The firm has identified specific stocks that stand to benefit from the North American shale gas advantage. Westlake Chemical Corporation (NYSE:WLK) has been given an Outperform (OP) rating, with an expectation of gains from a recovery in construction-driven chlorovinyls.
Similarly, LyondellBasell Industries (NYSE:NYSE:LYB) is also rated Outperform, with its appealing 6.43% dividend yield highlighted as an industry-leading figure. InvestingPro analysis shows LYB trading below its Fair Value, with a healthy P/E ratio of 12.6 and strong financial health score.
The company maintains a solid market position with $40.7 billion in revenue and a market capitalization of $26.6 billion. In contrast, Dow Inc. (NYSE:NYSE:DOW) holds a Sector Perform (SP) rating due to its higher anticipated capital expenditures between 2025 and 2027.
The report from RBC also touched on the dynamics of the ethane supply and demand (S/D) in North America, describing it as quite loose. With growing U.S. gas export capacity and power demand, an increase in North American ethylene capacity could lead to higher ethane demand.
However, this may be offset by a rise in gas production if prices reach the mid-$3 range. Ethane prices are expected to remain stable, within a 30-40 cents per gallon range from 2025 to 2027.
RBC's analysis indicates that strong associated gas production in the U.S. will likely support American integrated PE producers, allowing them to maintain a significant cost advantage of 15-25 cents per pound compared to their counterparts in China and Europe, who rely on naphtha or coal-based production. This advantage is estimated to be between 30-70%.
The firm has identified specific stocks that stand to benefit from the North American shale gas advantage. Westlake Chemical Corporation (NYSE:WLK) has been given an Outperform (OP) rating, with an expectation of gains from a recovery in construction-driven chlorovinyls.
Similarly, LyondellBasell Industries (NYSE:LYB) is also rated Outperform, with its appealing 6.43% dividend yield highlighted as an industry-leading figure. InvestingPro analysis shows LYB trading below its Fair Value, with a healthy P/E ratio of 12.6 and strong financial health score.
The company maintains a solid market position with $40.7 billion in revenue and a market capitalization of $26.6 billion. In contrast, Dow Inc. (NYSE:DOW) holds a Sector Perform (SP) rating due to its higher anticipated capital expenditures between 2025 and 2027.
In other recent news, LyondellBasell has announced a significant CFO transition set for 2025. The current CFO, Michael McMurray, will retire, and Agustin Izquierdo, the company's Senior Vice President, is slated to succeed him. This development is part of LyondellBasell's long-term planning and commitment to internal leadership development.
In financial news, LyondellBasell's third-quarter earnings per share were reported at $1.88, with an EBITDA of $1.2 billion. Several financial firms, including BMO Capital Markets, Piper Sandler, BofA Securities, Citi, and Jefferies, have made adjustments to their price targets for the company.
The company's strategic initiatives, such as the construction of the MoReTec-1 recycling facility and the planned closure of the Houston refinery, are proceeding as planned. LyondellBasell aims to unlock at least $600 million in annual EBITDA by the end of 2024, with a target of $1 billion by the end of 2025. These recent developments reflect LyondellBasell's strategic focus on disciplined capital allocation and optimizing operations to ensure long-term value.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.