Hello, and welcome to the LyondellBasell teleconference. At the request of LyondellBasell, this conference is being recorded for instant replay purposes. Following today's presentation, we will conduct a question-and-answer session. I'd now like to turn the conference over to Mr. David Kinney, Head of Investor Relations. Sir, you may begin..

Thank you, operator. Hello and welcome to LyondellBasell’s second quarter 2021 teleconference. I'm joined today by Bhav Patel, our Chief Executive Officer; and Michael McMurray, our Chief Financial Officer.

Before we begin the business discussion, I would like to point out that a slide presentation accompanies today's call and is available on our website at www.lyondellbasell.com/investorelations. Today, we will be discussing our business results while making reference to some forward-looking statements and non-GAAP financial measures.

We believe the forward-looking statements are based upon reasonable assumptions and the alternative measures are useful to investors. Nonetheless, the forward-looking statements are subject to significant risk and uncertainty.

We encourage you to learn more about the factors that could lead our actual results to differ by revealing the cautionary statements in the presentation slides and our regulatory filings which are available at our Investor Relations website.

Additional documents on our Investor Relations website provide reconciliations of non-GAAP financial measures to GAAP measures together with other disclosures including the earnings release.

Finally, I would like to point out that a recording of this call will be available by telephone beginning at 1:00 PM Eastern Time today until August 30 by calling 877-660-6853 in United States and 201-612-7415 outside United States. The passcode for both numbers is 13721413.

During today's call, we will focus on second quarter results, the current environment, our near-term outlook and provide an update on our growth initiatives. Comments made on this call will be in regard to our underlying business results in some cases, excluding the impact of lower cost or market inventory adjustments or LCM.

With that being said, I would now like to turn the call over to Bhav..

Thank you, Dave. Good day to all of you. We appreciate you joining us today as we discuss our second quarter results.

Before we begin with the business discussion, I would like to acknowledge the sadness we are feeling throughout the LyondellBasell family after our tragic incident this week at our LaPorte facility, which resulted in the death of two contractors and injuries to several additional contractors and employees.

Every day, we work diligently to ensure that the colleagues, the friends and most importantly, the families of our employees and contractors never have to receive the calls that went out last Tuesday evening, notifying them of the loss or injury of a loved one.

Our investigation is underway and it will be sometime before we reach a conclusive determination regarding the cause of the incident. Our sincere condolences go out to the families of the two men lost in the incident and we pray for a fast and full recovery for all of the injured..

Thank you, Bhav. Good morning, everyone. Please turn to Slide Seven and let me begin by highlighting our strong cash generation, which has been enhanced by our recent growth investments. In the second quarter, LyondellBasell generated $1.9 billion of cash from operating activities that contributed towards the more than $4 billion.

Our free operating cash flow yield has been 10.1% over the past four quarters and free operating cash flow for the second quarter, improved by more than 80% relative to the second quarter of 2019. We expect continued improvement of our last 12 months cash flow performance as we move forward through each quarter of 2021.

Let's turn to Slide Eight and review the details of our cash generation and deployment during the second quarter. As I've mentioned, during previous calls, a strong and progressive dividend plays a fundamental role in our capital deployment strategy.

In the second quarter, we expressed our confidence in our outlook by increasing the quarterly dividend by 7.6% to $1.13 per share. We continue to invest in maintenance and growth projects during the quarter with approximately $430 million in capital expenditures.

Strong cash flow supported debt repayments of $1.3 billion, bringing our year to date debt reduction to $1.8 billion. We closed the second quarter with cash and liquid investments of $1.5 billion. Last week S&P global ratings recognized the improvement in our metrics by upgrading our credit ratings and indicating a stable outlook.

We expect that robust cash generation and an anticipated tax refund will enable continued progress on our goal to reduce our net debt by up to $4 billion during 2021 and further strengthen our investment grade balance sheet.

