LYB - Earnings call transcript Q1 2018 | LyondellBasell Industries N.V.

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Operator

Hello and welcome to the LyondellBasell teleconference. At the request of LyondellBasell, this conference is being recorded for instant replay purposes.

Following today's presentation, we will conduct a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to Mr. Investor of Director Kinney, Relations. David begin. Sir, you may

David Kinney

Chief LyondellBasell's Thank Teleconference. XXXX our Executive Aebischer, to by you, Hello and Chief our Thomas and Shirley. First Officer Officer. I Patel, Quarter Bob welcome Financial am today joined

historical to believed not note would statements. time forward-looking this I reasonable Before are could to out to forward-looking that for facts of materially would matters results These Actual today's and subject also that the differ statements statements. discussion, are our assumptions call significant on from upon to accompanies point management, is presentation like at uncertainties. forward-looking like available risks we made that slide are website business are in to based begin call the and which and are relating be those statements I made a at you www.lyb.com.

about more financial at GAAP www.lyb.com/investorrelations. results refer non-GAAP to differ, financial please actual available detailed disclosures, that presentation financial other including with currently Reconciliations For measures, website and applicable our cautionary on the information release, could www.lyb.com. available earnings any cause measures at to which in are are slides the our the to of factors together statements reports, our

P.M. both United in point The States. numbers Time I telephone XXX-XXX-XXXX will X:XX XXX-XXX-XXXXoutside be Time on for recording beginning Eastern calling out available May and by the at like Finally, Easter is would of the to until passcode today by a XX that this call States X:XX XXXXX. United P.M.

I Bob. near-term call the on outlook. quarter to turn to our the current and we would call, During like will results, focus first now today's That being said, over environment the

Bob Patel

you to joining Dave. all you earnings quarter and thanks for Alright, call. morning thank Good first our of

the for shareholders. for to superior strategy and the to the New Reliable additional review value improving margins as from Let's quarter. flow business products LyondellBasell continues our provided cash deliver and growth Year. built start highlights first momentum outstanding exhibit portfolio for several The Slide generation X begin with our operations an

earnings the generated quarter reflects XXXX. EPS XXXX first tax increase intermediates through of quarter increase XX% Both share. an the to XX% quarterly improvement the the announced it in Strong diluted the the quarter the our XXXX, for fourth $X.X first quarter, of represented fourth providing EBITDA in net to was business quarter results Our the excluding an were quarter benefits dividend, derivatives over that returns quarterly income EBITDA strong per cycles. and first a business first first continue over significant segment. and increase relative quarter fourth billion, representing for our $X.XX that to in our XX% improvement and This the record and occurred quarter. to ability an to per our quarter. we In shareholders performance confidence for share $X the bringing one-time

our Polymers start Our advanced A. joint quarter Quality growth Circular first the acquire in and Schulman QCP with venture with announcement of or program to the our SUEZ.

extend markets, materials. our position leading establish products our the high and SUEZ in position will market partnering in range acquisition Schulman of expanding to a growth QCP A. the the While for us allows in recycled innovative JV, with establish

project XXXX. by employees the safety Our summer. highlights X our this our organic on is growth the for contractors the PO/TBA HDPE first projects and our track for also achieved during improvements is to project And Construction Hyperzone for performance quarter. groundbreaking progressed scheduled first in the quarter. during on continued startup strong Slide

over performance Safety very the to to operations company continued helps XXXX. top you and see and safety As that pleased to commitment profitability. reliable know, ultimately of our priority our help we a improvement environmental remains believe across first drive months and

ethylene across where quite by products. plastics. wire the positions, robust electrical margins for chain of polyethylene additions and such on quarter Global capacity strong our our cable polyethylene demand for will due needed plastic more markets quarter. for market Thomas some Slide trade enjoys quarter, and first market pressure jacketing the highlights for pipe, demand now, high-density will growing film deficit and during X% financial the tanks global X substantial transportation detail fuel as growing the to polyethylene illustrates China's packaging, satisfy sheet for be polyethylene leading for growth. remained to grew During American the North provide first and these and And and

Thomas Aebischer

Please results. now morning to shows trailing of which X our good Slide all quarterly turn and and Bob, to you, segment you. Thanks XX-month

strong other use. Intermediates quarter picture margin the On and EBITDA benefitted in resulted Olefins Polyolefins styrene X, and record the polyethylene strong and we and both for for segment. demand a quarter a generation of During products Slide a provide cash Derivatives segment,

this and quarter dividends through During returned first approximately amount the of billion cash investors we from $X share and to generated half of operating was activities over repurchases.

to we through an continue share. strategy increase dividend, first core our to We quarterly and announced in XX% as quarter, our per $X Bob dividend as view it mentioned the capital to deployment previously raising

XXXX. and wait of board tax reform impetus While the the the for and benefits earlier we the increases, until meeting larger May to for combination our increase improving typically of market provided of dividend view dividend consider a conditions U.S.

