LyondellBasell Industries N.V. (LYB): A Bull Case Theory

We came across a bullish thesis on LyondellBasell Industries N.V.  on Lasse’s Substack by Lasse. In this article, we will summarize the bulls’ thesis on LYB. LyondellBasell Industries N.V. ‘s share was trading at $54.19 as of September 3^rd. LYB’s trailing and forward P/E were 115.30 and 11.40, respectively according to Yahoo Finance.

LyondellBasell (LYB), a top-three global producer of polyethylene and polypropylene, benefits from being one of the lowest-cost operators in North America due to ethane sourced from shale gas. At its current price of $49, the market is discounting a prolonged period of depressed earnings, but history suggests spreads and utilization rates eventually revert to the mean. This mispricing provides a wide margin of safety, further supported by an attractive 11% dividend yield and several identifiable catalysts.

The company generates about 40% of its revenue from Olefins & Polyolefins (O&P) in the Americas, where cheap ethane underpins strong cost advantages. Another 25% comes from O&P in Europe and Asia, which, despite higher feedstock costs, benefits from proximity to regional demand and potential political catalysts. Intermediates & Derivatives contribute 20% of sales, led by the world’s largest propylene oxide and tertiary butyl alcohol (PO/TBA) facility in Texas, which provides steady margins, while the remaining 15% is derived from Advanced Polymer Solutions.

Although global polyethylene oversupply has weighed heavily on margins, with Northeast Asia PE-naphtha spreads running at roughly half their historical average, LYB’s U.S. ethane-based cost position remains firmly in the first quartile. Management has operated polyolefins at about 80% utilization to preserve value, and as industry rationalization and demand recovery materialize into 2026–27, spreads and utilization should normalize.

With a valuation of just 4.5x EV/EBITDA and 0.4x sales, plus resilience from its PO/TBA and APS segments, LYB offers compelling upside. A sale of European assets could unlock $1 billion for buybacks. In a bull case, shares could reach $117 (+150% with dividends), while the base case implies $84 (+83%). Even in the bear case at $39, downside is limited if dividends hold. LYB is best accumulated now and added on weakness, with potential for significant upside as spreads and utilization recover.

Previously we covered a bullish thesis on Eastman Chemical Company (EMN) by Necessary-Damage5658 in November 2024, which highlighted the company’s ability to gain share from export restrictions favoring compliant suppliers. The company’s stock price has depreciated approximately by 33% since our coverage. This is because the thesis didn’t play out amid weaker demand. The thesis still stands as compliance-driven trends support Eastman. Lasse shares a similar but emphasizes on LyondellBasell’s cost advantage and catalysts.

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Disclosure: None.