Key Stats for LYB Stock
- 1-Year Price Change for LYB stock: -31%
- $LYB Share Price as of Jan. 14: $52
- 52-Week High: $79
- $LYB Share Price Target: $49
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What Happened?
LyondellBasell (LYB) stock jumped over 6% on Wednesday, leading the S&P 500 as Wall Street turned more optimistic on U.S. plastics producers heading into 2026.
The rally came after Citigroup removed its 90-day downside catalyst watch on LYB stock, signaling that the worst may be over for the chemical giant.
Investors are now looking ahead to the company’s fourth-quarter earnings release scheduled for January 30, with expectations building that results could surprise to the upside.
LyondellBasell has been navigating a brutal stretch for the plastics industry. The company reported mixed second-quarter results in 2025, with overall sales and profit declining.
But there was a bright spot: polyethylene resin sales volume in the Americas grew 6%, showing resilient demand even in a tough environment.
The stock got hammered in August 2025, dropping 4% to 7% after those earnings. Analysts turned cautious, with some firms lowering price targets and positioning LYB stock more as a high-yield dividend play than a growth story.
The company’s dividend yield has climbed above 5%, attracting income-focused investors willing to ride out the industry downturn.
CFO Agustin Izquierdo recently laid out the company’s cash improvement plan at the Goldman Sachs Industrials and Materials Conference.
The plan targets $1.1 billion in cash generation over 2025 and 2026 through working capital management, fixed cost cuts, and slashed capital spending.
LyondellBasell has already reduced its 2025 capex budget from $2.2 billion to $1.7 billion and expects to spend just $1.2 billion in 2026.
The company is also making tough portfolio decisions. It’s selling European assets that have been a drag on profitability and focusing investment in regions with feedstock advantages, such as North America and the Middle East.
LyondellBasell shut down its Houston refinery and sold its ethylene oxide business as part of this cleanup.
On the growth side, the company is betting big on plastics recycling. Its MoReTec chemical recycling plant in Germany is on track to start up in 2027, with more than half of the 50,000-ton capacity already sold to brand-name customers.
The company expects recycled plastic to command a premium of roughly $500 per ton over virgin material, driven by regulatory mandates in Europe and corporate sustainability goals.
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What the Market Is Telling Us About LYB Stock
LYB stock’s surge suggests investors believe the plastics industry is finally stabilizing after two years of brutal conditions.
Several factors are driving the renewed optimism.
- First, inventory levels are normalizing. U.S. polyethylene inventory dropped from 45 days on hand in August to 40 days in November, according to the American Chemistry Council. Operating rates have also fallen to 83% from the mid-90s just two months ago, showing producers are matching supply with demand rather than flooding the market.
- Second, LyondellBasell is positioned to benefit as the cycle turns. The company avoided a $200 million hit from the Channelview turnaround that weighed on 2025 results. It also dodged a $60 million loss from winter storms last year. Just eliminating those one-time items should add $400 million to $450 million in 2026 earnings, according to CFO Izquierdo.
- Third, the U.S. remains the low-cost producer globally thanks to cheap natural gas. Even with ethane prices spiking to $0.30 per gallon recently, LyondellBasell’s breakeven point is in the high single digits. The company maintains a massive cost advantage over European and Asian competitors, and ethane storage sits at near-record levels of 80 million barrels.
The bigger question is when demand recovers. Packaging has held up well, but housing, automotive, and durable goods remain depressed.
Existing home sales haven’t budged, which matters because housing drives a big chunk of plastics demand. Izquierdo noted that the durable goods replacement cycle typically lasts 5 to 6 years, and we’re approaching the end of that period following the COVID buying spree.
If housing starts to recover and consumers begin replacing appliances and furniture bought during the pandemic, LYB stock could see a major tailwind.
The company expects demand to grow 3% annually, which is solid but not spectacular. The real upside comes if supply discipline holds and new capacity additions slow down.
China remains the wildcard. New polyethylene capacity continues to come online in Asia, though much of it runs at 65% to 70% utilization rather than at full capacity.
LyondellBasell’s joint-venture cracker in China is barely breaking even, underscoring the oversupply problem. But if China’s “anti-involution” campaign leads to more plant closures, it could remove 7 million tons of ethylene capacity from the global market.
LyondellBasell is also laser-focused on protecting its investment-grade credit rating. The company won’t sacrifice that status to maintain the dividend, according to Izquierdo.
If needed, the Board would recalibrate the payout to keep leverage at 2.5x debt-to-EBITDA through the cycle. That’s reassuring for bondholders but a reminder that the dividend isn’t completely safe if conditions worsen.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