million Our the work expenses project. were and early on the quarter and turnarounds, Hyperzone during growth new planned investments plant $XXX in capital PO/TBA driven maintenance maintenance the first by

balance quarter first investment cash grew million. liquid the by During $XX and our

past generated in activities, $X.X billion. financial investments for approximately XX we the share program increased balance and cash the approximately months, by than of repurchases capital liquid and investment and used and cash billion other our $X.X more activities the billion dividends of Over from $X.X operating

very up with we inception filed the recommend of cash repurchases months. statement the Our shares billion to chart billion from between operating $X approximately operating early billion of with and The free $X.X billion share our the of $X our substantial initial months In continued quarter trailing the approximately shares cash. that buyback investments consistent program relative we XX our program expenditure, XXX X.X will shares strong over more million activities. in program, LyondellBasell many our the a five quarter Bob. new After peers. and of generated activities our call we percent to outstanding million our periods, our the SEC a LyondellBasell's ratio group favorably the or $X next much. April, our to cash XX% peers. compares capital turn finished XX% the from repurchase With liquidity. another industry of consistency perspective as leads have of longer operating approximately Thank a that, with enterprise In X flow of specialized with bottom of of the illustrates activity value the during each the Company XX approximately to generation provides was shares. Since strong shareholders of and XX% authorize generation have outstanding. Slide and back you of in cash the proxy I repurchasing and a on consistent

Bob Patel

Alright, thank you Thomas.

previous declined fourth approximately results quarter Americas approximately and and approximately reduced of and margin decreased was strong due the $XX Slide a production $X.XX rates. across In quarter Approximately LIFO to million XX% million. ethylene pound. per from – In pound million, spreads combined operating XX our Ethylene inventory our $XX and improved our a during included volume Olefins Polyolefins turn Relative Let's by ethane quarter averaging from rates by increased NGLs. approximately our olefins over operating quarter decreased from segment polyolefins, by XXXX was Polyethylene $X by of quarter. $XX per EBITDA million, $XXX results XX%. derivative results charge the first approximately decline system $X.XX review ethylene segment, ethylene remain to results. first fourth the million. of The to XX% came

$XX would incur quarter two-thirds third fourth during this Derivatives to quarter the and our O&P one Channelview cold million. This from roughly to first is by of impacted impacts million, results weather approximately – estimated with maintenance that of completion segment. week $XX and crackers approximately our two impact second Planned near approximately the the on is first call, This is our the in remainder the segments by $XX be most million. mentioned impacted of impact of unusually our I in event negatively During results the Americas quarter January. Intermediates quarter at work we

Over derivative lower two weakened prices months, have operating rates ethylene supply, the inventories. past strong spot due industry increased and to

increase remains environment margins operating months. the robust. in ethylene tight are However, polyethylene downtime in downstream This second during result with balanced improved in coming an increased a predicting downtime quarter. should cracker units more derivative rates the market Industry on combined consultants ethylene the are and

and Asia to Polyolefins performance in Turning XX, International and Europe, review the – segment. Olefins let's Slide

the the quarter During multi-employer LIFO $XXX million. ethylene of improved per higher million results by XXXX pension quarter, Olefins and increasing pound. with fourth $XX $XXX Fourth margins million EBITDA million first million charges approximately result quarter. inventory or reflected $XX charge was approximately of $X.XX $XX than

of advantaged ethylene higher decreased maintenance at Utilization due site. naphtha the absence of to Our cost feedstocks out co-product the as fourth quarter increased volume feedstock. X% production of Wesseling by credit weighted

a volumes. exceeding improved results million at primarily approximately XX% operated by to by higher industry about during the quarter first sales rate polyolefins X%. crackers due Combined Our $XX performance

will consultants the the industry that down shut be highlight are of balance maintenance for On months. maintenance global the Intermediates and segment. tight crackers across remain April, performance spring Derivatives During in to markets second strong with we European XX, increased Industry Slide the quarter. our forecasting planned three during

a by products $XX approximately relatively LIFO margin derivatives chemicals. Results improved due fourth the the primarily margins. The from quarter driver of over approximately $XXX lower million. Oxyfuels improvement to and higher million first quarterly And as reflected an million results were $XX results quarter results representing charge for million, and was $XX styrene quarter. increased related oxide inventory unchanged setting was record propylene EBITDA improved from improvement primary million, Fourth and of $XX offset margin was a in volumes. for intermediate XXXX

strength butane as demand methanol but are industry in remain to of seasonally capacity to the production and During high strong prices. for Prices market. continue returns moderate lower we margins to enter oxyfuel expected styrene period as April, we're the seeing and

Now let's segment. XX of discussion move Refining a Slide to the for

profitability First RINs The from LIFO at $XX relative million. fourth operating strong refinery quarter decreased continued benefited inventory margins were day first the quarter of per million the unchanged. during barrels refining quarter. The relatively adjustment fourth of the was to The XXX,XXX $XX cost a quarter. EBITDA and rate

has first from favorability Maya quarter could season. and crack have demand. average. extend refinery seasonal $XX barrel, nameplate X-X-X the our April, The During summer higher a enter to significant we increase capacity spread through improved this quarter as operate the the believe per with continued near refining to We increased spreads second driving

dedication the at rates and look in their seen closer proud enabling a of to our improvement take operating in refinery, and reliability I'm the rates and let's improve years the the from asset. significant improvements XX, continued the efforts to at Slide quarter. our during for the outlook trajectory upward Operating this operations refinery. to team Turning the of we've first high a our XXXX return the over

