Middle East Disruptions Push Up Chemicals! LyondellBasell Q2 Profit Surges

The company reported net profit of $559 million in the second quarter, compared with $125 million in the first quarter and $115 million in the same period last year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $2.127 billion, compared with $615 million in the first quarter and $715 million in the same period last year.

Chief Executive Officer Peter Van Acker said at the earnings conference call: “The Middle East conflict has caused severe disruption to the petrochemical market, affecting plant operations, feedstock supply, logistics, and trade flows. The scale and duration of the supply damage are unprecedented, and the industry’s recovery will be measured in quarters rather than months. Once the Strait of Hormuz is open to shipping and remains continuously accessible, the supply situation will improve. However, we estimate that about 6 million tons of polyethylene capacity, or roughly 20% to 25% of the Middle East’s supply, has suffered lasting damage due to the conflict and will not be able to restart until as early as 2027. In addition, some new capacity expansion projects are expected to be delayed.”

Performance of Each Business Segment

Sales in the Europe, Asia and International Olefins and Polymers segment were $2.955 billion in the second quarter, up 18% sequentially and 9% year on year; adjusted EBITDA was $331 million, compared with a loss of $6 million in the first quarter and earnings of $46 million in the same period last year. Tight industry supply boosted margins, with olefins earnings increasing by $115 million sequentially and polyolefins earnings increasing by $130 million sequentially. The region’s steam crackers operated at approximately 85% capacity.

The Intermediates and Derivatives segment generated sales of $2.747 billion, up 33% quarter over quarter and 21% year over year; adjusted EBITDA was $386 million, compared with $224 million in the first quarter and $290 million in the same period last year. Profitability in intermediates chemicals increased by $105 million sequentially, while profitability in oxygenated fuels and related products increased by $65 million sequentially, both benefiting from higher margins driven by tight supply.

The High-Performance Polymers Solutions segment generated sales of $1.01 billion, up 15% sequentially and 10% year over year; adjusted EBITDA was $78 million, compared with $58 million in the first quarter and $40 million in the same period last year, also benefiting from higher product prices driven by tight supply.

The Technology Licensing segment recorded sales of $167 million, up 58% quarter over quarter and 22% year over year; adjusted EBITDA was $74 million, compared with $18 million in the first quarter and $34 million in the same period last year.