One modeling item of note, our original full year net interest expense guidance of $430 million did not include extinguishment cost associated with our accelerated debt repayment program. As a result, our 2021 net interest expense will likely exceed this prior guidance. Please turn to Slide Nine to review our quarterly profitability.

In the second quarter of 2021, LyondellBasell's business portfolio delivered record EBITDA of $3 billion. This was an improvement of more than $1.4 billion relative to the first quarter. Our results reflect robust demand for our products driven by the recovery global economy and our growth investments..

Thank you, Michael. Let me summarize our view of current conditions and the outlook for our businesses with Slide 17.

In the near to midterm, we are still in the early stages of the global economic recovery and despite the challenges from variance continued progress with vaccinations and reopening should continue to support robust demand and margins for our products.

Pent up demand is tangible and consumers have ample liquidity to drive purchases of both services and manufactured goods as reopening proceeds globally. Low inventories due to supply constraints and logistics disruptions will only serve to extend tight market conditions.

Downstream customer backlogs and persistent demand bode well for continued strength in LyondellBasell's order books. In polyethylene, strong US and Latin American demand has overtaken volumes that previously flowed from the US to export markets in Asia.

As logistics constraints subside and US PV exports to Asia resume, producers will need to refill a depleted supply chain of 500,000 tons or more that is not fully captured in industry statistics. In North America, we expect markets for PV and PP will remain tight into next year.

Higher vaccination rates are expected to improve global mobility over the coming year. The return of international travel will drive further recovery and transportation fuel's markets to increase profitability for our Oxyfuels and refining businesses providing additional earnings upside for LyondellBasell. Let me close with Slide 18.

Our second quarter results provide clear evidence of LyondellBasell's progress and maximizing cash flow performance through all stages of the business cycle. We are leveraging our leading and advantage positions across a larger asset base to deliver results that far exceed our previous benchmarks.

In today's strong markets, our second quarter EBITDA results are 38% higher than our previous record. By 2023, we expect that our recent growth investments will provide an additional $1.5 billion of mid cycle EBITDA earnings capability relative to 2017.

Our value-driven growth investments should propel stronger performance in a variety of business environments. Our prudent financial strategy remains consistent. We have increased our quarterly dividend and remain confident in our capability to deliver on this commitment throughout business cycles.

We are prioritizing de-leveraging and our rapid progress on debt repayment will serve to further strengthen our investment grade balance sheet. Capacity expansions are coming online in our industry during a period of extraordinary demand growth and enabling an orderly absorption of this new capacity into the market.

Further investments in petrochemicals are proceeding at a manageable rate and recent project cancellations and delays demonstrate capital discipline by market participants. At LyondellBasell, we're focused on providing leadership for our industry to establish a more sustainable feature with new circular business models.

We will increase our capacity to serve the growing market demand for circulum branded polymers produced from recycled and renewable feed stocks as we work toward our goal of annually producing two million tons of these products by 2030. LyondellBasell is capturing the strength of a rebounding economy.

We aim to extend our track record of robust returns from our growing global business portfolio and look forward to updating you on our progress over the coming quarters. We're now pleased to take your questions..

Thank you. At this time, we'll be conducting a question and answer session. If you would like to ask a question. Our first question comes from Jeff Zekauskas with JPMorgan. Please proceed with your question..

Thanks. Thanks very much. At the end of the first quarter, Bob, you talked about how low your inventory is in Europe. Maybe yoU.Said they were 11 days.

Can you talk about where your inventory is -- inventory days are now and secondly, have US contract polyethylene prices for July settled, and if they have settled, what was the change?.

All right, good morning, Jeff. Thank you for that question. On inventory, we are starting to restore inventories back to more normal levels. They're better than they were or higher than they were back in Q1, but still not above historic levels and we continue to be hand to mouth on several grades, both in the US and in Europe. They are improving.

One other comment about an inventory is that in the U.S in particular, we're not positioned to do a lot of exports. That will require another level of inventory, which we don't have today. So if the inventory situation is improving, not back to historic levels on July contract discussions are still ongoing. Markets are very firm tight.

