LyondellBasell Industries N.V.LYB has officially started construction of the world's biggest propylene oxide (PO) and tertiary butyl alcohol (TBA) plant. The project is based in the Houston area. It is projected to cost $2.4 billion and startup is planned for 2021.
Once operational, the plants will produce 470,000 metric tons of PO and 1 million metric tons of TBA per annum. Per the company, the plant is built to cater to the rising global demand for urethanes used by consumers every day and clean-burning oxyfuels that will improve air quality around the world.
The company will construct two facilities on existing manufacturing sites to optimize product balances and realize synergies. The 140-acre PO/TBA plant will be built at the Channelview Complex in Texas, while an associated 34-acre ethers unit that will convert TBA to oxyfuels will be built at the Bayport Complex in Pasadena.
Notably, the new plant was chosen to be built at these existing locations along the Texas Gulf Coast to take advantage of their proximity to low-cost feedstocks along with necessary transportation infrastructure required to ship products to markets globally.
According to an analysis by the Greater Houston Partnership, the PO/TBA project is projected to generate tax benefits of more than $453 million for the county, community college, school district and other local taxing districts for a period of 10 year. Moreover, the Pasadena site is expected to create benefits worth $104 million while the Channelview site is expected to deliver $349 million in tax benefits.
Per the company, global urethanes demand is projected to grow 4-5% over the next five years, mainly driven by emerging economies in India and Asia and higher demand for consumer products. Also, the global TBA market is likely to rise 3% per annum between 2018 and 2028, as the governments and drivers in Latin America as well as Asia Pacific look forward to improve the quality of air with cleaner-burning gasoline.
Shares of LyondellBasell have gained 3.9% in the past six months, against the industry 's 4.2% decline.
Zacks Rank & Other Stocks to Consider
LyondellBasell currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the basic materials space are Huntsman Corporation HUN , Ingevity Corporation NGVT and Celanese Corporation CE , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Huntsman has an expected long-term earnings growth rate of 8.5%. Its shares have returned 21.8% in a year.
Ingevity has an expected long-term earnings growth rate of 12%. Its shares have surged 64.1% in the past year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have gained 18.4% in the past year.
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