LyondellBasell looks to retreat from Europe

In another portent that the European petrochemical industry is shrinking, LyondellBasell Industries says it has launched a strategic review of its multibillion-dollar olefin, polyolefin, and chemical intermediates operations in Europe.

The review will be vast, encompassing all the European assets in the firm’s Olefins & Polyolefins and Intermediates & Derivatives business units. LyondellBasell says it will evaluate options such as selling assets, investing in plant improvements, restructuring, and closing facilities.

“At this stage, all options are being explored and no definitive decisions have been made,” a company spokesperson says in an email. “It is too early to anticipate any impact on our portfolio, organization or our employees.”

European assets comprise most of LyondellBasell’s Olefins & Polyolefins Europe, Asia, and International business. That unit generated $9.8 billion in sales and a loss of about $9 million before taxes in 2023. The business is the European Union’s largest supplier of polyolefins—specifically, polyethylene and polypropylene—with an 18% market share. Major sites are in Berre l’Étang, France; Frankfurt, Knapsack, Münchsmünster, and Wesseling, Germany; Ferrara and Brindisi, Italy; Moerdijk, the Netherlands; Tarragona, Spain; and Carrington, England.

The European intermediates business produces propylene oxide in Botlek, the Netherlands, and Fos-sur-Mer, France. It also runs a propylene oxide joint venture with Covestro in Maasvlakte, the Netherlands.

The company says the review will not change its plan to build a plastics recycling complex near Cologne, Germany, that will include a commercial-scale catalytic pyrolysis plant.

During a conference call with analysts late last month, LyondellBasell CEO Peter Vanacker noted the need for consolidation in Europe due to the small size and advanced age of the region’s ethylene cracker fleet. “There are about 40 crackers in Europe; close to half of them have a capacity that is lower than 500,000 tons per year,” he said.

The European industry has already started restructuring. Last month, ExxonMobil announced that it would close a small ethylene cracker and polyethylene and polypropylene plants in Port-Jérôme-sur-Seine, France, this year. Sabic said it would shutter one of its ethylene crackers in Geleen, the Netherlands. LyondellBasell has already indicated that it is closing a polypropylene line in Brindisi.

Steve Lewandowski, vice president of olefins and derivatives for the consulting firm Chemical Market Analytics by OPIS, says it is too early to tell what LyondellBasell will decide about its facilities. “Each one has its pluses and minuses,” he says. Some have the logistic advantage of being close to deepwater ports or refineries. The smaller of the firm’s two crackers in Wesseling, situated inland near Cologne, might be a candidate for closure, he says.

LyondellBasell will likely hold on to some assets in the region to maintain critical mass, Lewandowski says, especially if it grows its business in sustainable polymers.

Laurence Alexander, a stock analyst with the investment firm Jefferies, says in a note to clients that he sees the strategic review as part of an attempt by LyondellBasell “to streamline and focus on US-based assets.” Should the company decide to sell all the assets under review, the transactions would generate $7 billion to $9 billion, he writes.