of for you International sulfur many to X, is fuel in marine Maritime X.X% limit the aware, the are As XXXX. X.X% reducing Organization effective from January oil

the curves distillate will heavy significant When Brent than that oil by than profitability and result with crude our by more for projected refinery. X-X-X for spread substantial to barrel oil Forward already differentials, a more are by improvements barrel this in indicating mid-XXXX. spread improve the increase could $X light mid-XXXX refining per $X improvements combined and Maya crude per over

refinery to treating monitor well we over regulations positioned Please us coking, these the market to XX Slide to leave and from distillate But months. update high continue hydro of will on acquisition. A. these Schulman capacities the believe for the an our at implementation the developments. turn We benefit coming

with and one vertically customer value the LyondellBasell's With business broad activities. one Schulman's clearance. week our we implementation agile and for officer began of the March focus announcing integration very customers across received and staffed pleased positioned deliver our markets, compounding A. to shareholders. on of and we combination integrated States made. the XX, planning have synergy growing On for progress acquisition, are work teams Within significant these I'm United well day and management we polypropylene detailed antitrust

U.S. you second to remaining A. forward to XXXX, shareholder the is of Schulman in of clearances key We updating as XX. coming progress highlights. market the on regulatory recap the the to Turning this milestones capacity continue for June continued We close scheduled LyondellBasell strong in transaction a time anticipate in vote XX, subject that to QX Slide acquisition me we some new the delivered allow results and reach the look when to to will half

Derivative first returns of cash conditions. generate achieved businesses In deliver XX% to market EBITDA continued and continues We generation. record and range dynamic for increased we of resilient portfolio quarterly the by global dividend quarterly to our segment. in a Our quarter, Intermediates our strong

all multiple continued ran for strong We refinery nameplate capacity. see products business polyolefin lines our supported segment The our benefited O&P regions. to businesses. margins strong That margins across across solid near demand from chain I&D our and for

seasonal Looking we forward, fuels spread oxyfuels both and that seeing are business. for our typical improvements refining support transportation

to we and industry global As increase oil for in balanced move derivative anticipate support the ramp capacity, downstream continue ethylene and will units recent to provide to polyethylene should pricing. in more prices polyolefin position. up full demand The strong

our startup construction and for PDH underway plant by a for North scheduled that plants final engineering Hyperzone to in take for decision with said, investment of XXXX. program this plant organic track summer. work Our is well questions. very support PP growth your to we're pleased American on and early groundbreaking our XXXX now HDPE PO/TBA formal is Preliminary our progressing With

Operator

[Operator Bank America with of Byrne Instructions] comes from Steve Lynch. question Our first Merrill

your You ask may question.

Steve Byrne

you. being world. at enable that remains in sustainable? a and that substantial the as see to rest are you factors premium do They just the Europe polyethylene of the that, Yes. Thank pricing What

Bob Patel

Good Steve. morning,

rates First at as no operating of capacity growing continued there all is increase the modest demand in and rate. Europe new a is have to

industry relatively are complex rates. much find generally at Asia market in what China over there more much, higher a than So, the speaking. also might units It's or in you the for running

So, in bit harder it's to market some little ways a serve.

So, will time continue believe premium that be in goes as we to do there some resilience on. this

Steve Byrne

not dynamic it I other to pricing just square factor startup seem logic And other ethylene of and there are it about the in be all view seem to downstream derivatives delay polyethylene was of with just in because your on March high inventory low doesn't the derivatives, this unless wanted in and ethylene derivatives downstream of U.S. level producer the Bob you? polyethylene to is

Bob Patel

The inventories remember well. production to more may be polyethylene, average is than they there as going be higher but in

targeted been of derivative – It's So, not and terms polyethylene grades. that I their the or the think do more some the producing been operation. units in up steady of down have not

new kind normal newer here as think we in know units. a we'll more I lot QX reach a of with these

Steve Byrne

Very Thank you. good.

Bob Patel

you. Thank Okay.

Operator

RBC Our comes Capital Markets. from next question with Viswanathan Arun

is You feature. your your Arun, may your ask line open. is question. Please check mute Arun, open. your line

the from ask may go your next on with Juvekar You to question. That comes P.J. question. And Citi. we'll

is line Your open.

You may ask your question.

P.J. Juvekar

morning. Good Yes.

Bob Patel

Good morning P.J.

