OREANDA-NEWS. LyondellBasell said demand for olefins and its derivatives will tighten in the second and third quarters amid ongoing maintenance.

"As we look forward to the remainder of the second quarter, a significant amount of industry capacity will be offline in both the US and Asia for scheduled maintenance," LyondellBasell chief executive Bob Patel said on an earnings call today. "We believe this is tightening global olefin and polyolefin markets."

In April and May roughly 10pc of ethylene production capacity will be offline because of scheduled turnarounds. Some delayed cracker turnarounds extending into the third quarter will keep supply tight, Patel said. Recently, the company took down its 800mn lb/yr Corpus Christi facility for an ethylene expansion and maintenance, which it expects to be back online in 3Q.

US ethylene production operating rates US stood at 95pc in the first quarter and at 91pc in both Europe in Asia. Patel noted that CTO and MTO units in Asia, which supply about 2-3pc of global production, are providing extra incremental supply to the tight global market and will be increasingly relevant as a price setting mechanism in Asia in the future.

Following the second wave of US crackers coming online in 2018 the company expects a dip in operating rates. However, possible startup delays because of funding and economics issues could keep operating rates flat.

Following the recent coker fire at its Houston, Texas, refinery on 8 April, LyondellBasell continues to assess the damage and aims to be back online before the end of the second quarter. The fire is expected to have a $40mn-70mn impact on second quarter earnings. "During the second quarter our refinery will operate at reduced rates as we repair damage from an April fire," Patel said. The refinery is expected to run at 75pc.

LyondellBasell reported a profit of just over $1bn for the first quarter, up 30pc compared to the fourth quarter of 2015 and down 11.51pc from the first quarter of 2015. The company saw improvement in three of its five segments, including the olefins and polyolefins segments for the Americas and Europe, Asia and international as well as the intermediates and derivatives segment.

The sale of the Argentine Petroken subsidiary benefited the Americas olefins and polyolefins segment, in addition to improved polypropylene spreads. Headwinds included narrower polyethylene spreads and declining ethylene margins as inventories were built ahead of planned maintenance and expansion at the Corpus Christi, Texas, facility.

The intermediates and derivatives segments saw volumes improve for acetyls, isobutylene derivatives and ethylene oxide, as well as improved margin for styrene monomer on strong demand. Positive factors were offset by lower methanol and oxyfuel margins.

The refining segment registered an operating income loss of $30mn, down from a $101mn loss incurred in the fourth quarter of 2015, due to planned maintenance at the Houston refinery.