JP Morgan Still Overweight On LYB

JP Morgan has published a research report on LyondellBasell Industries

in anticipation of the belief that the company's 4Q is historically weaker than the 3Q. In the report, JP Morgan writes "2010 was something of a mini-peak in EBITDA for LyondellBasell. Plant outages in the olefins industry in North America early in the year led to tight supply/demand conditions and above-average profitability and cash generation. The profits of its European operations were also elevated, with margins widening from tightness in the European butadiene markets brought on by the sharp shift away from naphtha-based feedstocks to natural gas liquids in North America, curtailing exports. It is too much to assume a repetition of such favorable conditions as a base case for 2011. As for the short term, 4Q:10 is typically a seasonally weaker quarter than 3Q:10. The refinery mix moves away from gasoline to heating oil. The U.S. and European olefins operations tend to experience lower operating rates as customers reduce inventory. Raw material costs too have been rising from higher oil and natural gas liquid values." JP Morgan maintains its Overweight rating and $32 price target. LyondellBasell Industries closed Friday at $26.86.