Patel said the pandemic recovery is only just getting started, and while demand is increasing here in the U.S., Europe and Asia's reopenings are still ahead. Plus, the shortage in semiconductors has hampered multiple industries, from autos to appliances, and it may take another two years for those industries to catch up to demand.
LyondellBasell expects to be in a higher-price, higher-margin environment for at least another year.
When asked about this winter's storm and power outage in Texas, Patel explained that normally they have six days of advance notice when severe weather is coming to perform a clean, safe shutdown.
In the case of winter storm Uri, there was a sudden shutdown and power failure that damaged furnaces. The sudden freeze also burst pipes, he said, leaving the entire Gulf Coast scrambling to repair with outages that lasted 30 to 45 days for most facilities.
Finally, Patel said that the pandemic showed the best and worst of the plastic industry. He said so many products, like personal protective equipment and syringes, depend on plastic, but more must be done to close the loop on plastic waste to ensure that every item can find its way back to a recycling facility.
Let's check out the charts of LYB.
In this daily bar chart of LYB, below, we can see that prices have almost doubled in the last 12 months. Prices have just slipped below the rising 50-day moving average line. Trading volume has been "uneven" during the rally but the On-Balance-Volume (OBV) line has risen with the price action. The Moving Average Convergence Divergence (MACD) oscillator is weak and just barely above the zero line.
In this weekly Japanese candlestick chart of LYB, below, we see some signals suggesting a pullback. The weekly candles show a top reversal pattern and bearish confirmation. A reversal pattern with candles can mean either a decline or a sideways period.
The OBV line has been stalled the past three months and has diverged from the price action. The MACD oscillator turned flat and has crossed to the downside for a take profit sell signal.
In this daily Point and Figure chart of LYB, below, we can see that the charting software is "reading" the price action as bearish and is projecting a downside price target in the $95 area.
Bottom line strategy: The charts and indicators of LYB look bearish at this point in time. The Point and Figure chart suggests a decline to $95 and that could mean a test of the rising 200-day moving average line. Avoid the long side of LYB until this correction runs its course.