P.J. Juvekar

stake Bob, your on been plastic that tracking and And this on company how it that, down bags. bought recently, demand. to then does impact related single-use polyethylene, cities of view several have anticipation you recycling that What's a in on in polyethylene trend? was

Bob Patel

for a as been well the On U.S. in PE bags, parts around that's while as different the globally. of single-use

felt. been and that impact. HD a see the has that combination impact of already some It's LL And of

like move is important & going the joint forward. really QCP acquisition you IKEA today. and for is Unilever very more know with than towards venture, feature seen what to our venture With as products. a recycled in brand and be it Gamble to And respect their looking think SUEZ as owners very, remains a the to greater of going content of think, Procter in circularity this impact and anticipating I broader be that's we

is recycling waste so which know the the and and brings is the we've partnered that what's to is segregated a know recycling of So, I for handling venture feedstock been has clean with very think you waste company plant was a SUEZ, comes In end-use waste mixed with unique the good what that that you more recycling. is into challenge limited. the past, who

QCP think terms to we a economy. of impact have I very with opportunity unique in really circular

P.J. Juvekar

up prices slightly, on, the have your Yeah. up. you've NGLs. views Ethane gone ethane up, in always know And secondly but you maybe past, running and given not inching on

you with drilling you. on So, give outlook but in takeaway there? new your Thank crackers, and Permian capacity ethane us also the these more can

Bob Patel

from P.J. Gulf a to been have coming of Belvieu from lot Permian midstream to There or more about Yeah. Mont the the announcements the pipelines Coast.

ample to Coast. the that is And to there believe supply so, capacity Gulf to we the closer ethane continue new

frac Eagle $X.XX and Permian, So, more bit from on, kind yes and been to we're a saying a from while inspecting we've is the range. you'll $X.XX years spread be there the premium, Ford couple we're so Rockies, and of a for of in that the recall that of to that

So, of my available lots in is there opinion. ethane

P.J. Juvekar

Thank you.

Operator

Thank you.

Vincent comes question with Morgan Stanley. next from Our Andrews

You may ask question. your

Vincent Andrews

between just morning X.X What talked so we that months comes of everyone. over and could how you price? and think get Asian different you the compress, market. next think lot P the price the will – do online? Bob, as do good a trends, about about capacity that cracker you that six U.S. price see the think maybe you as as or P Thank X, product spread the and for you Asian different needs you grades know destined startups, And to do

Bob Patel

morning Well is a Vincent. lot there Good there.

me I address let in So, see pieces. if it can

if of operating at it's you globally, look rates back high step rates. still pretty all, and operating First

I great year may as still essentially. Asia. before. prices and or differential that this It's out leaving this capacity, when like-for-like have at X%, of With year U.S. greater grades, on are build we're operating may have And in $X.XX. what it's X% XX%. prices, you we of coming you than or had operating unique look about as the by the not higher last off Asia the oil rates with about between me that come us this And demand growth if think up cycle it supply the rates phase year on exceed seems will feature growth full to or

remainder, be grades other the more U.S. that For to I as centric, historically delta we've there – still expect for are had. product some be would

to kind and my the really have at into opinion. is spread separate the of look lot grades not of $X.XX it and you in So, that like-for-like, price that are and exported a

Vincent Andrews

$X Thank $X.X only And you. generated I there cash could Okay. flow Thomas, and ask know, I operations. believe of just EBITDA you about billion is of if you from you, billion

from just usual? Anything could one So, walk to us the you other?

Thomas Aebischer

Right. Yes.

seen in you the have you'll see obviously the during detail all working So, development XX-Q. capital – the net obviously

capital slide, of working net have of the buildup We net explains significant piece it. most and sort that capital variance, the working

you it's first quarter look a to actually significant on free XXXX, free compared flow. So, it on a know of basis, you when cash at increase flow cash

Vincent Andrews

But the working capital was what it inventory, driving part is of it?

Thomas Aebischer

basically yes. It's inventory,

Vincent Andrews

much. very you Thank Okay.

Operator

you. Thank

Our with Jeff comes next JPMorgan. question from Zekauskas

your You may ask question.

Jeff Zekauskas

Bob. different Can about affect you time? how ethanol may regarding China talk market changes MTBE in over policy the

Bob Patel

given good I EXX, MTBE and market But and see see still think think Jeff, the that on that we still referring you're know project. to to we're so cheaper going have investment you for is butane capitalizing more an good U.S., oxygenates see being PO/TBA MTBE be important globally here if going is and there prospects a even we'll I ethanol, develops. to how forward. in our we And

Jeff Zekauskas

And spend to you did how the then quarter? X.X in back million Thomas, shares first much for buy

Thomas Aebischer

Right.

look you for We the – we So, you X.X spent cash million. statement, at shares, spent and $XXX flow see million or will it. the

time cash actual between of two in share lag days. have and XX-Q, However we count the we a know outflow as you the the disclosed about

will two shares, details $XXX X.X the million So, these is that see spend when in including time all actual lag Q. million. you The day the you take

Jeff Zekauskas

so you Thank much.

Operator

you. Thank

Barclays. from next Duffy comes with Our Fischer question

open. line Your is

Duffy Fischer

Good fellows. Yeah. morning

Bob Patel

Good morning.

