LyondellBasell CEO said that PE, PP prices will continue to strengthen in the third quarter

LyondellBasell's chief executive said on Friday that demand and prices for polyethylene (PE) and polypropylene (PP) are expected to "continue to strengthen"
.

LyondellBasell CEO Bob Patel said on the company's second-quarter earnings call: "With all due respect, all forecasters have been underestimating demand over the past year.
.
.
we are now facing There’s also the global economic recovery and many durable goods that are lagging in demand — cars, appliances, furniture, etc.

”

"Inventories in many value chains are still low
.
So when you consider all these factors, it's hard to imagine weaker demand in the second half of the year,
" he added
.

As PE inventories begin to normalize, the company's overall polyolefin sales in the third quarter are expected to rise from the second quarter, with more products available for sale
.

"We're returning PE inventories to more normal levels
.
It's already higher than the first quarter, but still not above historical levels
.
Inventories are improving in both the U.
S.
and Europe,
" Patel said
.

However, he noted that LyondellBasell's PE inventories have not reached levels that would meaningfully boost U.
S.
exports
.

At the same time, customer inventory levels also appear to be low
.

"Customers don't seem to have much inventory, so when we've had some intermittent, unplanned outages recently, they've been very concerned
.
"

Discussions on U.
S.
PE contracts for July are underway, with the CEO citing a tight market, hurricane season, the U.
S.
industry's heavy maintenance schedule in the third and early fourth quarters, and more price hike announcements in August
.

LyondellBasell's PE orders in August were stronger than any other month of the year, largely because it had more volumes to sell
.

"We're still constrained (in PE), but at some levels, we have sufficient inventory .
.
.
in some regions, we're still at the lowest levels of contracts," Patel said
.

"The bottom line is that U.
S.
polyolefin sales in the third quarter should be higher than in the second quarter because we will be producing more and selling more,
" he added
.

Polypropylene market tightens

The CEO noted that inventories are tighter on the PP side than on the PE side as demand for durable goods - especially for cars and appliances - continues to strengthen
.

"Our PP supply is very tight and in most cases we are trying to get minimum volume contracts with customers
.
Some bottlenecks in car production are being eased, which will make the market even tighter
," Patel said
.

He added: "I think PP will remain tight for the rest of the year .
.
.
and propylene will continue to move higher
.
"

Earnings clues for the second half of the year

While third-quarter sales of polyolefins are expected to be higher than the second, it's unclear whether second-quarter revenue will break through to record levels
.

Most on Wall Street expect overall earnings in the chemicals and polymers sectors to slow in the second half of 2021
.

“We don’t make a judgment call on earnings, but I think our third quarter should be very strong considering the comparison of the third quarter to the second quarter
.
It remains to be seen whether the second quarter will be a record level, but it is definitely very strong, far from Much higher than the previous record
," Patel said
.