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LyondellBasell (LYB) to Build New Plant in Germany, Shares Up

Shares of LyondellBasell LYB have gained 7.5% since it announced its decision on Nov 18 to build an advanced recycling plant in Wesseling, Germany. This plant will convert pre-treated plastic waste into feedstock for new plastic production.


On Oct 11, 2022, LYB announced that it signed an agreement with Germany-based 23 Oaks Investment to create a joint venture, Source One Plastics. The main focus of the joint venture will be to build and operate an energy-efficient plastic waste sorting and recycling facility in Germany. It will process the plastic packaging waste generated by 1.3 million German citizens per year that goes unrecycled, using renewable energy from wind and biomass. The processed waste will provide a material part of the feedstock to produce new plastic materials at LYB’s proposed advanced recycling plant at Wesseling.


This plant further progresses LYB’s proprietary MoReTec technology, a high-yield technology used in converting plastic waste into pyrolysis oil and pyrolysis gas. This, in turn, can be used as feedstock in LYB’s crackers to create new plastic products. LyondellBasell currently operates a semi-industrial scale MoReTec plant at its Ferrara, Italy, site.


LYB announced that the Wesseling plant will be the first commercial-scale, single-train advanced recycling plant with scope for further scalability. With this plant, LyondellBasell can recycle most plastic materials like mixed plastic containers, multi-layered food packaging items, and more. The facility, with an estimated annual capacity of 50,000 tons, is scheduled to begin operations at the end of 2025.


LYB is actively trying to develop and implement scalable, sustainable and circular technology. LyondellBasell aims to support its customers in meeting their demand for renewable as well as circular solutions, and this plant at the Wesseling site is an important step to that end.


LyondellBasell is one of the leading plastics, chemical and refining companies. Based in Houston, TX, it operates in 18 countries. Currently, it is the world’s second-largest polypropylene producer. Multiple industries, such as packaging, electronics, construction materials and automotive parts, uses LYB’s products.


In the last reported quarter, LYB delivered adjusted earnings of $1.96 per share, missing the Zacks Consensus Estimate of $2.96. Revenues fell 3.5% year over year to around $12.3 million in the reported quarter. LyondellBasell faced headwinds from higher-energy costs, new supply and softer markets in the quarter. Demand for its products used in consumer packaging remained stable. However, it saw weaker demand from durable goods markets. Olefins, polyolefins and intermediate chemicals markets witnessed significantly higher energy costs and soft demand in Europe in the reported quarter.


LYB stated that its diverse business portfolio, strong balance sheet and solid liquidity are enabling it to navigate the challenging markets. Demand from consumer packaging, oxyfuels and refining markets remains strong. However, inflation, high-energy costs and softer seasonal demand are expected to further compress margins across most of LyondellBasell’s businesses in the fourth quarter. Challenging conditions are expected to persist in the European and Asian markets.


For the current year, the Zacks Consensus Estimate for LyondellBasell’s revenues is pegged at $50.87 billion, indicating 10.2% growth from the year-ago reported figure. The same for earnings stands at $12.32 per share, implying a decline of 32.3% from the prior-year reported number.


Price Performance

Shares of LyondellBasell have dipped 2.7% in the past year compared with a 1.5% decline of the industry.

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Zacks Rank and Stocks to Consider

LyondellBasell currently carries a Zacks Rank #5 (Strong Sell).


Better-ranked stocks worth considering in the basic materials space include CalMaine Foods CALM, Alpha Metallurgical Resources AMR, and Olympic Steel ZEUS. While CALM and ZEUS flaunt a Zacks Rank #1 (Strong Buy), AMR holds a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.


CalMaine Foods has an expected earnings growth rate of 197.8% for the current year. The earnings estimate for 2022 is pegged at $8.10 per share. CALM’s earnings estimates have been constant in the past 30 days. The stock has gained 58.5% during the year.


Alpha Metallurgical Resources has a projected current-year earnings growth rate of 413% from the prior-year reported number. AMR has a trailing four-quarter earnings surprise of 1%, on average. Shares of AMR have skyrocketed 261.3% in a year.


Olympic Steel’s earnings estimate for the current year is pegged at $7.67 per share. The estimates have been revised 600% upward in the past 30 days. ZEUS has a trailing four-quarter earnings surprise of 25.3%, on average. Its shares have soared 70.9% in the past year.

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