ab 27 March 2026 Global Research Chemicals Sector The regional playbook for the chemical industry Prices up, capacity adjustment, final volumes down? Earlier this week, we hosted a call for investors during which we discussed how the conflict in the Middle East is impacting the chemical industry in each region. Cyclical chemical companies are currently increasing prices to compensate for higher costs, and those in Europe and the US may benefit from capacity closures in Asia given the lack of feedstock suppl ...

ab Global Research owered by UBS Evidence Lab YES P 24 March 2026 EMEA Sustainability Middle East tensions: here we go again for Europe's energy? Middle East escalation raises the stakes for European energy markets Tensions in the Middle East raise European energy security concerns, with oil and gas markets responding to escalation risks. The UBS Energy team highlights increased complexity versus 2022 due to potential prolonged disruption in the Strait of Hormuz, which reinforces the importance of energy sy ...

ab 26 March 2026 Global Research Chemicals Sector Will higher prices lead to lower volumes? Focus on volumes rather than prices Over the last four weeks the three key questions we have been asked are: (1) Can chemical companies pass on higher energy and input costs?; (2) what product chains are most impacted? and (3) Will higher prices result in lower demand in the medium term? Looking at previous periods of fossil fuel inflation, we would initially expect rising chemical prices to offset higher energy and ...

Core Insights - India is set to significantly expand its polyolefins production capacity to meet rising domestic demand, reduce import dependence, and achieve self-sufficiency in key petrochemical sectors [1] Group 1: Capacity Expansion - India is expected to add a total of 126.87 million tonnes per annum (mtpa) of polyolefins capacity from 163 pre-construction and 69 under-construction projects between 2026 and 2030 [2] - This capacity addition will account for over 30% of the expected global capacity additions by 2030, positioning India as a dominant player in the global polyolefins market [2] Group 2: Demand Drivers - The demand for polyolefins in India is primarily driven by the increase in polyethylene and polypropylene usage, which are widely applied in packaging, automotive, construction, and agriculture [4] - Factors such as the rise of e-commerce, growth in food and beverage packaging, and sustained infrastructure investments are further accelerating the demand for durable and cost-effective polymer solutions [4] Group 3: Government and Industry Support - Government policies focusing on industrial development and reducing import reliance have spurred significant capacity expansions by domestic companies [5] - Reliance Industries is expected to lead in polyolefins capacity additions in India by 2030 [5]

Industry Overview - The chemicals sector is currently facing significant pressure due to weak global demand and high feedstock and energy costs, which are squeezing margins for petrochemical manufacturers [1] - LyondellBasell, a major player in the chemicals industry, has announced a surprise dividend cut, reducing its quarterly payout from $1.37 to $0.69, representing a 50% decrease [1] Company Profile - LyondellBasell is one of the largest global producers of chemicals and plastics, focusing on polyethylene, polypropylene, and refining, with a unique integrated model from refining oil to producing polyolefins [3] - The company operates over 25 plants worldwide and is recognized for its scale and technological leadership, particularly in polyolefins [3] Strategic Moves - LyondellBasell is advancing strategic plans, including the sale of four European units by Q2 2026 to simplify its portfolio and raise cash [4] - The company is also progressing on its MoReTec-1 plastic-to-fuel recycling plant in Germany, targeting a startup in 2027, while continuing workforce reductions of 7% in 2025 [4] - Management is focusing on cost savings and maintaining an investment-grade balance sheet, with little emphasis on large acquisitions or new ventures [4] Stock Performance - LyondellBasell's share price experienced a significant decline of approximately 27% over the past 12 months due to crumbling chemical margins and disappointing earnings [5] - However, the stock has rebounded by about 30% year-to-date as of late February 2026, driven by cost-cutting news and optimism that the industry downturn may be nearing its end [5] Valuation Metrics - LyondellBasell presents an attractive valuation scenario, with an EV/Sales ratio of 0.8, significantly lower than the sector median of 2.1 [6] - The company's dividend yield stands at 9.46%, far exceeding the sector's yield of 1.6%, indicating strong income potential [6] - Overall, LyondellBasell appears to be cheap to fair on various metrics, supported by its investment-grade balance sheet [6]

