Lyondell PO business resists propylene price hikes

By Patrick Raleigh UT On-line news editorHouston, Texas- Lyondell Chemical Co. Intermediate Chemicals and Derivatives (IC&D) segment has posted 'significantly improved' results in its propylene oxide (PO) and PO derivatives business. The unit also supplies TDI (toluene diisocyanate) MTBE fuel additives and styrene monomer. "Increased prices and 14 percent volume growth in PO and PO derivative products combined to increase operating results by more than $40 million," compared to the prior year first quarter, Lyondell said 22 April. The gains, it noted, were despite higher costs for propylene-its main raw material. Results in MTBE and styrene were relatively unchanged versus the year-ago period, while TDI results were impacted by lower margins, the Houston group also reported. Overall, IC&D's first quarter sales increased 11 percent year-on-year to $1105 million, while earnings (EBITDA) came in 62 percent higher at $86 million.Compared to the final quarter of 2003, a 20-percent rise in PO and PO derivative sales volumes led to significant improvement in results, according to Lyondell. However, Lyondell linked the higher PO sales to maintenance activities within the industry, and said margins in PO and derivatives were hit by rising propylene prices. Against that, the company said price increases in certain products were sufficient to offset these raw material price increases. Lyondell's TDI results were "relatively unchanged" in the first quarter, compared to the fourth quarter of last year, said the group statement.Looking at the group's prospects ahead, Dan Smith, president and CEO said: "Although we continue to face raw material price uncertainties, improving industry conditions have enabled us to deal with this volatility more successfully than during the past three years … If we continue to experience solid global economic growth and see some stabilization of energy prices, I believe that we could enjoy very positive conditions later in the year."