The ongoing conflict in the Middle East led to a revenue surge in the olefins and polyolefins (O&P) segment for LyondellBasell last quarter.
The company reported in its second-quarter earnings call Friday that its operating income in America in that segment jumped to just over $1 billion for the quarter, up from $142 million in Q1; the company posted an identical $142 million figure in Q2 2025. Year to date, domestic O&P income totaled $1.15 billion, up from $227 million a year ago. The segment’s EBITDA stood at $1.18 billion for the quarter, up from $327 million in Q1.
Driving that surge was an industrywide supply constraint brought about by the situation in Iran, CEO Peter Vanacker said. Aside from supply cost increases, the conflict has led to a loss of about 6 million tons of PE capacity, roughly 25% of the company’s total capacity in the Middle East. Much of that production won’t restart until at least early next year, he said, leading to price increases.
At the same time, demand for PE remains strong, leading to higher pricing than last year, according to Kim Foley, executive vice president of olefins and polymers. North American sales for the quarter were up 3.5%, with demand expected to stay high in segments including health care, infrastructure and packaging, which accounts for about 70% of the company’s PE demand. Polypropylene prices, meanwhile, are expected to climb another 10 cents per pound in August,
“This strong reliability and operational performance allowed us to capture favorable market conditions,” she said.
A change in the Chinese polypropylene market has also impacted the business. Where China did a lot of exporting in the second quarter, that nation is expected to do more importing in Q3, Foley said. And where much of the company’s product that goes through the Middle East would go to Chinese and other Asian markets, the shortfall there has been partially made up by US production.
US ethylene crackers operated at about 95% capacity in Q2, she said, but maintenance at two US facilities will impact how much product the company can deliver in the near future. The company’s site in Iowa is shut down now for repairs, while its Louisiana site is slated for a maintenance shutdown late in Q3.
“The longer the strait (of Hormuz) stays closed — the US can only partially close that gap,” Foley said.
The company’s O&P segment in Europe, Asia and international markets reported $158 million in operating income in Q2 after posting a $68 million loss last quarter. Divesting sites in France, Germany, Spain and the United Kingdom helped tighten the company’s market presence, Vanacker said, as did about $50 million in European emission credits the company sold.
Elsewhere in Europe, the company’s chemical recycling facility in Germany is proceeding as scheduled, Vanacker said. The MoreTec-1 facility should start up late next year, with most of its opening capacity already pre-sold. A second chemical recycling facility that had been proposed in Texas remains on indefinite hold, he said.
As a whole, LyondellBasell posted a Q2 net income of $559 million on $9.12 billion of sales and operating revenues; those are up from $125 million and $7.2 billion, respectively, the previous quarter. Diluted earnings per share rose from 38 cents last quarter to $1.71 in Q2.
A global workforce reduction of about 3,400 since the start of last year, including about 30% of the total management headcount, has helped keep costs in line. But Vanacker cautioned that continued market instability could impact the company for some time.
“Market normalization is expected to take beyond this year to happen,” he said. “The recovery time will be measured in quarters, not months.”
