LyondellBasell Industries N.V. LYB and Covestro announced to permanently shut the Propylene Oxide Styrene and Monomer (POSM) production unit (PO11) at the Maasvlakte site in the Netherlands. 

The Maasvlakte site is a joint venture between the two companies. This decision was taken after careful consideration of the continued pressure on Maasvlakte's profitability due to global overcapacities. High costs of European production and strong increase of imports from Asia also led to the move. The companies expect these factors to persist and as a result do not anticipate longer-term profitable production.

This decision prioritizes technology differentiation, circularity and attractive returns over the cost of capital, ensured through the optimum utilization of core assets. The working relationship between all stakeholders is expected to remain the same. LyondellBasell will carry out a process to safely shut down the asset between now and the end of 2026.

The LYB stock has lost 28% in the past year compared with the 13.1% decline of the industry.

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LYB 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 Zacks Rank and Key Picks

LYB currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Basic Materials space are Ingevity Corporation NGVT, Axalta Coating Systems AXTA and Carpenter Technology Corporation CRS. While NGVT and AXTA sport a Zacks Rank #1 (Strong Buy) each at present, CRS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ingevity’s current-year earnings is pegged at $4.45 per share. NGVT beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with the average earnings surprise being 202.9%.

The Zacks Consensus Estimate for Axalta’s current-year earnings is pegged at $2.51 per share. AXTA surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings surprise of 16.28%.

The Zacks Consensus Estimate for Carpenter Technology’s current fiscal-year earnings is pegged at $6.95 per share. CRS beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average earnings surprise being 15.7%. Its shares have soared 181.2% in the past year.

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Carpenter Technology Corporation (CRS) : Free Stock Analysis Report

LyondellBasell Industries N.V. (LYB) : Free Stock Analysis Report

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

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