LyondellBasell Industries N.V. (LYB - Free Report) announced that it signed a definitive deal with Liaoning Bora Enterprise Group (Bora) to expand in China through a 50:50 joint venture (JV).
Notably, LyondellBasell and Bora initially signed a memorandum of understanding on Sep 5, 2019, and declared their plans to form the JV during a ceremony in Panjin, China.
LyondellBasell — which is among the prominent chemical makers along with BASF SE (BASFY - Free Report) , Dow Inc. (DOW - Free Report) and Eastman Chemical Company (EMN - Free Report) — said that the combination of the operational excellence of Bora and the leading technology of LyondellBasell will enable them to manufacture polyolefin products efficiently and provide it to local customers.
Per the agreement, the partners will form a Sino-foreign JV — the Bora LyondellBasell Petrochemical Co. Ltd.
Notably, Bora LyondellBasell Petrochemical will operate a 1.1-million metric tons per year ethylene cracker and related polyolefin derivatives complex in Panjin, China. It is estimated to witness overall costs of around $2.6 billion. Reportedly, the complex will produce products that meet the rising demands of different industries in China such as transportation, packaging, building and construction, healthcare, and hygiene.
LyondellBasell will market the high-density polyethylene and polypropylene, manufactured using its Spheripol, Spherizone polypropylene technologies and Hostalen ACP polyethylene technology. The start-up is anticipated in the second half of 2020.
In the upcoming months, LyondellBasell anticipates making its equity contribution. Notably, the JV’s creation is subject to approvals from relevant government authorities, including the State Administration for Market Regulation’s antitrust review.
On the fourth-quarter earnings call, LyondellBasell expected to witness normal seasonal improvements in its businesses gradually through the second and third quarters of 2020. The company believes that a rebound in the industrial demand as well as favorable resolution of trade policies will provide a substantial upside for the industry. It believes that its foundations of cost management, operational excellence and disciplined capital allocation will continue to serve it amid the current challenging environment.
Considering the completion of its Hyperzone project and the expected benefits from the IMO 2020 regulations, the company expects its impressive track record of generating cash to continue.
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