the summer driving season begins, oxyfuel and refining margins are likely to rise due to increased gasoline crack spreads and reduced butane costs. In the second quarter, LYB anticipates meeting market demand with average operating rates of 85% for global olefins and polyolefins assets and 80% for Intermediates & Derivatives assets. The company continues to follow targeted stimulus activities and remains on the lookout for improved demand in China.

LyondellBasell Industries N.V. Price and Consensus

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

Zacks Rank & Key Picks

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

Better-ranked stocks in the basic materials space are ATI Inc. ATI, Carpenter Technology Corporation CRS and Ecolab Inc. ECL. 

ATI currently carries a Zacks Rank #2 (Buy). ATI beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 8.3%. The company’s shares have gained 39.7% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Carpenter Technology currently sports a Zacks Rank of 1. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.1%. The company’s shares have gained 95.3% in the past year.

The Zacks Consensus Estimate for Ecolab's current-year earnings is pegged at $6.59 per share, which indicates a year-over-year rise of 26.5%. The consensus estimate for ECL’s current-year earnings has gone in the past 30 days. ECL, which currently carries a Zacks Rank of 2, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 1.3%. The company’s shares have gained roughly 33.6% in the past year.


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