LyondellBasell to focus on US market amid ethylene capacity closures in Europe, Asia

Amid rationalizations and closures of ethylene capacity across Europe and Asia, which are expected to help offset substantial capacity additions in China, LyondellBasell will focus on growing its presence in cost-advantaged markets like the US, CEO and Executive Director Peter Vanacker said in the company's third-quarter earnings call.

Around 10% of global ethylene supply -- around 21 million metric tons -- is slated to close by 2028 in response to current weak demand and oversupply issues in the global market, Vanacker said in the Oct. 31 call.

"We're confident that these closures will help to partially offset the overhang from the substantial capacity additions underway in China," said Vanacker. "At LYB, we're leveraging the market trends that reinforce our strategy."

However, high availability of of ethane in North America means the US has one of the world's most competitive production costs for ethylene, Vanacker said.

LyondellBasell's Olefins and Polyolefins Americas sector saw increased profitability, Executive Vice President and CFO Agustin Izquierdo said, pointing to lower ethylene costs due to "co-product contributions, coupled with less downtime following the successful completion of turnarounds at our Channelview complex in the second quarter."

Oversupply dampens spot ethylene market

However, current oversupply in the market has led prices to consistently drop in the US ethylene market.

Platts, part of S&P Global Energy, assessed domestic spot ethylene prices at 17.625 cents/lb on Nov. 3, nearing multi-year lows seen in the second quarter; prices hit a two-year low on April 15, when Platts assessed spot prices at 15.375 cents/lb.

An ethylene seller said they though the market had reached its floor when spot prices were still above 18 cents/lb.

Weak prices have led to strong production rates across the value chain, from ethylene crackers to vertically integrated polyethylene production, according to market participants.

"There is room to move prices down for the current [ethylene] cost," a US-based polyethylene trader said.

A second trader said current ethylene-polyethylene margins still had room to drop polyethylene prices, as ethylene was very cheap.

PE demand remains robust

The company continues to see robust demand for polyethylene globally, particularly in the consumer packaging sector, Vanacker said.

Rising support from lower inflation rates could increase demand for durable goods, which could result in a more favorable housing market in the coming years compared to what was observed in 2025, he said.

"Government spending on infrastructure is one element that is driving demand," he added.

Vanacker also said polyethylene price increases are on the table, adding that such adjustments are appropriate considering current market dynamics.

"Polyethylene has grown," Vanacker said. "Exports continue to be robust based upon low delivered cost positions that manufacturers, including ourselves, have in the Gulf Coast. So we will continue to, of course, push for price increases."

LyondellBasell subsidiary Equistar Chemicals announced a $66/mt price increase on US polyethylene exports, affecting all grades of the company's branded PE resins.

"[It is] too early to say if we will be successful, but it gets a lot of attention, of course," Vanacker said.

Two other North American polyethylene producers have announced price increases for November, while confirming previously announced October hikes for North American buyers.

Even so, polyethylene market participants across the Americas maintain a bearish outlook for demand in November, with several expecting prices to drop even further from their current market lows.