Duffy Fischer

first A days couple the to with ship U.S. going go the ethane CDI announcement the that we from China is ahead ethane from cracker just, and had a of its question ago

pellets is roughly there, guess with question structure? the and what's which do in the to the best difference China pellets is think couple versus obviously to announcements two what's how be years? your many cost condensing we'll the in And that of you get there; going shipping producing between like ethane shipping ethane more But pellets expensive. next relative producing ethane So, cost one, over the that two, differential using here,

Bob Patel

producers and it's think or announcements come that to is cheaper chemicals step So, may East will industry, And premised of produce in liquid move about Duffy, more sort development which to the how will ethane, market. you ethane on the predict we of But Middle of think what ethane through are inexpensive difficult petrochemical the this or it first that, form but I you much if sentiment and solidify other prevailing it there chose come. would the of all, to ship. still the know polyethylene forecast back be to think as essentially

$XXX I In something of – ton terms of bags kind in it like terms of of north in thumb, which cost pound a as that of of is including you to the cost ethylene range ethane shipping about or of to $X.XX rule differentials, know think polyethylene putting you as opposed so a something just a as in cost know that. sort as opposed of being $X.XX or

of is shipping in terms delta So, a there gas polyethylene. versus significant

Duffy Fischer

those Fair make towards just styrene methanol, maybe been doing have growth smaller those your and moving internally follow-up, pretty with portfolio? better thought of acetic moving and acid lately organic the in the there part to of done to enough. trying segment, any well. well I&D one a on Then Is is obviously businesses couple bigger

Bob Patel

front so, range over that year of Nothing in know I&D you our and prepared know thinking Duffy, consider. have last in or us of we two been discuss options through years we the in we've will a to strategy or I'm you today.

Duffy Fischer

you, guys. Fair Thank enough.

Bob Patel

Thank you. Okay.

Operator

Thank you.

question from with comes Nomura next Aleksey Our Instinet. Yefremov

your may ask You question.

Aleksey Yefremov

are what expectations million $XX year driver PO was year-over-year. were this this XXXX? earnings the talk your broadly results behind to compared could in supply and demand What you derivatives you about know for QX and

Bob Patel

of quite in be PO. quite should that stable was business. – and continue. second our continue as PO some, to expect monomer we constructive co-product about in styrene the into If have the so Volumes the we're driver So, been we margins PO go increase to be really up a quarter, to fairly as – production

and be I&D. I earnings the think our We key business, going gets supply come cheaper to up, step from crack QX the We to oxyfuels about because saw months. about in year, in transit volumes back an and season we when think Alex, into feature, I&D various how to will moving really is contribute as products, you the improving driving from QX plenty actually oxyfuel ethylene there the driving summer see of that early which typically typically season. benefits of have up and spreads Butane our indicating that is butane business. go this

So, that I feature. ultimately oxyfuel we move years, do prior should think an as of in result as all be we in QX, important

Aleksey Yefremov

will Understood. it's ramp I that also I Thank the your going integrated follow-up prices productions strengthening ethylene? it and sense, ethylene guess new to demand merchant of as forward. if can And units merchant cracker going crackers, but ethylene for would you. make on ethylene maybe if PE supply in strengthened ethylene would How be view sounds that's ramp increase.

Bob Patel

industry, some the operating the to prices had while for very run spot the business. ethylene ethane close pretty derivatives down as cracker were opposed up new and in we in more the QX, the cost. prices in have and been – polymers as crackers didn't in of So well high, rates cash Recent to ethylene units

know to just the mind, so of on let address company. I our So, investors' is impact this sort me

X% in in translates change about sell about impact million the spot per of we margin for size the About all, of profitability. a First and impact to sort merchant our of $XX year market, ethylene into you. to the XX%

to spot doesn't, we think the you those think and come about terms. in If when year we for modest more year I should upsize impact it start translate as very more X% earnings. through it's you, $XX the a move that run full expect units for So, on change new a polyethylene as And to million do in balance. into impact ethylene the will then margin, fully,

Aleksey Yefremov

Bob. you. Thank

Bob Patel

Okay.

Operator

Thanks.

question next from McCarthy with Vertical Kevin Research Partners. comes Our

You may question. your ask

Kevin McCarthy

matter Gulf issues? resin to China it or density happen matter producers? you maybe on Coast proceed trade matter, of it with tariffs and And thoughts U.S. what Yes. linear for and could density potential low not might Morning. substitution Good polyethylene. certain sorts flows Bob, for on if pricing including if your share resins were with does Does low those

Bob Patel

yes, first of all, I Kevin, think, us. around sort they're of

Our things on and little is have very low they'll a be then that density followed and focused think company more low. you by density, we mentioned. linear those And combination high I of

the in and You shift, prices be LL be could but HD don't some And substitution Asia. higher done, term impact used will see but it's I near some to of applications, trade from think flow can that substantial.

think is it longer when assessing about we impacts. So really tariffs topics, the and trade are term – I

frankly. impacts near term think the are I prices higher

David Kinney

Kevin, this is Dave.

whether behind on of you go that on one trade shift back force If that. think question you polyethylene really to is another, the I or us. China for in chart not, pounds the lane the the XX deficit more does driving know and need billion trade final Bob a showed slide that's X, China, this polyethylene way or

Kevin McCarthy

if And as you. may. follow-up a then I Thank

close Your deficits making wondering for with days benchmark XQ O&P that between levels of the speak might than you flat factors America's you was other could earnings to to some disparity these example sequentially, are or propylene held in perhaps perhaps pretty I the helping better to monomer suggest. ethylene support of in the earnings there. money the in value more the your or if

Bob Patel

also market And it terms a But have to I very mix and our polyethylene. think participation the segment. we of in that helps the speaks good in polypropylene

that. and Kevin business, another resilience I O&P talked demonstrates So, the our QX our think about of and we've about portfolio again,

David Kinney

non-market portrayed some was polyethylene there the we in really by if for at Kevin, bad as as I every market to think adjustments. of that polyethylene. of consultants that's think occurred the And wasn't some adjustments realization the look real market you had line in that you some there out product those saw and every don't that think relative I out price of I that the non-market

Kevin McCarthy

helpful. you. very That's Thank

Operator

Thanks.

