OREANDA-NEWS. Strong ethylene margins, which contributed to record earnings for LyondellBasell in 2014, will likely ease in 2015 along with lower crude prices, but near-term sales volumes and operating rates will remain strong as downstream buyers need to restock, chief executive Bob Patel told analysts today.

"When we think about the inventories in the value chain, they are relatively low," Patel said.

With crude prices falling during the past 60 days, downstream buyers destocked quickly to rid themselves of high-priced inventory, Patel said. Now "we think that has run its course," he added.

As crude prices begin to stabilize, Lyondell anticipates a period of inventory replenishment and a seasonal uptick in demand which will continue through April, Patel said, spurring demand for ethylene and polyethylene.

Despite the dip in global ethylene prices, Lyondell is moving forward with plans to boost overall ethylene capacity by 25pc by 2017.

"While we anticipate that margins will ease from the records of 2014 as crude oil prices decline, our positions remain advantaged," he said, referring to cheap ethane feedstock in the US.

The company completed an 800mn lb/yr expansion of its La Porte, Texas, ethylene cracker in 2014, and in September announced plans to add up to 550mn lb/yr of ethylene capacity at its Channelview, Texas site by 2017. The new Channelview project is on top of ongoing work to add 250mn lb/yr of capacity at the site. Another 800mn lb/yr of capacity is expected to come on stream at Corpus Christi, Texas, by the second quarter of 2016, following a first quarter 2016 turnaround at the facility.

Lyondell's fourth quarter profit fell 32pc from last year to \$793mn, including a \$455mn after-tax adjustment accounting for declines in value of its inventories. However, full-year 2014 profits rose 8pc versus 2013, in large part because of improvements in olefins and polyolefins.