We still have hurricane season in front of us. We have a heavy maintenance schedule in the industry in Q3 and early Q4 in the US. So contract discussions are ongoing and there are more announcements out there for August..

Thank you. Our next question comes from Steve Byrne with Bank of America. Please proceed with your question..

Yes. Thank you. I'm curious as to how much visibility do you have about inventory levels at your customers and whether, their inventory levels are back to normal or still low or maybe they're starting to run them down.

Just curious on that and is there anything structural that precludes your US customers from looking to the international market to fulfil their demand? Is there something that precludes them from really doing that whether it's product quality or the type of material they need from converters, anything that you can comment on that?.

Sure. Steve, good morning. First of all, inventory at customers, it's difficult for us to have exact numbers on that, but I can tell you that when we've had some intermittent unplanned outages recently, we they seem to not have much inventory because before if they're too late, they're very concerned.

So anecdotally, I would say there's not much inventory downstream, especially because there's this anticipation of pricing leveling off as well and we've been talking about that for months now and prices continue to rise because of the persistent demand strength.

So, all of that says to me customers are not holding an extraordinary amount of inventory when we're late they call us right away. Secondly, your question about imports, historically, and even today imports because of long lead times and generally only the more generic grades are available for import. The imports tend to be limited.

Furthermore if you think about today, transportation costs, shipping costs and container costs from Asia to the US basically wipe out the entire arbitrage that exists today in polyethylene price. For example, shipping cost, including container cost is three to four X, what it used to be pre pandemic.

So all of that limits the amount of imports that really come in and the customer's ability to import product..

Thank you. Our next question comes from P.J. Juvekar with Citi. Please proceed with your question. .

Hey, good morning, Bob. I hear your commentary about stronger for longer, but even if one takes a view that this tightness is temporary, maybe lasts for six months to a year ,the free cash flow you will get is real. You almost get $3 billion to $4 billion of free cash flow during this period of tightness.

What would you do with that free cash flow? Would you either go towards sort of green projects like CCS or CO2 recycling or hydrogen projects, or B, would you rather go into M&A opportunity? There are a lot of midcap companies in chemical industry that would fit well with your IMD or APS segments.

How do you think about allocating this extra free cash flow?.

Excellent. Thank you for that question, PJ. There's a lot there. First of all, you're actually right. There's this debate of where we are in the cycle and whether we're at elevated levels or not. I think there's a couple of points to be made. One is that what's lost in this debate is that LyondellBasell's mid cycle earnings have stepped up.

Through the cycle earnings power is up by a $1 billion to $1.1 billion so far in 2021 compared to 2017. And when we have a full year of PO/TBA production in ‘23, that'll add another $400 million to $500 million of it's EBITDA to our earnings power.

I think that's very important in terms of through the cycle cash generation ability to pay dividend, fund buybacks in the future all of that. We must not forget that while we continue to debate, are we at peak or not? Secondly, in terms of capital allocation, our first priority is to continue to pay down debt.

And Michael talked about that in the prepared remarks about our targets of up to $4 billion of debt reduction this year. We think that's very achievable. We'll continue to update everyone on that.

Once we're to that point where we've taken out $4 billion of debt, then I think the whole range of sort of alternatives come into play, continue to strengthen the dividend, think about buybacks, look for deep value, M&A. I think we've demonstrated that that's our focus and stay within the lanes where we swim today. So we'll continue to look for that.

In terms of green projects, we're still studying where we can get the most bang for the buck, if you will and I suspect that our CapEx will reflect some of those green investments later in the decade, probably 2025 onwards and I would suspect that will be for a total in the second half of 2021, somewhere in $2 billion to $3 billion range in terms of CapEx in the second half of the decade, not annually, but total for the second half of the decade..

Thank you. Our next question comes from Bob Koort with Goldman Sachs. Please proceed with your question..