Our next Ahmed Global from question Alembic of Hassan comes Partners.

You may ask your question.

Hassan Ahmed

Bob. morning, Good

Bob Patel

Good morning.

Hassan Ahmed

while wanted XX% a to perspective, I the more all propylene done. not that Bob, exports polypropylene perspective. does I from a question, to revisit U.S. tariffs, Interestingly, my China feedstock seems product And around but have trade part it right, be obviously a of seems numbers if not. China from propane the pricing of are

kick type fair So mean of I were it guess a may of them? ceiling probably to the right even for way a favorable assume regime seeing mean, domestic this I would I polypropylene Is market, would ethylene a extremely be tariff things. propylene in, the is for that glut in to pricing propylene which bit that rising provide depressed thinking if you'd of and start the about of

Bob Patel

And is you all, outcome. a that Look, first export of not of that about potential being Yeah. a there think think built. propane, when terminals new there I are lot is

On the NGLs. hand, from propane there supply is other coming more new

So, if with you. then back, to were pull China I agree yes,

I propane would ethane with more propane be it today. would much and think than therefore competitive is increase, mines the

So, scenario is that that the big how very you've for a possibility plays outlined it out.

Hassan Ahmed

sort get bit, obviously sequential part looked XX% year-over-year to maybe Understood, there or the individual the were a be well sort strong this basis, results certain as on as strategy was quarter-on-quarter, outage down What on volumes going significantly. your a an asset better of And know a at on year-on-year. gears as you reduce yield this I XX% was both on sort I&D those things? of and of a I side. volumes volumes understood. Changing down it there within to mean may Was over seems pricing products, there?

David Kinney

substantial. issues our year, but quarter with We did acetyl segment improvements during the this this the right absolutely some are you Yeah. have been have margin first Hassan, of is operational Dave.

Hassan Ahmed

resulted mean to impact be you sort in? what out I would of that EBITDA break outage impact able

Bob Patel

segment. whole It wasn't really material the for

Hassan Ahmed

Perfect. Thanks much. so

Operator

The Deutsche Bank. Begleiter Thanks. from question David next comes with

is line open. Your

your You may question. ask

David Begleiter

in the very in in on just April polyethylene you near May – this Bob, timeframe May term, expect some morning. Good PE price this would erosion Thanks. June perhaps?

Bob Patel

We for strong in a are seasonally period polyethylene.

to meet I very year mentioned as have next see to very and see demand supply generally very in had so quarter of just Asia, year, globally. the annual So, how the is is is prices QX for demand well. market and in oil seems the to then three of and but this And that the two, higher calls, for typically prior develops, higher this or and couple growth up in polyolefin until quarters see prices we'll similarly. growth we going time a the me polyethylene constructive coming the I first – is with in shaping

David Begleiter

Very been a styrene announcement Bob, announcement? U.S. good. by that capacity. a you And player is by add recent to Were on new there just surprised

Bob Patel

Well, monomer has been now more styrene production. Asia, that our prevalent think in focus to we're are I a days, David. our to very surprises the think as and oxide on economical a we about more And going me company. But as styrene way see POSM, think producing that a fuel propylene most happen least therefore and at for still SM that's of little

others. for So speak can't we

David Begleiter

Thank you.

Operator

Thanks.

Goldman comes Koort question with Your from next Bob Sachs.

You may question. ask your

Bob Koort

that you bar One, started Thanks. Good couple capital maybe a wasn't the there? of of change the from Did guys the inorganic dynamic it some talk it see buying are pay morning. Are Thanks. is dissimilar threshold deployment, price sort of down? Bob, Question raise items. opportunities. you active developing? fourth Give or stock, obviously a stock little you what you your maybe price you to secondly us around can about like market guys then, willing was sense this there? further back guys you or a bearish in And quarter. How looking bit what quite

Bob Patel

all, of share repurchases. on first So,

quarter different. quarter, calls, in that I've we And intrinsic really prior in and and I mentioned every know trading. no what's our talked grid as about this review are we so You through the where think was ahead in past, we we value update quarter the

I investors time from like company had to non-public that information. important ours think material recognize time to what's is for

we and plan. into earnings of market announced case the able the new In announced. Schulman A. mid-February. immediately the are after we get with release XXbX not QX, we to hadn't in the acquisition We Well

announcement up be of We dividend of also public the those our We both material believe on February. information. to moved end to

so, until the And very we can't in February. end to really market get back buy of shares

said to if practices continue normal our doing are very through these so be bang see you'll And we our for keep of maximize our we the as So these want we opportunistic, you to we buybacks. and us bucket regularly value that. before will updated firm and you know we can that things, think

we that from we've values. strengths the On in fit standpoint apply said for businesses the inorganic know our and a past clean that our look can what side, we we where strategic businesses

are of in a that as expect you and range inorganic value-minded We think company we do should we very continue or whether they're I everything consider that to growth options, organic.

