LyondellBasell Industries N.V. LYB and Sipchem have received a feedstock allocation from Saudi Arabia's Ministry of Energy to support a joint feasibility study for a large-scale mixed feed cracker complex with a diversified derivative portfolio. The two companies will assess the project's viability and optimal structure before proceeding with a 60% (Sipchem) and 40% (LYB) ownership split. 

The allocation outlines the framework for both parties to define the project's technical, financial and commercial aspects. If the project moves forward, it will produce petrochemical products and derivatives for both domestic and international markets while creating thousands of local jobs.

The joint project has the potential to deliver long-term value thanks to cost-effective feedstocks, large-scale facilities, advanced technologies and its strategic location near major international markets. LYB’s technologies will enable the production of differentiated polyethylene and polypropylene grades, including the Catalloy line of elastomeric polyolefins. Sipchem and LYB will also collaborate on exploring carbon management solutions, including low-emission technologies, to support both their own and the Kingdom’s goals of achieving net-zero emissions.

Sipchem will benefit from this relationship by leveraging the most cutting-edge, energy-efficient technologies, greatly contributing to its environmental goals and improving operational sustainability.

LYB stock has declined 24.2% in the past year compared with the 8.2% fall of the industry.

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LYB, on its fourth-quarter call, said that it remains geared up for the macroeconomic drivers that will eventually spur supply chain replenishment, increase demand for durable goods and aid a more widespread economic recovery. One sign of recovery is that North American domestic demand for polyolefins returned in 2024, following two years of declines. 

The company anticipates seasonal demand gains across most product categories in the first quarter. Interest rate cuts, inflation moderation and pent-up demand will also foster increasing consumption of durable goods, which is expected to boost the company's polypropylene and Intermediates and Derivatives businesses. Increased driving and summertime gasoline requirements are projected to result in usual seasonal increases in oxyfuels margins.

LYB’s Rank & Key Picks

LYB currently carries a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the basic materials space include Carpenter Technology Corporation CRS, Alamos Gold Inc. AGI and Axalta Coating Systems Ltd. AXTA

Carpenter Technology currently carries a Zacks Rank #2 (Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.7%. The company's shares have soared 206.4% in the past year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Alamos Gold, which currently carries a Zacks Rank #2, beat the consensus estimate in three of the trailing four quarters, while missing once. In this time frame, it has delivered an earnings surprise of roughly 7.9%, on average. AGI’s shares have rallied 104.8% over the past year. 

Axalta Coating Systems, which currently carries a Zacks Rank #1, beat the consensus estimate in each of the trailing four quarters. In this time frame, it has delivered an earnings surprise of roughly 16.3%, on average. AXTA’s shares have rallied 14% over the past year. 

 

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This article originally published on Zacks Investment Research (zacks.com).

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