Thank you. Good morning. Bhav you've mentioned that the freight rates crowd out in force in the US market. I assume those freight rates are a friction point on exports. So you had mentioned that maybe there could be more demand than we've seen and I presume part of that would be into the export markets.

So how do you think it all plays out? I was looking this morning, it looks like export prices are now $0.15, $0.20 less than domestic prices for well molding polyethylene. So you have to give in on price in order to move that volume as inventories rebuild due to maybe offshore prices have to come up towards US prices.

How do yoU.See that dynamic playing out?.

Yeah. Great question, Bob. So first of all, historically, even pre-pandemic freight rates coming from Asia to the US were always higher than flag rates going out of US to Asia because of the backhaul sort of concept on product going out.

Typically we would pay about $40 per ton excluding packaging, just freight to get polyethylene for example, from the Gulf Coast to the Asia. Today, that's probably double. It's not really limited in terms of exports. Frankly, we just don't have enough production today to be able to export spot volume to Asia.

We are doing some exports that are more contract oriented down to Latin America. We have some contract commitments, even in Asia that we continue to fulfil, but we're not quite back in that mode. Certainly as a company, we're not a where we're looking for spot volume going to Asia.

And I think as, as the year progresses and some of these bottlenecks around shipping relieve themselves, I don't see that as being a challenge and over time as that happens, I think the price in China should start to come up as their ability to export finished goods improves.

And I think the world will kind of equilibrate with China prices coming up as these shipping constraints relieve themselves..

Thank you. Our next question comes from Mike Sison with Wells Fargo. Please proceed with your question..

Hey, good morning. Nice quarter guys. When I think about your profitability heading into the second half of the year, given I think your outlook tends to be little bit more positive than the consultants.

Do you think your margins will continue to improve sequentially?.

Yeah. Good morning, Mike. So first of all, with all due respect to all of the prognosticators they've underestimated demand consistently over the last year and my comment about demand being stronger for longer, and I think that's really played out. And we've been talking about that since the last earnings call. I think that'll continue.

If you think about it, we still have global reopening in front of us. So many durable goods that are on back order automobiles, appliances furniture I could go on and on many value chains are still very low on inventory, down through finished goods. So that needs to get rebuilt. And then for us as a company will benefit as mobility increases.

So, when you think about all those factors, it's hard to imagine that demand would weaken in the second half of the year. Now we do have some other forces at play. We have feed stocks with coming up with it, with natural gas in the US coming up.

Frac spreads haven't really opened up, but feedstocks are coming up but my sense is in this kind of market environment, there's some ability to pass some of that through.

As a company, we have some planned and unplanned outages here in Q3? So, we don't guide on earnings, but if I think about Q3 versus Q2, we should have another very strong quarter in Q3.

Remains to be seen if we can get to a record level like we did in Q2, but certainly very strong and well above prior records, that's how yoU.Should think about Q3 and in Q4, we'll have some seasonality, but still from a historic perspective, Q4 will be well above historic Q4 levels.

So, hope that helps you in thinking through second half earnings for us..

Thank you. Our next question comes from Kevin McCarthy with Vertical Research Partners. Please proceed with your question..

Good morning, Bhav, I was wondering if you could update us on your outlook for the propylene chain and specifically speak to polypropylene inventories. I think you mentioned a few times that you're seeing a substantial order backlog for durable goods. Looks like PP producers ran pretty hard in the quarter.

How do yoU.See inventories on that chain and what implications do yoU.See for polypropylene prices versus monomer as we move forward through the back half of the year?.

All right, thanks, Kevin. So I see continued strength and I think as durables strengthen and especially auto because, that is one of the larger end uses for polypropylene. For us inventories are still low and they're actually tighter on polypropylene than they are on polyethylene.

We're kind of hand to mouth and we've had the lightning strike at Lake Charles, which set us back about a week or a week or two and so we're very tight on polypropylene and for the most part, we're managing to contract minimums with our customers.

As some of these bottlenecks relieve themselves for auto production, that's just going to make the market tighter and then appliances, those are big draws on polypropylene.