Bob Koort

Great. Thanks very much.

Operator

Thanks.

Your Sheehan SunTrust. with next question comes Jim from

your ask may You question.

Jim Sheehan

you that that going strategic in changes Bob, refining think options forward? your International Organization for how your helping in business Maritime the with the do business,

Bob Patel

Yeah.

now our Jim, consistent to on reliable focus is our that. I sure have at that on my message the operations that's make track focus I good think on there continues strong team been So this, want is And a to right and refinery. we're and to in

a have I out of It's we be turned opportunity in indeed forward curves tremendous the true. front us. think to

closer, to ours me a capacity we that refinery especially so volumes coking As any process of its large is for real get has oil. this much it that crude like ability opportunity, seems to sour and

value So, building to comment, about we we're we is own. today well minded that in I is there when focus we value-minded, last and refinery very things. great And our my potential run again are think our these up think

Jim Sheehan

issues variety of or cable to markets. there you market temporary Great. presence softening the market? do there. highlighted more contend that's you've with? that in what's think demand think your Recently you end think about wire in business, happening am And company's are Do and strong curious the I polyethylene I of then in been there extensive some been end is a

Bob Patel

there I developing about should I home, government, that's like. and market stimulated if and infrastructure markets. probably quite by spending in we that good more that you a here And be potentially, think infrastructures' the spending back step think one at temporary if that is just think because

Jim Sheehan

you. Thank

Operator

question comes next with One Instructions] [Operator from Fargo Frank Securities. Mitsch Wells

You question. your may ask

Frank Mitsch

a Yes. even Hi. congratulations improvement on quarter conference the congratulations further sound the Good the quality nice and morning. call. in And of on

Frank Mitsch

recognition, your for you Frank. Thank

Frank Mitsch

sounds in an Absolutely, underground it no bunker. you're like longer

of your see going to based of you're another better, would Is it pounds sustainability, record any I&D, in expect you reason quick follow-ups, obviously have couple I&D record on in a styrene Just more sounds there doing that in has like acetyls. QX? not the we know is oxyfuels

Bob Patel

see markets develop. let's Frank, how Well,

go. volatile methanol, Directionally, to the predict more parts QX our QX. should difficult compared will of in better I&D portfolio I are think were and oxyfuel be styrene to those

we about So, let's where end a up see quarter from now.

Frank Mitsch

that that I you was $XXX actually is lag see there take that you a yes. and And mention Thomas, as will you $XXX. however it million, two paid day then

in the bought that the you that two Can of out Schulman run guys million you're of hike. you periods and deal dividend $XX for the me? And days. rate back that says it the kind clarify stock that So, is of now of quiet

Thomas Aebischer

on This you this know quarter. have buybacks is No. share actually [indiscernible] you every

the ask and outflow, of And at two depends buying you we and lag. That pullback is at quarter, very what's it look the I cash cannot we day certain clarify given I see think look you a to about is obviously earlier when day closed the are know, the amount But I much shares So, question fourth Q price. obviously and shares pace. that was that on the at you any underlying again. think and share important an

was, we our find continued we of and very a shares it at level buying under attractive under why that's or before, share. stated $XXX, $XXX we wherever the also back share as So $XXX

we to what so. that's continue So do

Frank Mitsch

so were how the March. at thinking to end that of aggressive two million that's $XX change about days I that? just But clarify, very be in you should meant that Is

Thomas Aebischer

No.

March will obviously, share in shares. you I you average have we much see pulled share the just shares back, prices look what's as easily we price you paid corresponding think the for can is. when X.X virtually we'll see count, how And at also, figure share million

Frank Mitsch

You. Thank right. All

Bob Patel

Thank you, Frank.

Operator

Thanks.

from Roberts John comes question next Your with UBS.

question. You may ask your

John Roberts

of the between IMO sulfur could range fuel, you of be refinery. it's terms scenarios. can decisions at an in of kind lower required And for change. for scrubbers the fleet so Is the few wide onboard any delaying on happen extremes make there just the there On give of have that to lead capital plenty you Bob. scrubbers lead time I make in really that changes or their to suspect to period a will ownership scenarios any you, the they'll XXXX, the operating happens. of what Thank be decision of any time

Bob Patel

don't. capital capitalizing I really, I've that's refinery, capacity it for focus have XXXX. asking consistent on more IMO just focused nameplate at earmarked We Again on and we've broadly, team really operations that. the been this don't really that's been on any reliable

biggest for and out IMO be. the ourselves positioning could to is that driver what XXXX turn think I

Thomas Aebischer

as We our run actually Tier John. completed Bob needed. well need so to further is there investment last Yes, We no year, investment X it said. just

John Roberts

to the those And you well? business. proxy, wanted distribution to deal separate and the of one something as Schulman composites view of that on, maybe the the might like bidders or they parts the in split Schulman Do reading after then, it later off deal looks strategic you out

Thomas Aebischer

and And to obviously Those whole of we of So, going I'll thought we but markets. reach build will decisions of creating that I carefully. acquisition, am we in think multitude world that as a Schulman, the our the in that about new a we of businesses. company made very compounding was to have are on a compounding all these at about that not this smaller class I are look just platform to business any all have it convinced ingredients compared you remind

of with open creation. So solving we're for and mind that an value going all to

John Roberts

Thank you. Great.

