LyondellBasell Revenues Set to Decline in Q4 2022: ChemAnalyst

LyondellBasell achieved record profitability in 2021 supported by robust demand, tight markets and the company's recent growth investments. The revenue had been reckoned a high rise from USD 27.8 billion in 2020 to USD 46.2 billion in 2021. The two major units of Chemical segments - Olefins & Polyolefins Americas (O&P-Americas) and Olefins & Polyolefins Europe, Asia, International (O&P-EAI) produces Polypropylene (PP) and Polyethylene (PE) contributing majority growth percentage in the company revenues.

LyondellBasell is the leading producer & technology provider of Polypropylene (PP) and Polyethylene (PE) globally. Both of these chemicals are used in food and beverage packaging, construction, wire and cable, healthcare and automotive manufacturing industries due to the increasing demand in various manufacturing industries. Polyethylene (PE) sales accounted close to 22% with 4.1 million tons per year production capacity in 2021 in North America regions and polypropylene (PP) sales accounted for around 17% with 1.9 million tons per year production capacity in 2021.

The quarterly result for the year 2021 had been increasing in each quarter, the sales volume and production from Olefins & Polyolefins- Americas and Europe, Asia and international (EAI) operating segment boosted the overall revenue growth for the year 2021. LyondellBasell revenues for the quarter ending (Q3) September 30, 2022 were recorded $12.50 billion (3.54% decline) compared with Q4 of 2021 which stood at $12.70 billion. This decline was majorly attributed to higher energy costs, new supply and weaker markets shrinking global petrochemical profit margins.

The revenue in the last two successive years 2019 (10.97%), 2020 (20.08%) had been shrinking. During the third (Q3) and fourth quarter (Q4) for the year 2019, the repercussion in the revenue growth was due to slow industrial demand and typical seasonality. In addition, the sales proportion from the two major chemical production capacity- Polyethylene (PE) sales in 2019 accounted (17%), Polypropylene (PP) (14%) and in the year 2020 Polyethylene (PE) sales accounted 21% and Polypropylene (PP) approx. 16%. The Net earnings from Polypropylene (PP) generated around $3703.27 million in the year 2021 and Polyethylene (PE) generated approximately $6471.92 million in North America. In 2022 the Net earnings from Polypropylene (PP) would expect to generate 3417.57 USD million (evaluation based on yearly average price multiply by the annual production capacity 1.9 million tons per year with 90% efficiency) and Polyethylene would expect to generate 6188.38 USD million (evaluation based on yearly average price multiply by the annual production capacity 4.1 million tons per year with 90% efficiency). The net earning achieved in the year 2021 was progressive than the year 2019, 2020 and 2022.

Summing up various factors such as high energy prices, impacts of higher raw material, labor and transportation costs, inventory destocking led to decline in polyolefins prices in the year 2022. ChemAnalyst has forecast the net earnings from Polyethylene (PE) and Polypropylene (PP) probably would affect the overall revenue growth of the company in the last quarter (Q4-2022), the evaluation will anticipate a downward trend in revenue for the last quarter (Q4) in the year 2022.