So, my outlook is that polypropylene is going to be tight through the rest of the year and by the way, the other benefit that we're waiting to see is in APS segment with the auto sector being sluggish because of the chip shortage.

We're not seeing the full earnings power of APS just yet and that's a very significant part of the APS segment our service of the automotive market. So I think polypropylene is going to be very strong. I think propylene is going to be a persistently high for the foreseeable future..

Thank you. Our next question comes from Frank Mitsch with Fermium Research. Please proceed with your question..

Yes, good morning. And let me offer my condolences as well. Looking at the business I was struck by the comment that your August order book on polyethylene is the best that it's been in any other months of the year.

How anomalous is that? And do you have people on 100% order allocation? How are you dealing with it? As I think about your volumes, the second quarter polyethylene volumes were basically flat with the first quarter, what are your thoughts on the third quarter polyethylene volumes? If you could dig into that a little bit, that'd be helpful..

Sure. Frank, and thank you for your words of support. On the August order book comment, I think it's just an indication of us having more volume to sell. We've been constrained all year and, and as we try to inch our inventory back to more normal levels, we can with confidence take on more orders. We're still constrained.

So we're not selling polyethylene unconstrained across the system, but there are some grades now where we have enough availability that if a customer wants product, we're able to do it, but it's really great by grades. In some areas we're still a contract minimums.

And so, bottom line is Q3 US polyolefin's sales should be higher than Q2 as we produce more and sell more and I hope that that trend continues..

Thank you. Our next question comes from our Arun Viswanathan with RBC Capital Markets. Please proceed with your question..

Great. Thanks for taking my question. Congrats on the results. I just wanted to get your thoughts a little bit more on I&D. Looks like you had a pretty strong performance there. How would you kind of judge the asset sales chain as well as propylene oxide over the next, say two to four quarters? Yeah, thanks..

So on this propylene oxide demand is extremely strong. Margins are very, very strong there. We could sell more if we had it frankly. I expect that to continue again, coming back to my earlier comments about furniture shortages that play right into PO also automotive because the seat cushions and all that come from euro.

So we see a really good runway for propylene oxide going into the second half of the year and into even next year. Frankly, if the rate command is growing when our plant starts up, we have a decent chance at absorbing a good bit of it right away. And I think it will come on when it's needed.

Likewise, an asset continued strength from housing, yoU.See the paint market being very strong because of home improvement and people buying houses and refurbishing them and so on. So I don't see a letup on either of those.

Adding to that Arun, our Oxyfuels business has recovered nicely as we see more mobility around the world and still Europe is in largely in lockdown and I think the best profitability in Oxyfuels is still in front of us and I think that'll help offset any moderation in the O&P area as we see the fuels improving and in Q3, Q4 and into next year..

Thank you. Our next question comes from Vincent Andrews with Morgan Stanley. Please proceed with your question..

Thanks and good morning. Bhav, wondering if you could give us an update on the molecular recycling initiatives in the Italy plant..

Sure. Vince. It's coming along very well. We're about to commission a semi works plant here in September. And that'll be the next stage of development of that technology, where we continue to be very encouraged by the results we've seen at the bench scale.

And we'll know within a couple of months what the bottlenecks are in that technology and my hope is that later in '22 and into '23, we're prepared to make an investment decision on a medium scale molecular recycling plant, which could be in production in '25 plus or minus..

Thank you. Our next question comes from Hassan Ahmed with Olympic Global. Please proceed with your question. Good morning,.

Bhav, wanted to revisit some of your comments about the I&D segment. Obviously, similar to most businesses, 2020 was a bit rough, but, nice bump up, back to correlate the runway to $600 million in EBITDA.

And historically you've talked about the I&D segment being a pretty steady and as I sort of sit there and think about that and the steadiness of the earnings trajectory and some of the comments you made from the sounds of it, it seems that maybe, the earnings on a quarterly basis is maybe even north of $700 million on a steady eddie.