Operator

Thank you.

Our Bernstein. next Jonas question comes with Oxgaard from

You may question. ask your

Jonas Oxgaard

guys. Good morning,

Bob Patel

Good morning.

Jonas Oxgaard

I war is to little. some of talked Europe that in mean market? We to want think a I was place We're you whether a to not. in there polyethylene into about have bunch a now curious China all the have Europe or this? somewhere. of it impact ask I TRADE more to European of you is are so with and going Are you send how thinking what about preparations that making the about

Bob Patel

European the given the need into types year, Asian that albeit eventually are products. growing, for a at grow. imports – of of very that First markets I to think for of then the is maybe or different And X% market in going terms Jonas, the are than the modestly needs European market X% market

very plays the think to investment that about well targeted there. Hyperzone to new we I the in exports supplement to think do technology, Europe U.S. we over our what as already from So,

think it's locally. build than business polyethylene You better a know in a growing modestly to I European meet my view, way in rather

really in Europe. is think grades meaningful So, we mean and look might think I trade to war commodity market difference need compared are a more are that of the to I types the kind there do needed higher have at or I volume, grades that Asian between that an not, needed,

Jonas Oxgaard

right how now? And to which the with ones export your does are Europe going compete Eastern Middle

Bob Patel

here East. pretty Middle ethane costs competitive new So, ethane cost are the with the in

I we're at various regions think asset at look through for value. really asset. again, look optimizing We and – netbacks we it's So, by

more have the do supplementing think could needed Europe it export Europe, could if And presence we about think is locally exports I to product it's I so U.S. production from very and authority a we we we that, when already about large benefits very to what So, competitively the in there. from us U.S.,

Jonas Oxgaard

Well.

East of versus quality coming cost than the product I more out position? about Okay. the the Middle the was thinking in yours

Bob Patel

I see.

in going And it will I space. type many the it it's high polyethylene of on this density the be but I Hyperzone technology, really many, will believe that the think European depends that want. customers technology be type do unique product really to new are of deployed,

decade, marketing plan we And about the will next so, part new we as as of one about you potential the Europe think certainly on being the one this in and assets. the know think

Jonas Oxgaard

you. Thank Okay.

Operator

Thank you.

with question from Tudor, Holt. Matthew Blair comes Pickering, next Your

You may your question. ask

Matthew Blair

of that to PE? trade on styrene we had give flows see duties know does back tariffs what earlier or styrene. China Coming pricing? and potential comfort did perhaps you seller. Bob. you on and you more impact morning the about on less Could Good your from is the theme talk China kind on here, And you this Lyondell styrene year merchant

Bob Patel

is from different didn't publication, well. see to you volumes. on realistic terms lot to you Matthew. So, price we here you held this I is of as from in up quite is do see know so a styrene, price can posted the far impact be And of think

to we think have styrene. I this something watch know, You is with

some watch Here reason that how terms just unplanned styrene outages I in prices styrene to my think also of future that market. were so has have some all to about there develops. was the production of prices, view moderate returned moved we'll and of because Part

difficult going stinky all how they they forecast these be impact. how to to and are how anti-dumping and rebellion, how really of tariffs predict or So, duties,

I know think the progresses. more we'll as year

Operator

you. Thank

with comes Our from final Jefferies. Laurence Alexander question

You may ask your question.

Nicholas Cecero

you if This what economics see of walk Cecero of was we're on on Laurence. is can styrene, the styrene Nick terms off for through seeing me how in you end integrated the supply and Quick know wondering I for question decade? versus demand non-integrated you through play

David Kinney

Dave. is this Nick,

well. really It's co-producer of as revealed oxide the propylene tied haven't We our economics. production really the up in

And we broken so, that haven't historic. – out

Nicholas Cecero

Yeah. Thank you.

Bob Patel

Alright.

that some with the last close being with let remarks. So, question me

So, first of remains all, later you year. know there this potential polyethylene U.S. market a for choppier

this in into growth very growth shallow. X% think is year believe this Whatever operating by a coming operating still that operating supply rates. very, We're rates. about with short the left continue to with rates. or we're exceeds year, later place If demand X%, takes and very high cycle We high

year. segment and In terms should P business, the expect performance offset to declines Refining profitability they of in we later materialize U.S. I&D in our own

and is overall the again, the of this LyondellBasell balance I think strength portfolio.

continues you compounding. starting be traction that we growth on leader integrate focus terms And the and our really closing will operational Schulman excellence we're to polyethylene get the company our meantime, in a advance the create we On move day-to-day. of know and be or run can to we how as towards program PO/TBA on we and deal world believe what so commercial now

going here next giving an you forward to at lot the and update So, meeting. we'll quarterly on

interest for great you weekend. all you a wish thank So, and your

Operator

And does Thank you this your conference At you. We your disconnect time lines. this for conclude participation. call. may thank you today's

LyondellBasell Industries (LYB) 27 Apr 182018 Q1 Earnings call transcript