Core Insights - LyondellBasell reported a net loss of $738 million for the full year 2025, with diluted earnings per share of $(2.34), and a fourth quarter net loss of $140 million, or $(0.45) per diluted share [5][9][7] - The company achieved $800 million in cash improvements in 2025, exceeding its target of $600 million, and is targeting an additional $500 million by the end of 2026 [4][6] - EBITDA for 2025 was $1.1 billion, or $2.5 billion excluding identified items, reflecting the impact of challenging market conditions [9][5] Financial Performance - Sales and other operating revenues for Q4 2025 were $7.091 billion, down from $7.727 billion in Q3 2025 and $7.808 billion in Q4 2024 [1] - Full year 2025 net income excluding identified items was $563 million, with diluted earnings per share of $1.70 [4][9] - The company generated $2.3 billion in cash from operating activities with a cash conversion rate of 95% [5][32] Market Conditions - The petrochemical markets faced significant challenges in 2025, including global trade disruptions, falling oil prices, and increased capacity that outpaced demand growth [11] - North American polyethylene margins were compressed due to higher feedstock costs and trade issues, while European margins declined due to competition from imports [11][8] Strategic Initiatives - The company is focusing on operational excellence and safety, with record safety performance reported [6][12] - LyondellBasell plans to invest $1.2 billion in capital expenditures for 2026, emphasizing safe operations and ongoing projects like MoReTec-1 [13] - The Cash Improvement Plan has been expanded to target $1.3 billion by the end of 2026, reflecting a commitment to financial performance [16][4] Outlook - The company anticipates continued volatility in feedstock and energy prices entering Q1 2026, with expectations for improved polyethylene demand as seasonal trends unfold [14][15] - Operating rates are being aligned with global demand, with plans to operate various assets at approximately 75-85% capacity [15]

Summary of OMV Conference Call Company Overview - **Company**: OMV, an integrated oil and gas company with three main segments: energy, fuels, and chemicals [2][3] - **Stock Symbols**: OMVJF, OMVKY (OTCQX Best Market), OMV (Vienna Stock Exchange) [1] Core Business Segments - **Energy**: Focus on traditional exploration, production, gas marketing, and renewable energy projects, including geothermal energy [3][4] - **Fuels**: Strong retail and aviation presence, with plans to leverage these assets for growth [3][4] - **Chemicals**: Recent joint venture with ADNOC to enhance capabilities in the chemicals sector [4][16] Growth Plans - **Energy Segment**: - Significant project in Romania (Neptune Deep) expected to come online in 2027, contributing approximately EUR 500 million in clean operating results [12][9] - Plans to increase production from 300,000 barrels per day to 320,000-330,000 barrels per day by 2030 [9][13] - **Fuels Segment**: - Focus on optimizing the value chain and expanding retail and sustainable fuel opportunities [10][9] - **Chemicals Segment**: - Joint venture with ADNOC (Borouge Group International) expected to drive growth and synergies [16][28] Financial Performance - **Cash Flow**: Average cash flow from operating activities projected at EUR 6.5 billion from 2021 to 2024 [5] - **Dividend Policy**: - Historical dividend yield ranged from 10.5% to nearly 30% [5] - Introduction of an additional variable dividend starting in 2022 [5] - New policy to distribute 50% of dividends from Borouge Group International and 20-30% of cash flow from operations starting in 2026 [20][21] Strategic Adjustments - **CapEx Reduction**: Cumulative CapEx reduced from EUR 19 billion to EUR 4 billion until 2030, reflecting a shift towards traditional business and sustainable projects [11][19] - **Market Adaptation**: Adjustments made to align with changing market conditions and demand trends [6][10] Market Outlook - **Gas Demand**: Expected to remain a key driver in the energy transition, with a projected supply deficit in Europe [12][8] - **Chemical Market**: Anticipated long-term growth despite current oversupply issues, particularly in packaging, automotive, and renewable energy sectors [7][6] Competitive Advantages - **Chemicals**: The new joint venture positions OMV as a significant player in the global polyolefin market, with expected synergies of around $500 million [27][28] - **Fuels**: Strong integration between refining and chemicals, enhancing margins and cash generation capabilities [30][14] Risk Management - **Supply Chain Resilience**: OMV has diversified its crude and gas supply sources, reducing reliance on Russian imports [32][33] - **Leverage Management**: Maintaining a leverage ratio below 30% to support dividend policies and financial stability [25][17] Conclusion - OMV is strategically positioned for growth across its energy, fuels, and chemicals segments, with a focus on sustainable practices and shareholder returns. The company is adapting to market changes while maintaining a strong financial framework and competitive advantages in its operations.