So call it almost $3 billion and steady eddie EBITDA and from that from that segment.

Is that the right way to think about it?.

Well, one thing that we didn't experience in the past was a complete shutdown of global economy and that caused more volatility in I&D because of the Oxy fuels. Typically it's been very stable. I think today with the assets we have, yoU.Should still think about I&D as a $1.5 billion plus or minus 15%.

And then as we add to PO TBA project, we should be able to be consistently above $2 billion in I&D with upside when markets are strong, like they are today and that's how yoU.Should think about earnings power.

$1.5, maybe, plus to $1.7 in that range plus or minus and then after the PO TBA project mid cycle consistently above $2 billion and in periods like this well, well above,.

Thank you. Our next question comes from David Begleiter with Deutsche Bank. Please proceed with your question. Thank.

Bhav. Just on refinery, do you think it can still be breakeven in Q3. And give me a comment about, be potentially profitable in Q4. How do you think about that business in 2022? Thank you..

Thanks David. So on the refinery, I think we need a reset and rens frankly that would help a lot to get to breakeven. And as mobility increases, I think we have a good shot of Q4 being in the black. It really depends on how this variant plays out there.

As you think about our company that most parts of the company have shown very good resilience through the pandemic. In fact, strengths in areas like packaging the refinery has been challenged not only from a demand standpoint, but the light heavy differential narrowing. I think we can get too close to break even here in Q3.

We need a rens reset and in Q4, certainly we should be in the black..

Thank you. Our next question comes from John Roberts with UBS. Please proceed with your question.

Income from equity investments, doubled sequentially from the first quarter.

What's the EBITDA equivalent of that $285 million in equity income and maybe you could unpack for us a little bit, the sequential improvement between Sasol Bora and POJ please?.

Well, there's a lot there, and I'll probably ask you to follow up with Dave afterwards on some of the details. But let me just talk about a couple of the JVs.

So first of all, our Saudi JVs remembered that the cracker is an ethane cracker and that's a big driver and as oil price rises and as prices go up globally on polyethylene that JV tends to do very well.

That's a big contributor to the increase in earnings from the existing JVs and then the Sasol JV has done extremely well with the merchant ethylene that we sell from that JB and the ethane to polyethylene cash margins being where they are today.

Between operating cash flow and the expected tax refund on that investment, we expect to recover our get back up half of our investment in 2021.

So that's been a big driver and then incrementally all the other JVs has contributed to the improvement, but I would say the Saudi JVs and the Sasol JV were probably the largest contributor in the increase and the Sasol JV being brand new that was not in our P&L for most of last year..

Thank you. Our next question comes from Jaideep Pandya with On Field Research. Please proceed with your question..

Just a question really, around your volumes in Q2, what was sort of constraining you because if I look at polyethylene polypropylene, both in the U.S and Europe volume in the quarter and then just a little bit more longer term question when we think about your businesses, which are your businesses, which you think have sort of room to grow in spreads as well as volumes as the economy reopens in 2022 and 2023 and, people drive more, fly more, etcetera.

Thanks..

So Jaideep, first of all on volume constraints in Q2, remember we still had some pleas impacts early in Q2 here in the US and then, we've had some unplanned downtime in the polymers. But sequentially, we were able to build a bit of inventory and believe we, we had pretty good production.

So I think the headline there's a lot underneath the details in which product lines were higher or lower. My sense is that the fuels part of the business was still a bit weak in Q2, but the polymers and the PO was very strong in production in Q2.

And certainly up compared to Q1 going forward, you asked about which product lines have the most potential for spread and volume improvement indefinitely it's in fuels.

I do think there's incremental potential in spread improvement and in, in the polymers area globally, but where I think we have the greatest opportunity for a step up in volume and, and spread is in Oxyfuels and in gasoline and distillate here in the U.S and then we hope that will be very meaningful as we work through Q3 and certainly into Q4..

Our next question comes from Matthew Blair from Tudor, Pickering & Holt. Company. Please proceed with your question..

