In another blow to the European plastics industry, LyondellBasell has announced a review of its olefins, polyolefins, and chemical intermediates and derivatives business units in the continent.
The review will encompass a potential retreat from Europe, with options including selling assets, investing in plant improvements, restructuring, and closing facilities.
LYB plans to focus its portfolio ‘around businesses with long-lasting competitive advantage and to reinvest around those advantaged areas generating superior returns at meaningful scale’, Peter Vanacker, LyondellBasell CEO said in a May 8 statement.
LYB’s Olefins & Polyolefins Europe, Asia, and international business posted $9.8 billion in sales and a loss of about $9 million before taxes in 2023. The company has assets in Belgium (5), France (5), Germany (8), Italy (6), Luxembourg (1), the Netherlands (5), Poland (4), Spain (4), Sweden (1), and in the UK (5).
According to ICIS data, LyondellBasell holds 7.5% of the total European capacity for ethylene, 18.4% of HDPE, 12.3% of LDPE, and 19.4% of PP.
The company said in a May 8 press release that its investments in a commercial-scale MoReTec plant and the development of a circularity hub in Wesseling, Germany, will continue as planned.
“The company will prioritize its investments to align operations with our circularity and net zero ambitions," Vanacker added. "We understand that strategic assessments can create uncertainty for our employees and customers, but we are committed to operate our assets safely and reliably throughout this process."
In the first quarter of 2024, LyondellBasell Industries showed a small sales drop even as the firm's profit was flat vs. the same quarter in 2023.
In Europe, officials said logistics disruptions in the Red Sea restricted competitive imports and led to increased volumes from LYB's local assets for PE, PP, and other materials. They added that soft global demand for durable goods continued to challenge volumes and margins for PP and propylene oxide. Nonetheless, the company expects ‘modest improvements’ for European markets as the year progresses, particularly as energy costs continue to drop.
European industry faced extremely high energy costs in the immediate aftermath of Russia’s invasion of Ukraine. Although prices have since dropped, they are still above pre-pandemic levels which continues to affect the competitiveness of doing business in Europe.
LYB has joined Evonik, Indorama Ventures, and Neste in announcing restructuring plans amid the tough economic situation.