Core Insights - Abu Dhabi National Oil Company (ADNOC) plans to distribute AED158 billion ($43 billion) in dividends across its six publicly listed subsidiaries by 2030, nearly doubling the total amount paid since its first IPO in 2017 [1][2] Company-Specific Highlights - ADNOC Distribution aims for AED18 billion ($4.9 billion) in dividends with quarterly distributions starting in 2026, and plans to expand its stations to 1,150 by 2028, expecting non-fuel retail transactions to double by 2030 [5] - ADNOC Drilling has increased its 2025 dividend floor by 27% to AED3.7 billion ($1 billion), with a cumulative AED25 billion ($6.8 billion) expected by 2030, and is utilizing AI to reduce non-productive drilling time by 20% [5] - ADNOC Gas announced AED90 billion ($24.4 billion) in dividends through 2030 and a new AED147 billion ($40 billion) gas supply agreement, with projected Q3 2025 results expected to rise 5% year-on-year despite weaker oil prices [5] - ADNOC Logistics & Services (L&S) raised its 2025 dividend floor to AED1.2 billion ($325 million) and expects total dividends of AED8.1 billion ($2.2 billion) through 2030, alongside a 50-year AED4.8 billion ($1.3 billion) port contract [5] - Borouge maintains a 2025 dividend floor of 16.2 fils per share, with total payouts projected at AED27 billion ($7.3 billion) through 2030, and is set to merge with OMV and Nova Chemicals to become the world's fourth-largest polyolefins producer [5] - Fertiglobe announced total shareholder returns of at least AED1.02 billion ($277 million) in 2025, a 25% increase from guidance, with AI-driven efficiency gains expected to add AED92 million ($25 million) in annual EBITDA by 2030 [5]

Core Viewpoint - Three major Japanese petrochemical companies, Mitsui Chemicals, Idemitsu Kosan, and Sumitomo Chemical, are merging their domestic plastics production operations to enhance competitiveness amid oversupply and competition from Chinese manufacturers [1][2]. Group 1: Merger Details - The companies have signed a memorandum of understanding (MoU) to merge their polyolefins operations, aiming to share costs and develop synergies in R&D, production, sales, and distribution [2]. - The merger will integrate Mitsui and Idemitsu's Prime Polymer Company joint venture with Sumitomo Chemical's polypropylene and linear low-density polyethylene (LLDPE) business, expected to be completed by April 2026 [3]. - The merger is projected to yield annual cost savings of approximately JPY 8 billion [3]. Group 2: Market Context - The decision to merge comes in response to a shrinking domestic market due to population decline and lifestyle changes, alongside oversupply from Chinese producers [4]. - Japan's Ministry of Economy, Trade and Industry estimates the country's total polyolefin production capacity at 5.8 million tons [4]. Group 3: Company Statements - Mitsui Chemicals president, Osamu Hashimoto, emphasized the necessity of strengthening the business base through collaboration with other companies [5].

Group 1: Industry Overview - Japan's largest chemical companies are combining parts of their plastics operations to strengthen their market position amid a struggling global market [1] - The plan focuses on polyolefins, which constitute about two-thirds of global plastic production and are essential in various manufacturing sectors [2][6] - Domestic demand for polyolefins in Japan has stagnated due to demographic shifts, evolving lifestyles, and environmental concerns [3][7] Group 2: Market Challenges - The global plastics industry is facing challenges such as oversupply, thinner profit margins, and increasing pressure to reduce single-use plastics [4] - Companies are seeking to streamline operations and secure long-term relevance in response to these challenges [4] Group 3: Strategic Moves - Mitsui Chemicals, Idemitsu Kosan, and Sumitomo Chemical aim to pool their plastic businesses to manage production more efficiently and reduce duplication [4] - The companies project annual cost savings exceeding eight billion yen (approximately US$54 million) and anticipate benefits from shared expertise in product development [5] Group 4: Importance of Polyolefins - Polyolefins are crucial to various industries, including packaging, automotive, construction, and consumer goods, with polypropylene and polyethylene being particularly significant [6] - In Japan, polyolefins represent roughly half of total plastic consumption, making them vital for manufacturers and everyday life [7]