Good Morning, Bava. Sorry to hear about the accident. I had a question on the renewable side, so you have several initiatives on the table. I think it's probably fair to say that Lyondell is one of the leaders in this area, but at the same time, investors have a hard time gauging just how meaningful these projects might be for such a large company.

So could you help put that into perspective as you look at like CCP or more tech or circulation what are you most excited about and, and what is the potential to really move the needle for you?.

Sure.Thank you, Matthew. And I appreciate your words of support. Yeah, I mean, that's I have these conversations with investors often and that this is going to build momentum over the decade.

First of all, we called that our goal is to have about -- about 2 million tons of recycled or renewable based plastics by the end of the decade, by, by 2030, we think that'll probably represent about 15% of our production.

I mean, think about our work on MarTech, as well, as on circularity on QCP mechanical recycling and the circulum brand in particular, that's all part of our polyolefin franchise and given our, our capabilities in research and development application development we're leading in this area in circularity and we'll continue to it's just part of the polyolefin businesses, how I was thinking about it.

Not, not some separate significant step up in earnings, but it's part of making the polyolefin business work. Long-Term.

Thank you. Our final question comes from Jonathan Elvers with JP Morgan. Please proceed with your question..

Hi, thanks. Thanks for taking my question. Really appreciate the focus on de-leveraging and the very good progress you've made there year-to-date. And I guess, as it relates to the $4 billion net debt reduction target that you've referenced is a net target.

I'm curious, kind of how you think about paying down for debt versus just building cash on the balance sheet and in the case of the former possibly where within the debt capital structure you think about targeting? Thanks..

Yeah. I'll ask Michael to respond to that question..

Sure. Great. So, so great question, may be just a couple of points. What I, what I would say is that our overall maturity profile is in great shape, especially after all the actions that we took in 2020.

Actually our weighted average maturity is about 16 years as we sit here today and we don't have any significant near-term maturities on a, on a year-to-day basis we've taken out $8 billion that was done through our term loan and some of our 2023.

We have the ability to further de-leverage in the second half of the year with the $650 million of callable notes that we have as well. So that's -- that's obviously something that is in a prime focus. And then lastly we typically have a bit of commercial paper that's outstanding that we can, that we can use to deliver.

And then we're contemplating potentially doing a tender as well again in the second half of the year. And then just from a from a targeting point of view kind of through the cycle our total debt to EBITDA target is about one and a half to two and a half times.

And so quite frankly, as we're progressing through this year, we're in, we're in great shape from that perspective, as well as evidenced by the upgrade that we received a week a week ago from S&P..

Great, thank you, Michael and Jonathan let's see how the year progresses when we get this $4 billion put away. Let's let's continue the dialogue on capital allocation. I think we've proven over the years that we've been very disciplined in this area, and you should continue to expect that from us..

Thank you, ladies and gentlemen, we have reached the end of the question and answer session, and I will now turn the call over to Bhavesh Patel for closing remarks..

All right. Thank you, Alex. In Q2 2021, LyondellBasell has demonstrated its turbocharged earnings power in a very strong market environment and a larger company going forward.

We expect demand to remain strong is as mentioned throughout this call with reopening still ahead of us in many parts of the world backlogs and many product areas that has to be relieved, inventory restocking and increase mobility.

We had lined Elvis LR really well positioned to significantly strengthen our investment grade balance sheet, pay down debt and to capitalize on a stronger for longer market environment. The main points that I hope investors got out of the call today is that we've whether where we can debate about where we are in the cycle.

LyondellBasell have increased our earnings power through the cycle by more than $1 billion to date compared to 2017. And after our PO/TBA project is online, we'll add another $500 million of EBITDA in earnings power. All of that should provide for very robust cash flow, which will deploy in a very disciplined way to the benefit of our shareholders.

Thank you for your interest and hope you all have a great weekend..

Thank you all for participating in today's conference. You may disconnect your lines and enjoy the rest of your day..