LyondellBasell Industries NV believes it is in a good position to benefit from growth in demand for polypropylene and polyethylene.
At a pre-K 2010 news briefing in Dusseldorf, Anton de Vries, senior vice president of olefins and polyolefins, also kept the door open to a future deal with India's Reliance Industries Ltd.
Rotterdam, Netherlands-based LyondellBasell emerged from Chapter 11 protection from creditors in April. De Vries said that there had been “a lot of stress” during Chapter 11 as the company shut plants and reduced its head count to the current level of 14,500. The group's fixed costs have been slashed by $1 billion to just $3.6 billion now.
Now the firm can look to the future, he said. The company expects an additional 66 billion pounds of polyolefins demand worldwide by 2014. The Asia-Pacific region will account for most of that increase, especially China and the Indian subcontinent.
In its restructuring, LyondellBasell has closed four plants in North America and three in Europe, with another in Terni, Italy, set to close this year. But LyondellBasell also has brought on new capacity at three plants in the Middle East and is expanding its facility in Thailand.
Key to LyondellBasell's confidence is the low cost of its joint venture plants in the Persian Gulf, which benefit from low feedstock costs. De Vries claimed supply from Middle Eastern plants to any part of the world can beat the price of polyolefins produced locally.
In Europe, new investments have been made in Italy, France and Germany. This week the Munchmunster, Germany, plant will start production of high density PE, with a capacity rate of 705 million pounds per year. It replaces a smaller plant that was destroyed by fire in 2005.
During the question and answer session, De Vries suggested the failure of Reliance Industries to acquire LyondellBasell earlier this year may not be the end of the story. Creditors thought their “upside potential” would be restricted if Reliance had taken a majority stake during Chapter 11.
“The bid didn't work out, but I think it may come back in years to come,” he said.
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