Lyondell Houston FCC Restart imminent?

16.04.2020 -

LyondellBasell (LYB) could restart its fluid catalytic cracker (FCC) on the Houston Ship Channel as soon as today, the Bloomberg news agency has reported. The Netherlands-headquartered, US-managed petrochemicals group did not comment on this, however, when publishing preliminary figures for the 2020 first quarter.

In the event of a restart, the cracker would be operational for the first time since a fire damaged a reactor in mid-February. Bloomberg’s sources said no decision has been reached on whether the FCC will run at normal rates or if crude rates, which have been reduced since the fire, will be ramped up again to full, according to the report.

Looking at the current situation, LyondellBasell CEO Bob Patel said that due to the ongoing coronavirus crisis, the group is seeing lower demand for a number of products, and in response has temporarily idled production at several small plants in the Advanced Polymer Solutions segment, which supply automotive end markets and has “appropriately reduced production rates at other plants”

Lower oil prices and reduced demand for transportation fuels are affecting both volumes and margins in the refining segment and the Oxyfuels & Related Products business.  These impacts are expected to “adversely affect” results during the second quarter of 2020.

As the the full extent of the pandemic and the corresponding drop in oil price remains uncertain, Patel said LYB has developed strategies and is implementing measures to respond to a variety of economic scenarios.

To reduce operational and financial risk, the CEO said “selected growth projects,” which he did not specify and planned maintenance, including the recently reported slowing of construction activities on the PO/TBA plant in Houston, are being halted for now.

Acording to Patel, these actions, will reduce 2020 capital expenditure by about 20% against management’s prior guidance, from $2.4 billion to $1.9 billion currently.

Additionally, LYB expects that “aggressive inventory management combined with reduced pricing for raw materials and products will provide a meaningful influx of cash from working capital.“  The group said it is also accelerating initiatives to extend its leadership in cost efficiency.